How to help better manage your money
When it comes to financial security it's easy to think that you're not in the driver's seat. After all, you don't have much say in the direction of the markets, the economy, or even your own job security. But in fact, your financial future is also highly dependent on how well you handle important decisions that are entirely within your control. Here are four ways to help you manage your money better and help protect your financial future.
1. Manage investment risk: Diversify. While stocks have historically offered the best prospects of delivering inflation-beating gains over the long-term, there's no guarantee that stocks will always do well, especially over the short-term. That's where diversification can come into play. Whether it's your 401(k) or IRA, make sure you invest in an appropriate mix of stocks, bonds and cash for your situation to help you strike a balance between risk and reward. This retirement calculator includes basic allocation examples based on your financial profile.
2. Control the cost of borrowing: Keep your credit score high. The interest rate on a loan is greatly determined by what is going on in the general economy. But your financial reputation is another big factor too. The higher your credit score, the better loan terms you will be offered. Your track record of paying your bills on time plays a large role in determining your credit score. Use Online Banking to set up automatic payments for your recurring bills and you won't have to worry about making a late payment again.
Budgeting Tip #1
Paying off debts can help improve your financial health and contribute towards a more secure financial future - but only if they stay paid off. Through budgeting and fiscal discipline, you can devise a plan to keep your spending below your income over the long term.
3. Control account costs: Reduce the fees you pay. A way to help save more money is to eliminate late fees (and higher interest rates) that are charged when you miss a payment due date. Online bill payment can help you say goodbye to late fees and manage your money better. Controlling annual custodial and maintenance fees for your Individual Retirement Account (IRA) is another way to build financial security by allowing more of your account balance to grow over time.
4. Control your ability to weather a layoff: Build an emergency fund. While you often can't control your job security, you can control how well you are prepared if you are hit with a layoff. An emergency savings fund that can cover six or more months of living costs is great protection in an uncertain economy. Set up an automatic monthly transfer from your checking account into a separate savings account and you will be on your way to building your six-month security blanket. Make a monthly automatic deposit of at least $25 from a Bank of America checking account to a Bank of America Regular Savings account and the account's maintenance fee is waived.
What's next? Get motivated to improve your financial health
1Diversification does not ensure a profit or guarantee against loss. Past performance is no guarantee of future result.
Brokerage IRAs (non-FDIC insured) are available through Merrill Edge. Bank IRAs (FDIC insured) are available through Bank of America, N.A.
Merrill Edge is the marketing name for two businesses: Merrill Edge Advisory Center, which offers team-based advice and guidance brokerage services; and a self-directed online investing platform. Both are made available through Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S).
MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary of Bank of America Corporation. Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.
Investment products are offered through MLPF&S:
Investing involves risks, including the loss of principal invested.