7 Savvy Money Moves in a Scary Economy

The day-to-day demands of life with little kids don't leave us with much time for things like budgeting, plotting saving strategies, and making long-term financial plans. How much should you save? When is it safe to spend? Does putting money in the stock market still make sense?

No easy answers here, but if there's one thing the Great Recession has taught us, it's the critical importance of being a smart consumer. "People who are in a strong financial position can use rough times to their advantage and possibly even come out in better shape than they were in before this difficult stretch," says Bill Galvin, a certified financial planner with the Capital Management Group, in New York City. And even people who've lost a job or their home can take steps to avoid further problems. These seven strategies can get you moving in the right direction.

It's hard to think about increasing your savings when your expenses are growing. But many experts now say that you should have six to nine months of living expenses in your emergency account. "The idea is to have a cushion in case someone loses a job," says certified financial planner Eleanor Blayney, the consumer advocate for the CFP Board and author of Women's Worth: Finding Your Financial Confidence. Saving such a sum is easier said than done, but think of it as a goal to work toward and start taking steps in the right direction.

The ups and downs of Wall Street may make you skittish, but the stock market still provides the best odds for your savings to grow over the long haul. "You don't hesitate to buy other things on sale, so why not buy stock when the prices are low?" Blayney asks.

If your employer offers a 401(k) or 403(b) plan, be sure to enroll and aim to contribute 10 percent of your income -- or at least the maximum amount your employer will match -- generally a 50 percent match to up to 6 percent of your salary. If you don't have a workplace plan, open an Individual Retirement Account (IRA), which, like a 401(k), gives you a tax break on your money. Instead of choosing individual stocks, invest in mutual funds, which are a mix of different types of stocks, bonds, and other securities. (To learn more, check out personal-finance websites like bankrate.com.)

Look closely at your quarterly statement so you know what's happening to your money, but don't panic if you see share prices falling and your savings seemingly dwindle. "If you're in your 20s or 30s, you have time for your investments to recover," Galvin says. That may not be the case when it comes to savings earmarked for college. Depending on the age of your child, you need to be careful about how much of your cash is invested in stocks. One option: Save in an "age-based" 529 fund that automatically shifts to more secure investments such as money-market accounts and bonds as your child gets closer to college age.

Like everyone else, major banks have been hurt by the economic downturn -- and by tougher new banking regulations. Now, as the economy recovers, they're looking to recoup their losses. For consumers, that may mean higher fees on checking and savings accounts, bigger minimum-balance requirements, and larger penalties on late credit-card payments.

Find out what your bank is charging you by carefully examining your monthly statements, reading all notices you get in the mail or via your online-banking in-box, or calling customer service and asking directly. (This same advice applies to your investment accounts, which also can have hidden fees.) Shop around to see whether you can get a better deal. Many experts say that one smart way to cut banking costs is by using smaller community banks and local credit unions, where fees tend to be lower than those charged by major banks.

With so many Americans in debt, new businesses are popping up every day offering to help consolidate and reduce your payments and/or repair your credit score. Their promises may sound tempting, but if an offer sounds too good to be true, it's probably not legit. "These are largely unregulated businesses, and there are a lot of scams out there," warns Blayney. Unfortunately, there's no quick fix for a low credit score; repairing your credit report takes time. Also beware of companies that offer to consolidate your debt and negotiate with your lenders so you don't have to pay your credit-card bills in full. Even if they can reduce the amount you owe, you'll be paying for it in the form of fees to the consolidation firm -- and a severely damaged credit score. If you want professional advice on debt repayment, you can find help through the National Foundation for Credit Counseling (nfcc.org,), a nonprofit consumer-education organization based in Washington, D.C.

In a volatile economy, a regular paycheck is the best way to get financial peace of mind. If you have a good job, do whatever you can to keep it: Volunteer for new assignments; work hard to gain the respect of your colleagues; be a team player; and don't be seen as the office gossip or complainer. Most of all, seek out opportunities to expand your responsibilities and develop new skills.

The nation's economic downturn exposed the fact that most of us never got a practical education in financial planning. "For many people, the first time they give serious thought to their finances is when they are in trouble," says Vince Shorb, spokesperson for the National Financial Educators Council. The good news is that lots of resources are springing up to help teach basic financial skills and how to think about money in a practical way. Take advantage of every opportunity you can find to increase your financial literacy, but be skeptical of advice that comes from someone who is trying to sell you a product -- or who stands to gain in any way from a decision you make. "Work hard to find trusted advisors whom you can turn to for unbiased advice," Shorb says. "Your goal is to be in charge of your finances, not have your finances control you."