IHateFinancialPlanning.com
offers advice on managing your money
(ARA) - When life gets unpredictable, there's one thing
Americans always want to hang onto: their money.
During times of national uncertainty, it's only natural
to want to hunker down and hang on to your cash -- or at a
minimum, squeeze as much as possible out of every paycheck
(that is, if you're still getting one).
Many Americans are feeling less secure about their
lives than ever. In fact, 63 percent feel they will have
to make changes in their day-to-day lifestyle, according
to a survey by Wirthlin Worldwide, a McLean, Va.-based
research firm. Fears of the unknown, job loss or having
less income are also on people's minds.
"If you hated financial planning to begin with,
the thought of managing your money in trying times can be
even more intimidating," says Randy Schuldt, vice
president with IHateFinancialPlanning.com, a Web site for
the three out of four Americans who hate financial
planning. "Although it may seem impossible to predict
what the future will bring, there are some simple steps
you can take to give you more control of your money in a
changing world."
To give you and your family something to hang onto
during uncertain or changing times,
IHateFinancialPlanning.com offers the following tips:
Put it in perspective. If history is any indication,
the economy may not suffer long-term ill effects from
recent events. The Dow Jones industrial average -- the
oldest U.S. market benchmark -- typically falls for a
short time, but it has traditionally rebounded within six
months. It happened after Pearl Harbor, the Gulf War, the
World Trade Center bombing in 1993 and the Oklahoma City
bombing in 1995. Past performance doesn't guarantee future
results, but there's a possibility that history may repeat
itself. Fearful reactions will only make the short-term
last longer.
Reduce your deficit. The nation's economic outlook is
nothing you can control, but you do have control over your
own situation. If you've got credit card debt, take steps
to pay it down. Start with the cards with the highest
interest rate and pay more than the minimum on all your
cards with balances. Instead of using a credit card for
future purchases, get a debit card, which subtracts
purchases directly from a bank account.
Protect future income. You owe it to yourself and
family to protect your earning power with disability
income insurance and/or life insurance. The lack of
disability income insurance is the single biggest threat
to the financial well-being of the American workforce,
according to the Consumer Federation of America. It
reports that 80 percent of U.S. workers either have no
long-term disability income coverage or their coverage is
inadequate.
Resist the urge to borrow from your 401(k). Many people
are tempted to borrow from their 401(k) as a first resort,
but it should be the last resort. Many people think
because it's 'borrowing from themselves' that no harm is
done, but actually, they lose the chance to benefit from
the tax deferral and compound interest on potential growth
of their 401(k). That means your account will be much
smaller when you retire. Also, if you quit your job or are
fired, you may be required to pay back the entire loan
immediately. If you are unable to do so, be prepared to
pay income taxes and a 10 percent early withdrawal penalty
on the loan.
Balance your budget. Now is a good time to get in the
habit of budgeting your money. Track your expenses and
spending for a month or so. It could reveal some money
habits that need changing. And it can help you shape
future habits, such as saving, charitable giving or just
paying your bills on time.
Save for emergencies. Many people put off saving for a
rainy day. It may not be raining on the economy yet, but
the storms are brewing. A good rule of thumb is to have at
least three months' salary in the bank where you can
access it for emergencies ranging from a leaky roof to
layoffs at work.
Have a plan in case of layoff. During these tough
times, more and more companies are cutting jobs, and yours
could be next. If you haven't done so already, update your
resume. Be sure you understand what you'll need to do to
maintain health insurance coverage after a layoff. You
might want to apply for a home equity line of credit. You
don't have to use it, but it's hard to get approved after
you've become unemployed.
Write a will. It was a good idea before the world
changed, and it's a good idea now. As long as you're
thinking about your family's financial future, this is
also a good time to formally declare your wishes about who
gets what, and how much, after you've passed away. It's
also the only way you'll be sure your wishes are carried
out. You can modify your will as often as you like, for as
long as you live. You may also need a durable power of
attorney (POA), which formalizes who will make decisions
on your behalf, if you are unable to do so.
Invest in the future. Resist the urge to put future
plans on hold. If you want to buy a small business, adopt
a child or retire early, put those goals on paper and
follow through with a savings plan. It's easier to stay on
track if you have something to shoot for. Regardless of
the condition of the world, keep improving the condition
of your personal finances. An investment in your future is
also an investment in America's future.
Courtesy of ARA Content, www.ARAcontent.com, e-mail:
info@ARAcontent.com
