I am not really sure if we are in a recession, at least according to the standard or “official” government definition. But I do know that gas and groceries have been getting more expensive, the stock market has been declining and is quite volatile, banks have failed, and the general sentiment of the nation’s economy is rather gloomy. However, now is not the time to panic and take your money out of the bank and stuff it under your mattress, or stop investing in your 401k. However, making safe and smart moves with your money and your spending habits can provide you with a sense of security about your finances and future. When you feel more secure, it is easier to focus on reaching your financial goals instead of getting distracted by the bad financial news and “noise” out there.
7 Safe Money Moves for Unstable Economic Times
Don’t get scared or panic about your long term investments- Your long term investments should be just that, long term. Don’t look at the last week, month, year, or even five years if you are 25, 30 or more years from retirement. Even if you are planning on retiring in 10 years, pulling your money out of stocks or even worse, stopping retirement contributions is probably not the smart thing to do. Realize that the fluctuations in the stock market over 6 months or even a year is short term compared to a 10, 25 or 40 year retirement horizon. Making a change based on a few months is very short-sighted thinking when you compare it to your retirement horizon.
Look for additional sources of income- Can you boost your income by working more, getting a part-time job, or probably the best option, starting a small or part-time business? It never hurts to add to your “skill set” by starting a small business, doing side-work, or moonlighting.
Avoid, reduce, and eliminate consumer debt- Now is a great time to make a dent in or even better to eliminate any consumer debt you may be carrying, especially credit card debt. The less money you owe others, the less liability you will have should you lose your job or have another financial emergency.
Adopt frugal habits- Just like a business does when sales are slow, “tightening up” or making cuts to the non-essential expenses is a good thing to do during uncertain times. Developing a frugal mindset can help you apply new, frugal habits to many facets of your life. Spending Less $ = Saving More $ = Good Idea
Boost your emergency fund- In times of economic uncertainty, cash is certainly king. Boosting your emergency fund is a good idea and allows you to have some flexibility in the future. Make sure you have it in a high yield savings account, to at least counter the effects of inflation somewhat. ING Direct (Get $25 free for opening an account) is one of many good online banks with a higher interest rate than a local bank savings account.
Delay any sizable purchases-Were you thinking about purchasing a new car in the near future, or some other sizable purchase? Delaying your purchase for a while can allow you to increase your savings till you feel a little more comfortable with the current state of the economy.
Plan for your future- Now is a great time to examine your retirement and other personal finance goals. If you are making strides towards your goals when times are tough, it should be that much easier when things are more certain and the economy has a more promising outlook.
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