Maybe you're like me and you've been tooling around since late '98. Or maybe you're a newcomer -- welcome! -- who is just getting started with personal finance and investing. Either way, you've heard over and over again that investing is good for you. Hopefully, it hasn't started to sound like "eat your veggies."

We preach the value of investing for a variety of good reasons, of course. Being an investor can make you richer, it can make you smarter, and it can make you better at your job, just to name a few. Indeed, investing can be a wholly enriching experience if taken seriously. And sometimes even if not, as witnessed by those who bet early on Travelzoo (NASDAQ:TZOO) with nothing more than a brokerage account and a prayer.

So it seems natural for you, a Fool, to want to invest. After all, it's the Foolish thing to do, right? Well... that depends. Lost in all the "investing is good for you" chest-thumping out there is something fundamental: Why?

No, that's not a rhetorical question. I'm serious. Why do you invest? What do you hope to achieve?

Playing chicken with a freight train

Yeah, I know what you're thinking: Is this really an important question? After all, you're investing your money in the stock market. You own the Vanguard Total Stock Market Index Fund (VTSMX) or maybe Fidelity's Spartan Total Market Index (FSTMX), which costs a little less. You also own a few stocks -- maybe even one or more recommendations from our investing newsletters -- and contribute to all of your investments monthly. I mean, really, what else is there to know?

I'm glad you asked. Go back to the top. Yeah, you heard me, up there. See that title? Read it again. Louder. That's it. So, once again, tell me, Fool: Why do you invest? Before you answer, consider that "because I want to be rich" really says nothing. Just as you need to understand the details when it comes to stock analysis, so too must you get specific in thinking about why you invest, because only in doing so will you actually figure out what you really want, and how much you'll need to pay for it.

Maybe you don't know at this point. If that's the case, take heart -- most of America is with you. Heck, I'm in the same boat. But we're playing chicken with a freight train, folks. A Merrill Lynch (NYSE:MER) study profiled in the May 14 issue of Retirement Weekly reports that only a third of us have a financial plan, and most of us have unrealistic expectations for investment returns and annual savings withdrawal rates during retirement. The danger inherent in such ignorance is that you won't save enough to buy what you need, let alone what you want.

Just check out these findings from the Merrill study:

  • More than 50% of respondents said they plan to rely on their personal savings for their retirement income, but the average respondent was age 46 with $55,000 in annual income and had saved only $51,000. Yeesh.
  • The average respondent also said they plan to withdraw 21% of their portfolio's assets each year to fund retirement. That's great -- if you plan to only be alive for five years after punching the clock for the last time, that is.
  • Finally, most respondents said they expect annual investment returns of... wait for it... 22%.

Uh, yeah, OK, can I get a hit off of what you folks are smoking? With the stock market's annual return of between 8% and 12%, this is anything but a realistic expectation. Indeed, in a search at Yahoo! Finance, I found only 11 mutual funds with a five-year annualized return in excess of 25%. Peter Lynch averaged 29% annual gains while at the helm of the Fidelity Magellan (FMAGX) fund, and he's an investing legend.

Stop dreaming, start planning

Clearly, most of us need to get our heads out of the clouds, and get down to the very earthly business of creating a financial plan. Indeed, the Merrill study says only one third of us have one. Another study sponsored by the Consumer Federation of America last year pegged the number at just fewer than 50%. Either way, most of us are gambling that we'll have enough scratch to handle life's wants and needs. I don't know about you, but I prefer to confine my gambling to Vegas. Well, to that and the occasional poker trip.

In poker parlance, financial plans help prepare for life's bad beats -- a sudden illness, outrageously expensive college tuition, retirement, and roof repair for that condo you always wanted in Del Boca Vista. How? By forcing you to commit to paper all the sordid details of your current financial situation. That's combined with a complete list of all of your financial goals, and a detailed strategy for achieving them.

For comparison's sake, consider that a financial plan is a lot like a football coach's game plan. It factors in your strengths (your financial assets), your weaknesses (your financial liabilities), your opponent (your goals), and includes a series of plays (your plan). No football team wins without a good game plan; and no Fool retires to a life of champagne and caviar without a financial plan. (If that's still confusing, try this little ditty from my Foolish colleague Dayana Yochim.)

Dick Clark, champagne, and your financial plan

It's been more than two years since I started working on our financial plan but I have yet to finish. (I use TMF Money Advisor, which you can try 30 days for free. You can also shop for an advisor here.) Probably like most of you, I've simply run out of time, or I find that I need to update my records in Quicken. And then I use those facts to allow myself to become lazy. Well, no more.

You heard it here first: I will have a complete financial plan by the end of the year. If I don't... well, you can write my editor and suggest one or more nasty fates for me. Or you can just write me directly and curse my ineptitude.

But maybe you're like me, and you, too, have yet to create or finish a plan. That's great!

(Well, no, not really great. It's just that misery loves company.) You can join me in the fun. We can even give our effort a name. How about: "Fools for Financial Freedom?"

Yeah, I like the sound of that. So go ahead. Say it loud and proud: "I will get my financial plan done by January 1, 2005." Yep, that's it. Show me the money. A little Dick Clark, a little champagne, and a finished financial plan -- this is going to be one Foolish New Year's Rockin' Eve.

Motley Fool contributor Tim Beyers will be posting his progress in creating a financial plan to the Fools and Their Money discussion board. Join him and thousands of other Fools there to follow the story, or to post your own financial confessions, commitments, or successes. Tim owns shares of Vanguard's Total Stock Market Index fund and Fidelity's Spartan Total Stock Market Index fund. You can view his Fool profile and his stock holdings here . The Motley Fool has a disclosure policy .