Imagine you're planning a family vacation. Your spouse wants to drive, while you want to book a flight.

If you're planning a trip to the campground near your house, it would be ridiculous to fly. If you're planning a trip to Europe, driving is out of the question. Your destination largely influences how you will get there, and it's the same with financial planning.

Before you think of choosing investments or forming an estate plan, you first have to establish your financial goals. After all, until you choose your goals, you have no way of making progress toward them.

Step 1: Establishing goals

To determine your financial goals, start by identifying things that will make you feel happy, fulfilled and financially secure. Overall, your goals should be a balance between these things — if your goals will make you financially secure but miserable, or happy but financially insecure, you need to reconsider.

It's likely, based on these requirements, you'll define a combination of short-term, intermediate and long-term goals.

Short-term goals can be accomplished within the next year, such as saving for an annual vacation. Intermediate goals will generally be accomplished within the next two to five years, such as saving for a wedding or planning for the financial responsibilities that come from having a child. Long-term goals are more than five years away, such as saving for retirement or your children's college education.

Although goals may have different time frames, they should still be planned in coordination with each other, as achieving your short-term goals may affect your long-term goals. For example, a short-term goal may be to meet all of your mortgage payments for the next year, while a long-term goal is to own your own home. If you can't meet the short-term goal in this case, you're much less likely to achieve your long-term goal.

Step 2: Specifying goals

Some common financial goals include buying a house, getting out of debt or saving for retirement. If everyone could simply list these as goals on a financial plan, this step would be a lot easier. However, goals mean different things to different people. For one person, buying a home may mean paying $100,000, while to another it may be $2 million.

In addition to being specific, goals should have a time frame, be measurable, be realistic and indicate a course of action. For example, instead of "buying a home," your goal could be: "I want to put 3 percent of my paycheck into a savings account each month so I can buy a home within the next five years, with a mortgage payment below $3,000 per month."

By setting specific, realistic goals, it's easier to measure your progress toward them, and your likelihood of achieving them will increase.

Step 3: Prioritizing goals

If you have a list of financial goals, boost your chance of attaining them by prioritizing them as primary goals and secondary goals. You can rank goals in terms of both urgency and importance. For instance, contributing to your retirement fund is important, but it may have to come second to paying off credit card debt, which is more urgent.

If you have conflicting goals, such as saving for retirement and your child's education, you'll have to choose between them. You may decide based on which is more beneficial to the most people, or which causes the least amount of harm.

Using the example of choosing between saving for retirement or your child's education, consider that your child may be able to get a scholarship or take out a loan, but if you don't have retirement savings, you will have little to no income to live on in your retirement years. In this case, prioritize your retirement, as it would cause more harm to put your child's education first.

Step 4: Taking action

Once you've established, specified and prioritized your goals, you can start making progress toward them. To keep your spending in check while on the way to your financial goals, before making a large purchase ask yourself, "Will this get me closer to my goal?"

Keeping your goals top of mind can help you stay positive, as you will be able to track how putting money toward buying a home rather than a new designer handbag gets you closer to your goal, rather than focusing only on the fact that you don't have the handbag.

Keep in mind that your goals will need to be flexible — just as your priorities and needs will change as you grow older, your goals will also need to change. You should re-evaluate your goals at least every few years to make sure they still apply and you are making progress toward them.

And remember, the sooner you set your goals, the more time you have to save and the higher the likelihood you'll reach them.