Next, project how long you'll need to be paying for your goal.

Say for a moment that your goal isn't retirement, but sending your child through college. Will that expense stretch out over four years? Or is postgraduate study in the little one's future, too? Or maybe your goal is saving for a home and paying off a mortgage. The easy part is figuring out what you'd like to put down. But do you plan to use your investments to help pay your mortgage? If so, the goal for this pool of money may extend over 20 or 30 years, depending on the terms of your mortgage.

Back to the mother of all financial goals, retirement. Here, you need to consider just when you want to bid the working world farewell. Have you dreamed of an early retirement, or are you someone who can't imagine not working at least part time?

Then, unpleasant as it is, you'll need to project when you'll bid the world adieu. When it comes to life expectancy, think long. While most of us won't become centenarians, it's better to err on the side of longevity. Otherwise, you may run out of money.

Next: The Quiz >>