So the economy has taken a down turn. You've decided you might need to start saving some money. Well, it's too late. You should have been saving five years ago. But there's hope.
There's a Chinese proverb about the best time to plant a tree.
The best time to plant a tree was twenty years ago.
The second best time, is today.
The right time to save money was the time you got your first job. Whether that was yesterday, 5 years ago or 30 years ago, you should have started saving from day one.
Now what do you do? Start saving, dummy. You need money in a readily accessible form. A savings account at a credit union or good stable bank is the best place for this.
For your emergency fund, safety is more important than return. So instead of trying to get 4% interest from on online bank, getting 2% might be acceptable, if your money is secure.
How much do you need? I'm very conservative (smart) so I have at least 2 to 3 months in easy accessible savings. I also have a full years salary in savings. I keep my emergency money in savings account in a local bank. I keep the rest in a combination of CD's and online savings accounts.
This is not long term investment money, this is short term, the poop hits the fan money. If I lose my job or need money for any reason, I have it.
We also keep a ready reserve of cash on hand. You should probably have about $1,000 stashed somewhere in your house. I used to think this was foolish. However, if you bank shuts down over the weekend because the FDIC is taking over, you'll be glad you've taken the extra precaution.
I used to laugh at the old timers who were worried about bank runs and banks closing but now it's not so funny. When the government nationalizes the largest banks in the world, the laughter stops.
You may think I'm a bit over cautious. However, when bad stuff happens are you going to wait for the government to help you? Does Katrina ring a bell. If you're waiting for government to help you, you're going to be either dead or screwed.
The government can only provide you with subsistence living. They can give you food stamps but you're not going to be eating steak. They can provide housing but it's going to be a place you don't want to live in.
The Wealthy Reader Recessions/Depression Survival Savings Plan:
- Save 10% of your income (20% is preferable).
- Make sure your savings are secure.
- Keep cash on hand. At least $1000.
In the long run every thing will be OK. Take a few extra precautions and you'll come through this just fine.
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Comments
3 Comments so far
Excellent advise. It's great to see bloggers keeping their attention on the economy as we approach next week's election. It is, without a doubt, an important and complex issue facing our country right now. Here at Public Agenda we've put together an informative, non-partisan guide that focuses on the facts and the plethora of perspectives surrounding the economic debate in America. Be sure to check it out at http://publicagenda.org/citizen/electionguides/economy and feel free to contact us with any questions. The federal deficit clock is at $10.3 trillion, and is still ticking – learn more about taxes, spending and the national debt by also visiting http://publicagenda.org/citizen/electionguides/taxesdebt.
[...] READER: The Right Time To Save Money. Ok, back to Seriousville! This article kind of touches on what I try to teach my readers on a [...]
I found this article most excellent. I've also been doing some hard thinking about why I haven't really saved money in the past and you know what? I think it stems from the lack of knowledge from my parents.
I don't ever remember my parents saying to me that saving money at every chance I could would benefit me in the long run. I'm also a firm believer that if my parents would have sat me down and taught me more about money, and by that I mean saving, money management, credit cards….etc., then I wouldn't feel like I'm always living paycheck to paycheck.
I'm 42 so saving now is going to be a key goal for me, seeing as I have at least 30+ years left before I retire and make a good income from social security & savings. Sure the economy will straighten out and we'll get over this little recession which will help a bit but it's MY responsibility to do something about MY money management today!!
Thanks again for providing helpful information for us all.