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Balance long—
and short-term goals

We all have different financial goals, and often several at the same time. With a sound savings and investing strategy, you can take on competing goals with confidence.

Debt vs. investing: Think strategically

People often make the mistake of forgoing contributions to their 401(k)s to pay off debt faster. If you do the math, you may be better off starting to save and invest a little for retirement too.
For example, you don't want to be paying off too much more than you owe on low-interest loans if that means you can't contribute at least enough to get the employer's match with your 401(k).
The lower the interest rate on your loan, the better deal it may be to pay off that loan more gradually and invest in your 401(k) plan at the same time. Not only might your loan be at a lower rate than you could reasonably earn if you invested in the market, but even small contributions to a retirement fund have the potential to grow more than you think over time.

Save for a large purchase

Whether it's saving for a down payment on a home, a new car or a big-screen TV, it's good to take a methodical approach so you don't take on too much debt.

Plan ahead: Determine what you can really afford and set a realistic target date, then open a separate savings account and limit your access to it. Consider scheduling automatic direct deposits to keep your savings on track. You may want to think about opening an investment account, which could potentially offer greater returns.

Monitor progress: Keep tabs on how you're doing. There's nothing like success to help build momentum.

Make adjustments: Take action if you find you're falling behind by cutting back on non-essential expenses.

Plan early for the costs of education

College costs have skyrocketed in recent years and show no signs of slowing down. These tips can help you start saving and investing for a child's education:

  • Set this goal in context of your other goals, like retirement
  • Estimate costs well in advance, and consider all funding sources
  • Start saving as early as you can
  • Consider investing in a Section 529 account
  • Talk to family members about contributing through gifting
  • Track your progress and adjust if necessary
Take action:
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Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.