The first step in creating an effective budget is to know what is important to you and to write it down in the form of goals. In the previous section, you thought about what you wanted out of life, and you wrote down your goals. These goals are the things you should be working toward. It is not enough to just want to save money-- you should know what you are saving for. Your goals must be SMART: specific, measurable, achievable, reportable, and time-bound.