(ARA) - For many of us, summer is a time of vacations, day trips across the state and family reunions with loved ones we haven't seen all year. It's also a time when we tend to overextend our budgets in order to do as much as possible and pay little attention to how it affects our overall financial plan.
"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.
Getting your finances fit for summer is isn't easy-especially with all the temptations of warm weather. But if you put in the work and set a budget for your summer, you'll feel even more relaxed knowing your vacations and day trips are not at the expense of your ultimate financial goals.
Merrill Edge Report Methodology
Ketchum Global Research & Analytics and Braun Research conducted the Bank of America Merrill Edge Report survey by phone between Feb. 13 and Feb. 29, 2012 on behalf of Bank of America. Braun contacted a nationally representative sample of 1,000 Americans in the United States with investable assets between $50,000 and $249,999, and oversampled 300 mass affluent in San Francisco and Los Angeles. The margin of error is +/- 3.1 percent for the national sample and +/- 5.7 percent for the oversample markets, with both reported at a 95 percent confidence level.
To help inform the Merrill Edge Report, Communispace conducted a series of qualitative studies including interactive conversations, surveys, and other dynamic and exploratory activities with its proprietary online community of 300 mass affluent consumers.
Merrill Edge provides customers access to professional investment guidance through Merrill Edge Financial Solutions Advisors in the Merrill Edge Advisory Center or in-person at select banking centers. For customers who prefer to invest on their own, Merrill Edge provides a self-directed online investing platform, with robust tools and resources to help them make informed investment decisions.
Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 57 million consumer and small business relationships with approximately 5,700 retail banking offices and approximately 17,250 ATMs and award-winning online banking with 30 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.
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