Ahead of their clash with SK Brann, he said: "We all want to be in the Champions League, but we know where we are and what we have achieved. At the moment the UEFA Cup means everything to us.
"The Champions League would be fantastic and we are building a great squad. But we can't spend £28million on strikers and £18million on midfielders just yet, we have to be realistic over the market we are in. But the reality is that we are doing really well.
"What we are building is important. When do we play Inter Milan, who knows?
"But the biggest thing is that we are playing in Europe and playing massive games. We are aware of where we are and where we could be soon.
"Everyone wants the Champions League and to spend £100m on transfers every year.
"But this club has improved every year. Each season we have done something better and achieved more. We are improving and not going backwards."
Cahill insists that to a large extent there is already enough quality in the Everton side for them to hold their own in Champions League company.
The former Millwall man added: "We have a lot of players here who could play in Champions League sides, we just have to keep going and we will make it.
"We do not think we are far away, we really want the Champions League and a taste of what we have seen very close to us this week.
"We will make that happen and move forward. Liverpool are doing well and fair enough, but they have had to spend £200million to do it, so for us it is all about who we are and where we are.
"We have pride and we are striving to give that to the fans, hopefully we will be there soon.
"But our position speaks for itself. We know what we have achieved already but want more."