Savvy Money Approaches in an uncertain Economic Times

by: admin - November 6th, 2008 2 Comments

Although economic times are tough, this is not the time to take your money out of the checking account or 401k and put it in the mattress. Instead, it’s crucial to make safe and smart decisions with your money and spending habits. This is the case since when you feel more secure with your finances, it is easier to focus on reaching your wealth goals instead of getting distracted by bad economic news.

The steps to take during these times are:

No need to panic about long-term investments: Long-term investment should remain long-term. If you are 10 or more years away from retirement, taking your money out of stocks or stopping contributing to your retirement savings isn’t the right thing to do. Fluctuations in the stock market are relatively short-term when compared to the many years you have until your retirement.

Search for additional sources of income: You can boost your income and create yourself a bigger safety net by working in a part-time job or starting your own business.

Run away from consumer debt – Carrying a debt, especially credit card debt, is a burden and you should try your best to eliminate it as soon as possible.

Become more frugal – Everyone can cut back on some expenditures in many aspects of their lives. These could accumulate to substantial savings over time.

Have an emergency fund – To prevent tougher times, such as if you lose your job, financial advisers recommend having enough cash saved that is equivalent to your salary of 6-9 months.

Plan for your future – It’s a good idea to re-examine your financial plan on a yearly basis, but since this is a severe economic mess we are in, now is the time to look at these plans again. We will provide more details in a future post on the detailed financial planning a person should have.