To begin your financial plan, first classify your expenses into four categories to better understand your current financial situation in relation to your dreams about retirement:

• Essential Expenses = "Needs".  Your "needs" are your most basic living expenses such as food, housing, healthcare, and transportation.
• Lifestyle Expenses = "Wants".  Your "wants" are the things you enjoy that are within close range of your current finances.  They are non-essentials, but are usually activities that contribute to a quality lifestyle standard or peace of mind.  Embarking on a European vacation, painting, playing golf, enjoying the theater, learning to play a musical instrument, or tending your own vegetable garden are wants because they are associated with having the leisure time to take pleasure in them, but can be enjoyed by most reasonably successful retirees.
• Luxury Expenses = "Wishes".  It is important to distinguish between wants and wishes.  These terms are of course relative to each person's level or earned success, but generally a "wish" is any lifestyle enhancer that is completely non-essential, and usually carries some amount of social status appeal or exclusivity.  A yacht, private jet, a second or third home, antique automobile collection, or extended vacation are luxury expenses that carry high price tags, but can provide you with a lifestyle most people will only dream about.  Stop wishing, and organize your investments so that your dreams may become a reality.  After all, you deserve to see all your hard work rewarded!
• Investments = an investment requires an initial expense, but has the potential to generate a profit at a later date.  Keep in mind that not all large purchases are investments.  Items such as automobiles, even high-end ones, should never be perceived as investments.