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"Just like you plan for that summer vacation - you need to prepare your finances as well," says Dean Athanasia, preferred and small business executive at Bank of America. "Taking a moment to get your finances in order before you start planning those summer vacations is a great way to ensure you stay within the guidelines of your ultimate financial goals."
There are many different areas of your finances you could explore, but breaking it down by task usually makes the process more manageable.
- Balancing a budget: Eighty-five percent of people in a survey of 1,000 Americans with between $50,000 and $250,000 in investable assets plan to track and manage their budget over the next six months, according to the Merrill Edge Report.
To begin creating a budget, figure out where you're currently spending money and if there is any discretionary spending you can cut. Look at how often you eat out for lunch, how many coffees you're buying and how many magazines and cable subscription services you're paying for. Once you have a full picture of where your money goes each month, decide what you need and what you might be able to spare. Put the rest toward your goals like a summer getaway.
- Saving for retirement: It's no secret that retirement savings is one of the most important financial plans you need to have in place. Sixty-eight percent of the survey respondents say they are focusing on their retirement savings in the next six months. If you feel behind, you're not alone. Given the economic climate, 57 percent now expect to retire later than they planned one year ago, according to the Edge Report.
So how can you get on track? Start by deciding the type of lifestyle you want to have in retirement. Will you travel or relocate? What expenses, like a mortgage, will you still have? Once you set your goals and know what you're working with, you can use one of many retirement calculators online, like the one on MerrillEdge.com, or speak with a Financial Solutions Advisor to estimate how much more money you need to save and invest and how old you'll be when you can retire, given your current plan. Then adjust your plan - and your savings - appropriately.
- Paying off debt: Getting rid of debt is also a high priority for millions of Americans. Sixty-seven percent of people say they're focusing on managing their debt in the next six months. Too much debt can prevent you from reaching your financial goals so it's important to take an honest look at paying it off.
Tactics to employ for paying off debt include focusing on paying the debt with the highest interest rates - such as credit cards - first, then paying down those with lower interest rates like student loans. Some people may be more encouraged by paying of debt with the lowest balances first, and then working their way toward larger balances. Overall, staying committed to wiping out your debt is very important, because otherwise it will simply continue to grow.
- Paying for children's college education: If you have kids, you're probably thinking about how you will pay for college. Fifty-six percent of parents have paid or expect to pay more to send their first child to college than they had expected when the child was first born.
Families should plan around their unique situation, such as your child's goals and your family's current finances. Unfortunately, the majority of people plan to rely on their personal savings, while others take out student loans or rely on scholarships or grants. However, using personal savings alone could be detrimental to your own long-term plans, so a combination of a few tactics may be a good strategy.
