Tips for Keeping Your Money Safe in an Unsteady Economy
When it seems like everywhere you turn there is more bad news about the state of the economy, more people are becoming quite concerned about finding ways to keep their money safe. Even those who may have been big risk takers in the stock market have scaled back for fear that another dip in the stock market may cost them everything they have. With all the bank failures and bailouts that the economy has suffered in such a short period of time, it is no wonder why so many people have become so concerned. While you could always hide your money under your mattress, here are some simple tips that can help you keep your money safe no matter what the economy may throw at you.
First, decrease the amount of risk you take on. Whether it is the stock market or even your 401k, it is in your best interest to avoid risking money that you cannot afford to lose, especially in a shaky economy. What once was, and can still be, an outlet for the savvy investor to make large sums of money, those who are facing any form of financial hardship should decrease their level of risk as much as they can. If money is tight, it may be in your best interest to avoid investing in the stock market all together until the situation improves. You may also want to tone down the investments you have chosen for your 401k. It may be best to transition most of your money from high risk to lower, more stable funds, particularly if you are inching closer to retirement. While these funds may not generate as much money, receiving a steady return on your investment is better than losing your money all together.
Second, keep your cash in check. We all know that we need to have six months to a year’s worth of money kept in reserves should an emergency strike. The most common reason for this emergency fund is to help you pay your bills. An unsteady economy should make you re-assess what is required for a situation to be an emergency. While a job loss, decrease in pay, or family illness are all good examples of an emergency, you will want to avoid tapping into this cash for frivolous purchases like a dinner out or the season’s hottest designer shoes. Keep your emergency fund for emergencies only; otherwise, you could be out of money when you need it most.
Third, avoid taking on additional debt whenever possible. Whether it is in the form of a cash advance payday loan, or carrying a balance on your credit card, any form of debt can be one of the quickest ways to watch all your money walk out the door before you have even had the chance to earn it. In an unstable economy it’s best to try and pay cash for purchases whenever possible. This decreases your chance of piling on the debt in a time when you may not be able to afford to pay it off.
Lastly, be careful with who you borrow money from and what you borrow it for. While you will still need to borrow money to purchase a home or for a college education, make sure to apply for a loan with a payment that you can actually afford. One of the biggest causes for the failure of so many banks was the fact that they approved loans for jumbo, and no asset, no income mortgages that the bank knew the borrower could not afford. Applications were commonly doctored to make an applicant look better on paper so the loan would be approved. Many of these loans ended up in foreclosure simply because the borrower could not afford to keep up with the payments. In an unstable economy, if you can afford to apply for a mortgage, make sure to obtain a payment that does not fall outside your comfort level. The payment should be within a range that you are comfortable with. If you feel there is a chance you cannot afford the payment, than it may just be more than you can afford.
These are just a few of the tips that can help you keep your money safe in an unstable economy. Avoid taking on any form of debt whenever possible, and decrease your level of risk, and you are sure to keep your money safe and secure no matter how rocky the economy may get.
This entry was posted on Wednesday, November 18th, 2009 at 9:29 am and is filed under Economy & Business News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
