Tips for Maintaining Financial Stability

There are few things more stressful than worrying about whether you will be able to put food on your table or keep a roof over your head. In these difficult economic times, more of us are sharing that concern. And while we may not have control over the global economy, we can take steps to take control of our personal finances.

Here are three basic tips for stabilizing your finances to help get through these tough times.

1. Create a Household Budget

It is more important than ever to have a budget, so you can see more clearly where you might be able to cut back if necessary. To do this, you need to identify your sources of income, including your wages or salary, Social Security or pension benefits, and child support.

Next, identify all your fixed and flexible expenses. Fixed expenses include your rent or mortgage, credit card payments, insurance costs, and utility bills. Flexible expenses include food and entertainment as well as other discretionary spending like cable television, cell phones, and holiday spending. You can find ways to reduce or eliminate flexible expenses with some thought and effort. The goal is to balance your income with your expenses, and try to have some money left over for savings or reducing debt.

Once you create a basic budget, you can then set more ambitious financial goals. The federal Securities and Exchange Commission (SEC) provides a roadmap to help you set and meet your financial goals.

2. Build an emergency fund

Once you have a household budget, start cutting costs wherever you can, and use any savings to build an emergency fund to pay for unexpected expenses.  A financial cushion of at least 6 months of living expenses will give you some peace of mind in the event of a job loss or a medical emergency. Avoid the temptation to tap into your fund except in emergencies, and revisit it each year to make sure it still is enough to cover your costs if necessary.

3. Eliminate your debt

This is the simplest, but perhaps the most difficult tip. The first critical step towards eliminating credit card debt is to stop using the cards. Next, identify your highest interest cards and pay them down first.  Call your credit card companies and request lower interest rates. If you feel your debt has grown beyond your ability to manage, contact a credit counselor- but beware of scams.  The New York State Banking Department provides guidance on how to get out of debt safely, and can connect you with approved counselors to help you solve your debt problems. You can also call 1-877-BANK NYS for assistance.

Taking these three basic steps will set you on a course for financial stability. There are additional resources to help you with this goal, outlined below.

Free "My Money" Tool Kit

The federal Fair and Accurate Credit Transaction Act (FACT Act) established the Financial Literacy and Education Commission to improve the financial literacy and education of United States residents. This is done through a "My Money" website and a toll-free telephone number (1-888-MYMONEY).

The program provides access to money-related materials and resources from federal agencies that deal with financial issues and markets. Information is provided to assist consumers with: budgeting and taxes; credit; financial planning; home ownership resources; kids; paying for education; privacy, fraud and scams; retirement planning; saving and investing; and starting a small business.

The program offers a “My Money” Tool Kit you can order by calling 1-888-mymoney (or 1-888-696-6639). The tool kit is free, and contains the following publications:

• Consumer Action Handbook – This 182-page guide provides helpful tips on how to be a smart shopper, prevent identity theft, understand credit, file a consumer complaint, and much more.
• Roadmap to Saving and Investing – This resource from the SEC provides helpful tips and worksheets for setting financial goals, creating a financial plan, and getting started with investing.
• Consumer Information Catalog – This catalog lists resources that you can order related to money, housing, employment, federal programs, and many other topics that are either free or available at a low cost.
• Money Smart – This guide introduces you to the Federal Deposit Insurance Corporation’s (FDIC's) financial education program, which has helped more than 2.4 million adults improve their financial skills.
• Your Investments – This guide provides advice on questions you should ask before investing and what to do if you run into problems.
• Social Security: Understanding the Benefits – This booklet provides details on retirement, SSI, disability, survivor's benefits, Medicare and more.
• Higher FDIC Insurance Coverage – This guide outlines the new, temporarily higher bank deposit insurance coverage provided through FDIC-insured banks, including how to make sure you are covered.

Additional resources

• More information and resources to help you manage your money are available at the federal government's financial education site, called mymoney.gov.
• You can access a free adult financial education course (available in English and Spanish) from the FDIC.
• The Federal Trade Commission (FTC) also provides resources on how to save money and how to save money at the gas pump.

 

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