Saving & Investing

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Juggling multiple financial goals

You probably have a long list of financial goals: saving for retirement and college, buying a home, minimizing debt, and likely a few more

There's a lot on your plate, and you may feel a little overwhelmed. While anyone can save for multiple goals, doing so successfully means setting priorities and creating a plan.

What's really important?

It's tempting to place the highest priority on the goals that are nearest on the horizon. For example, if your child is heading to college in the next year or two, you might find yourself giving short shrift to your retirement savings in order to boost your college fund.

Before you do that, consider this: Generally speaking, you can borrow money for college or just about any other near-term obligation. You'll probably find it a lot harder, however, to find anyone willing to lend you money for your long-term retirement expenses.

Prioritizing your competing financial objectives may be as simple as making a list. Start by estimating the amount of money you'll need for each goal. Then, take into account your time frame, the flexibility of your budget, expected rates of return on your investments, and any alternative funding sources, including the possibility (and potential drawbacks) of borrowing. Finally, decide which goals are truly essential and which ones are luxuries you could defer—or do without.

A blueprint for financial success

Once you've put your goals in order, your next step is to map out a saving strategy.

Start by taking a careful look at your finances and estimating how much you'll be able to set aside each year—or, better yet, each week. Then, decide how to allocate your savings among your various goals, with high-priority items getting the lion's share. As you're developing your plan, be realistic and flexible, but be as aggressive as possible. Few people ever regret saving too much.

Because a financial plan is only as good as your commitment to stick to it, consider setting up an automatic saving and investing program. After all, saving money means not spending it—and the easiest way to develop long-term financial discipline is through automatic payroll deductions and direct deposits.

The bottom line: Whether you have one goal or a dozen, your main financial priority is, in fact, saving. Instead of spending your paycheck and setting aside whatever happens to be left over, commit to saving first—and never lose sight of your goals.

NOTE:

  • All investments are subject to risk.
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