ProBudgeting.com

Unemployment is on the rise and the stock market is down.  Your 401k has taken a hit and you don’t know when you are going to get a pink slip.  So, how do you manage your money in these circumstances?

First of all, find out how you can change your investments to safer ones.  Some 401k funds offer guaranteed dividends at a much smaller interest rate than you are used to but then there is no possibility of taking a hit from a drop in the market.  Even if you don’t put all your money in the safe place, you might want to change your ratio of safe to risky.

Secondly, if you have never started saving, this is the time to develop a new habit.  If you do lose your job, you will be ever so grateful for every penny you have on hand.  Along with attempting to put at least something from your paycheck in the savings account, get everyone in the household to put their pocket change in a jar every day.  In a month you might have as much as $25.  Don’t take it to the cash machine at the grocery-they will take some of your savings.  Instead, get the rolls from the bank and roll the change yourself.

Third, this is also the time to get credit cards and other loans paid off as quickly as you can.  The only thing worse than facing unemployment, is facing unemployment accompanied by a huge credit card bill.  If you have a loan on your vehicle, put even $10 extra on per month.  This will reduce the amount of time you will be paying on this loan because extra money pays down the principle.

Fourth, if you haven’t gotten this figured out, spending habits have to change.  There are actually lots of free or cheap options that can be fun for shopping and entertainment.  Try your local public library; they often have movies you can check out free.  The move to digital television has benefited those who don’t have cable; there are more channels than there used to be.  It’s not quite as big a loss to dump pay TV.  Thrift stores are great when you have that desire to go shopping but you want to stay in a budget.  You can get a whole outfit for less than $10! And you can find movies, books, and board games for cheap entertainment.

Before this economic crisis, we told ourselves that we needed a lot of things:  new clothes, a big SUV, the latest cell phone technology, the famous chef’s fifty-piece kitchen set, and so forth.  Now we are beginning to realize that we can do without a lot of what used to seem a necessity.  Remember that you have been brainwashed in a materialistic direction, so before you swipe that credit card, ask yourself, “is this item really necessary?”