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Money changes everything
With economic anxiety in the air, it's time you got your finances in order, don't you think?
You’re in your twenties
About your credit cards: Especially when the economy’s in the toilet, you do not want to be carrying a balance. Google budget worksheet, write out a personal budget so you can see what you’re spending, and then cowboy up and cut some luxuries, Richard Branson.
Once you’re debt-free, build an emergency fund. This is a good idea no matter what the economy looks like, but it’s especially important when layoffs are the only thing booming. Start with a couple thousand dollars, to be used if the shit hits the fan. “The emergency fund is for things that come up, like if you have to fix your house, but also to float you if you need money because of your job situation,” says financial adviser Bridget Sullivan Mermel (3744 N Southport Ave, 773-404-9344). Put the money where it’ll grow a little but you can still get at it quickly. Try a high-interest savings account like ING’s Orange Savings Account, which offers 2.75 percent interest with no minimum balance.
You’re in your thirties
If you’re not saving regularly, start now. “You want to save ten percent of your income, Mermel says. “If you can’t save 10 percent, start with 2 percent and build up.” Also, if you’re not already in your company’s 401k, join now. “If your company’s got a 401k, at least save up to the match,” Mermel says. No 401k? Go rogue and get an IRA (Individual Retirement Account) on your own. The Vanguard Target Retirement 2040 Fund does the stock wrangling for you. You need $3,000 to get started, but if you don’t have that in one lump sum, add money to your emergency fund until you do. Does it sound stupid to be buying into such a gloomy market? Think of it as a fire sale on stock, where everything’s cheap. This is the “buy low” part of “buy low, sell high.”
You’re 40 or above
Don’t. Touch. Your. 401k. If you freak out when you see your fund’s value tanking, stop looking at it. If you sell now, there’s no chance of a rebound. Even if money gets tight, don’t cannibalize your 401k just yet: That’s what your emergency fund is for. Wait, you don’t have an emergency fund? Well, damn, sounds as if you need to start reading from the top.
