smart spending

15 money moves for tough times

While economists debate whether the country is in a recession, consumers are being buffeted by skyrocketing prices, growing debt, layoffs, the subprime lending squeeze and a stock market roller coaster.

While you may not be able to control the price of oil or the prime rate, there are some simple things you can do to shore up your finances, safeguard your future and ride out whatever the economy throws at you.

Here's a list of ideas that hopefully will help you get through any hard times, plus tips if the hard times have already hit your household.

1. Eliminate the nonessentials.  One way to avoid putting spending on automatic pilot: Write down everything you buy and the price. Then go through the list and "be brutal," says Nancy Register, associate director for the Consumer Federation of America.

Ric Edelman, CFS, RFC, and author of "The Truth About Money," agrees.

"You need to make sure you're not spending any money that doesn't absolutely, positively need to be spent," he says. "A lot of people are spending money frivolously on wants they consider needs."

If you have kids, "It's a great time to explain wants versus needs," says Linda Sherry, director of national priorities for Consumer Action.

2. Start a go-to fund for emergencies.  The average family will face up to $2,000 a year in unexpected bills, says Register. For families already stretching to pay the bills, those surprises can trigger long-term financial problems. While you can't plan what or when, you can have money set aside just in case.

"You need to really boost your cash reserves," says Edelman.

His recommendation? Aim for one year's living expenses in an assortment of liquid vehicles, like a bank account, money market account and short-term CDs.

One way to kick-start that fund: Shave off 10 percent of your take-home pay every time you get a check, says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling.

Keep it liquid and make saving automatic. Look for a money market account that pays the highest rate you can find, says Register. Want to make sure you're consistent? Arrange to have the money deposited electronically.


Deposit any "extra" money you receive, like that birthday check, bonus, tax refund or raise.

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