Step #1: Look at the small picture. Where are you at now financially?

In order to get where you are going, you need to know where you are. In this step, you are only gathering facts and information. Look at your personal finances right now and get your facts straight. Determine what your net worth is. Calculate your debt-to-income ration, or at least add up exactly how much debt you have. Check the interest rate on each debt. Figure out what your income and expenses are each month and where your cash is flowing. Is your cash flow positive, negative, or breaking even? See how you are managing your risks as far as what kind of insurance you have. Stay away from making plans until all the facts are gathered and you can see your personal finances as they are now.

Step #2: Dream of the big picture. Where do you want to end up financially?

You won't achieve what you want until you know what you want. In this step, set aside all the facts and information you have gathered and set to work making goals. When you are setting financial goals, be specific. To the dollar, how much do you want to save and by what date? What are you saving for? How much cash will be in your emergency fund and by what date? By what date do you want to be out of credit card debt? How much do you want to contribute to your children's education fund? How do you want your investment portfolio diversified? Calculate how much money you will need to retire comfortably and at what age you want to retire. Set a date for paying off your car loan, home mortgage and any other debts. Determine where you want to end up financially and set realistic goals accordingly.

Step #3: Design the picture. What do you need to do to get there?

Once you know where you are and where you are going, you can make a plan on how to get there. Put the information you have gathered and your goals together and formulate a plan on how to achieve what you want. This step in the personal finance plan is often called budgeting. Figure out how much money needs to go into each part of your budget each month for you to reach your personal finance goals. How much do you need to put toward debt, retirement, emergency fund, etc. to meet your goals by the dates you have set. Some parts of your plan will probably be suspended until other parts are achieved, like contributing to retirement can be put on hold until credit card debt is paid, etc.

Step #4: Go for it.

Implement your plan and stick with it. This is the most difficult step in the process, so help yourself out by making payments to every part of your budget automatic. Track your income and expenses thoroughly so the next step is easy. Start living your plan and you'll find your happiness increase.

Step #5: Take a look at the picture. Are you getting where you're going?

Monitor your progress on a monthly or at least quarterly basis. Re-calculate your net worth and debt-to-income ratio. Have they improved? Look at your budget tracking and see where you've deviated, if at all. Do your goals need a revamp for you to be successful? Does your plan need changing to obtain your goals? Where can you do better? Where have you had success? Monitoring how you're doing will ensure that your personal finance plan will stay in tact and that you'll get your goals.