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High-interest debt.
Since credit card debts and personal loans often come with high interest rates, paying those off
should be your next priority. This will help free up money for other financial goals and eliminate the
interest payments that are costing you more money than you actually owe. You can also call credit
card companies and ask if they can lower your interest rate. They might not agree, but it’s
worth trying.
Helpful tip: Choose a debt repayment strategy that works best for you. Consider the snowball
method (paying off debts from smallest to largest) or the avalanche method (paying off debts with
the highest interest rates first). Then, stick to the plan until all your high-interest debts are cleared.
Retirement savings.
Your retirement may seem too far in the future for you to think about now, but this should come
next on your list of financial priorities. Why should it come ahead of saving for your child’s college
tuition, which is likely to be a huge expense? Because, unlike retirement, there are various options
for funding a college education, including scholarships, grants, and student loans. There are far
fewer options for funding your living expenses after retirement. Also, since more Americans are
living longer, maintaining your standard of living will require more money. You don’t want to outlive
your financial resources.
Helpful tip: Take advantage of individual retirement accounts (IRAs) or employer-sponsored
retirement plans like 401(k)s. Try to contribute at least enough to receive any company matching
contributions because that’s essentially free money for you. Thanks to compound interest, even a
small contribution now can result in significant savings as it grows over time.
Children’s college education.
The reason this financial obligation falls last on the list of priorities is certainly not because it’s less
important. College costs are high, and it makes sense to start saving early. But, if you must sacrifice
this goal to focus on others, you can fund your child’s education in other ways. Scholarships,
grants, and part-time student employment opportunities may be available for supplementing
education expenses if you haven’t saved enough to cover costs.
Helpful tip: Explore the option of a 529 savings plan or education savings account (ESA). These
accounts offer tax benefits and can help you save money to use specifically toward educational
expenses. If you can manage to automate contributions, you’ll maintain consistency and enable
your fund to build steadily over time.
This priority order can serve as a good guide, but changing financial goals, income, or other circumstances
might cause you to reassess and refocus from time to time. The key is to find a balance between the financial
obligations you have now and making sure your financial future is secure, too. As always, your financial advisor
can help you determine the best strategy to maintain stability, maximize your benefits, and minimize your costs
and penalties based on your individual situation and goals.
This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a
recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific
to your situation.
The fees, expenses, and features of 529 plans can vary from state to state. 529 plans involve investment risk, including the possible loss of
funds. There is no guarantee that an education-funding goal will be met. In order to be federally tax free, earnings must be used to pay for
qualified education expenses. The earnings portion of a nonqualified withdrawal will be subject to ordinary income tax at the recipient’s
marginal rate and subject to a 10 percent penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits.
529 plans are subject to enrollment, maintenance, and administration/management fees and expenses.
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Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.
Financial planning services offered by Navigate Financial, a WA Registered Investment Adviser, are separate and unrelated to Commonwealth.
Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network®.