5 Ways to Juggle Competing Financial Goals

College tuition, retirement savings and more – your financial goals can sometimes seem overwhelming. Merrill suggests a five-step process that can help you pursue them all.

Consider all the potential claims on your finances: a down payment on a home, your children’s college tuition, a parent who requires caregiving and, of course, retirement accounts that need regular care and feeding. That is on top of ongoing expenses and periodic big outlays like a new car.

How do you juggle these competing demands? You might begin by taking a step back and considering your goals and your values.

Then, using a five-step approach, you can identify and prioritize your goals. That allows you to create a realistic plan for pursuing them.

1. Take note of your values and goals

Sit down with your family and make a list of what is most important to you. Crafting one- or two-sentence value statements can help guide your family’s financial decisions. For example, if you have identified giving back to your community as an important value, that commitment could inform your goals for how you spend, save and invest. Next, make a list of your financial goals. Your values will help to shape them.

2. Sort your list

Prioritizing your financial goals can help you pursue them more effectively. To do this, decide which of these buckets each goal belongs in:

• Essential goals, such as saving for retirement, building an emergency fund and preparing to cover healthcare costs as you age, are critical to your financial well-being. They absolutely cannot be put off.
• Important goals are less critical but represent core priorities. They may include funding education, saving for a home, paying down debt or leaving a legacy.
• Aspirational goals are anything that is merely nice to have, like a second home or a big trip. They should be your lowest priorities.

Categorizing your goals this way – and identifying whether they are short- or long-term – can help you create a plan for thoughtfully allocating your resources.

3. Get family members on the same page

Even couples and families with similar goals can differ when it comes to priorities. Consider building consensus using a technique called “The Fist of Five.” A goal is proposed and discussed, then each family member votes by raising zero to five fingers, representing their level of support. The process continues until every remaining goal gets at least three fingers from everyone.

4. Build your investments around your priorities

Now you are ready to put investment strategies in place to help you pursue your goals, starting with the essential ones. Once you have a solid strategy for funding those, you can create strategies to invest for your important goals and, finally, your aspirational goals. Consider your risk tolerance and how much time you have to pursue each goal. You may also consider other investments, such as a health savings account to help cover long-term medical costs, or a 529 education savings account to prepare for tuition expenses.

For a goal that is one to three years away, you will probably want to keep the money in a safe, liquid account such as a CD or money market account. For goals more than five years away – perhaps your son, daughter or a grandchild is nearing college age – consider adding higher-risk/higher-reward assets. For goals 10 years out or longer, you might invest more aggressively for growth because your investments should have time and potential to rebound from any market dips.

5. Reconsider your plan periodically

Life changes, such as divorce or a new job, or unforeseen economic events may necessitate a second look at your plans. You may need to add or subtract a goal or adjust the timelines. Say you want to change careers, even if it means postponing retirement. Think about the potential impact of this across all your goals so you can make decisions that do not shortchange any of the things that matter most to you.

Along the way, you may very likely have to make trade-offs. But by using this five-step process, you will be armed with the knowledge you need to help you prioritize your goals and align your assets toward pursuing them.

For more information, contact Merrill Lynch Financial Advisor Eric F Gonzales of the Napa, CA office at 707.254.4606 or eric_gonzales@ml.com.

[1] EBRI and Greenwald Research, “2023 Retirement Confidence Survey,” 2023.

[2] Corebridge Financial and the Longevity Project, “Funding longer lives: Preparing Americans for greater financial security and well-being in retirement,” March 2024.

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