Give nest eggs attention they deserve

Whether you’re just getting started or you’re looking to grow the savings you already have accumulated, there are simple steps that can help ensure that you stay on the right track.

• Start with planning. When you think about how much money you’re really going to need to meet all your future obligations – whether it’s sending your children to college, securing retirement income or putting a down payment on a new home – the task of actually planning your savings strategy might seem overwhelming.

The best way to start is by setting long-term savings goals first, because those are the ones you will need to work on a little bit at a time. Once you have calculated how much you’ll need to set aside each month to meet those long-term goals, you can also set intermediate and short-term goals. Continue saving, even after you reach your short-term targets.

• Prioritize your long-term needs. When looking ahead to the major expenses that await you, it’s important to decide which will best be paid with savings and which could be financed with debt. Keep in mind that not all debt is necessarily bad. For example, if you can’t afford to save for both college and retirement expenses, you might be better off borrowing to pay for college than having to borrow to pay post-retirement living expenses. After all, nobody is going to offer you a scholarship for retirement.

Careful planning can help you decide how to best meet all of your needs.

• Pay yourself first. If it’s not already a part of your regular routine, make saving a habit, just like paying your bills. To make it automatic, see if your employer offers some form of direct deposit, and then divert some of your paycheck directly into a savings or investment account – even if it’s just a small amount.

Over time, you won’t even notice that part of your paycheck is “missing,” and you can always increase the portion that’s siphoned off for savings.

• Control and reduce your debt. While it is true that not all debt is bad, there are some forms of debt that can do serious damage to your savings plans. Every dollar you spend paying the interest on your credit card is a dollar you could be putting to more productive use. That money could be accumulating in a savings or investment account, but when you have to use it to pay down your credit card interest charges, you’re really getting absolutely nothing in return.

• Team up. Outlining financial goals and what you hope to accomplish is a great way to begin the savings process, but it’s easy to be sidelined if you go it alone. Talking about your goals with your spouse, parents or significant others might provide the support you need to actually make it happen. If you’re married, it’s especially important to communicate with your spouse to set mutually agreeable goals and decide on ways to achieve them. You might also consider enlisting the services of a financial consultant who can tailor a savings plan to meet your needs.

Timothy Reese is senior vice president, investments, with A.G. Edwards & Sons Inc.

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