Sep 30, 2008 8:09 pm US/Eastern
Protect Yourself During These Tough Economic Times
BOSTON (WBZ) ―
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The New York Stock Exchange (File Image)
Spencer Platt/Getty Images
When asked about the economy, Joan Green of Newton let out a screech. "Things are not great," said Green.
In this roller coaster of an economy, people want to feel safe. So how much of a financial cushion should you have on hand?
"Textbooks tell you three to six months (of expenses). I always tell my clients six months is a good number to have in liquid cash," says Debra Brede, a wealth management advisor who operates D.K. Brede Investment Management Company. "But it really depends on how secure your job is in this environment."
Brede says the best place for that safety net cash is a known institution's money market account or an FDIC-insured bank account. But she emphasizes this is short term safety money. She says long term investments should be left to ride out the turmoil.
She says if you're looking for ways to save, you need to scrutinize what you're spending by keeping a journal. "Most people when they find out where they're spending money they'll realize they can't account for five percent of their income."
Brede says many people don't maximize on their retirement plans or take advantage of their company's 401k match.
A financial cushion is one thing, but what if you have to borrow money? Now more than ever is the time to ask, "How's my credit?"
Ted Yoos of Cornerstone Financial Management suggests the following: You can find out your credit rating once a year for free at
AnnualCreditReport.com.
If you need to improve it-- first make sure you're making minimum payments on time.
Then use extra money to pay down debts.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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