None of us can control the economy. You and I cannot control economic downturn where we work. While we have some control over how we are perceived at work and how that may impact our job status in a downturn, for the most part we cannot control who is downsized and who stays as it relates to our own personal job.
What can you control?
1. Reduction in spending. You can review your expenses over the last three months and look for where you can cut spending and apply that money to savings for “future trouble” or short, medium or long-term goals (depending on your planning up to this point).
2. Money Diet for bills. Start a process with credit cards first and then all of the businesses that send you a bill on a monthly basis. Your goal is to do what good businesses do: reduce bills or expense by a percentage. Perhaps that is 10 or 15%. You are simply going to start with the question: “What can we do to reduce your bill by 15%? I want to keep doing business with you. Please help me.” Don’t take no for an answer. Ask for a supervisor. Put the savings to actual savings. That is the real bottom line.
3. Automatic Savings. Everyone talks about “paying yourself first.” It’s the hardest things to do until you make the decision to do it. You can do automatic savings thru work or your checking account. It is the most organized way to pile up savings (faster than you think). Do your research. Make sure your bank is FDIC-insured. Look for the highest rates on money market savings. Don’t just leave this in some local bank account getting .0000234% interest.
4. Emergency Savings Fund. In today’s world you should have a 15 to 18 month emergency savings fund. That means 15 to 18 months of expenses in savings incase you are laid off from work or experience one of the many other things YOU WILL EXPERIENCE over time in today’s world. With automatic savings (see #3), you can build savings faster than you think. You just have to get started!
5. 401k. This is a savings vehicle that is best judged over a thirty-year period of time. If you are not doing this today and your company offers it, you should begin —- even if you start with a 2% contribution. We are big believers in STARTING. Don’t wait. Go, go, go!
6. Roth IRA or Traditional IRA. If you qualify for the Roth IRA, you should do it. Yes, in addition to the 401k. If not, go traditional. Do your research on the internet and always look for low fees. Low, low, low is the way to go.
7. Negotiating. In the old days (the 1990’s), it was okay to be a little shy about negotiation. You are standing in front of someone selling you a product. They are applying a certain amount of pressure (as they have been trained to do). You blink. That’s the way it has always worked, right? No, we now live in an era of the CONSUMER. You must do your research before a purchase. You must seek multiple places where you can get the same product. You must make them emotional. You must frame the issue so you can gain the advantage ahead of time. Eliminate emotion and time table from your purchases (patience) and you will save THOUSANDS.
And put that money in savings.
Now get out there and save and invest like a smart consumer (remember to do your research first).