KANSAS CITY, Mo. – If you are like most families, you are on a tight budget in this recession.
But you can help change that and still keep the family going while being able to find a little cash for yourself.
Heather Davis Richards from Essential Knowledge says there are five things you can do to help plan for the future.
1. Have an emergency fund
An emergency fund is a reserve of cash that you can dip into when an emergency comes up.
It is money that you can use to tie you over if you lose your job, or that you can use to make unexpected car repairs.
2. Diversification and Liquidity in savings
The basic purpose of diversification is to reduce your portfolio risk and volatility. It's primarily a defensive type of investment policy
A diversified portfolio is capable of weathering varying economic cycles and improving the trade-off between risk of loss and potential return. Of course, diversification cannot entirely eliminate the risk of losing money.
3. Pay yourself first
The best way to do this is to establish a budget based on your available income.
Experts say the amount should be placed aside in some sort of savings or investments plan. With time this amount will grow larger and eventually grow to an amount you can allocate to some type of investment.
The also say by paying yourself first, it gives you a rewards of sorts because it will allow you to do things you may not think you have the money to do.
4. Manage the big expenses first. Don’t spend all of your time managing the small ones
First, deciding which expense is "big”.
Second, introducing subjectivity opens you to the temptation of ignoring a shameful splurge at the mall or the "it's a million-in-one chance" loss at the slots.
Third, you'll be surprised how much "small" expenses, like the daily coffee or tolls or cell-phone overcharges, add up.
5.Don’t ignore easy saving opportunities
That idea includes keeping a part of your money in a savings account, putting it into an 401 (k) or investing in stocks or mutual funds.
Even if you do not have a lot of cash to put into them, every little bit helps.
