The Tipping List
Economy Scrambling Your Savings?
5 Easy Ways to Keep Your Nest Egg Smelling Sweet in a Rotten Economy
Watching your 401(k) go down like the Kraken taking down the Black Pearl? You aren’t alone — lots of us are watching as the stocks plummet, taking our nest eggs with them.
Or, we are watching as the big banks fail, wondering IS MY BANK NEXT?
Some of us are even cooking up a grand old omelet of panic, with bits and pieces of our finances scattered everywhere (don’t get me wrong — you should be very diversified, but still).
If you are like me, one of the aforementioned panickers, settle yourself.
Here are five easy ways to protect and even grow that nest egg during tough times.
1. Don’t panic.
Even if your stock portfolio or 401(k) has nose-dived, it will bounce back – as evidence by the 500-point stock market bounceback the day after the economic bailout plan failed to pass. Your bank will be protected, and you can protect yourself further by moving money around – not removing it from the system, but by creating more accounts that fall within FDIC insurance limits. Don’t liquidate your 401k and don’t pull your money from the banks – those are still the best places to grow your savings.
2. Keep saving.
It’s always a good time to save – even when you feel like you just can’t. A measly $5 a week counts as saving – don’t think that just because you can’t commit large sums to your savings account that it doesn’t make a difference. This is one case where every little bit truly counts. Just make sure you are saving in an account that offers you the highest interest rate possible. (Bonus tip: check out some of the online banks like HSBC – they are offering up to 4 percent interest in some cases!) And consider the new programs being offered at some banks that automatically transfer money to your savings account each time you make a purchase – you’re saving without even knowing it!
3. The market is a LONG TERM investment.
Your stock values have probably increased and decreased a thousand times since you first got involved, while always coming out to a relatively stable place. It can be terror-inducing to look at that 401(k) statement and see the loss, but the very nature of the market says that the losses will come back – it’s like a scab; just leave it alone and the injury will heal. You may even find that the bounceback leaves you with an even bigger piece of the egg-salad sandwich than you anticipated!
4. Take a hard, honest look at your finances.
Really examine where you are spending, what things are “needs” and what things are “wants.” Do you need or want that latte? Do you need or want to go out to lunch? These are excellent ways to nickel and dime your way out of significant savings. Five dollars every day on a coffee is $25 a week – and almost $100 a month. I don’t know about you, but that’s a lot of money to me! I’d much rather have that in the bank than in my belly. (That’s not to say I give up my precious coffee, but I do drink the office coffee now.)
5. Keep paying down your debt, no matter what.
The Fed has lowered interest rates, which means that in many cases, you can pay off certain debts even quicker than before. So keep socking money at them. The sooner you get those debts paid, the sooner you can throw that money into growing your nest egg. And, as everyone always says – negotiate your interest rates. Now more than ever, lenders don’t want defaults showing up on the books, so they may be a little more amenable to lowering those rates. That’s more money in your pocket – and in your savings.