5 ways to protect your finances

If you're feeling less secure about your financial situation these days, you're not alone. Job losses, stock market gyrations, tighter credit and Congressional debates about the economy have made many people anxious about their finances. Fortunately, there are some smart ways to respond to uncertainty about today’s economy and even find new opportunities.

To get started, here are five specific steps you can take to protect your finances right now:

1. Prioritize your goals.
Focus your attention on your top financial priorities. In uncertain financial times, it’s important to consider what matters the most to you, whether it's building up an emergency fund, buying a house, saving for your children's education or investing for your retirement. Now’s a good time to make sure you're on track to achieve those major objectives. You might want to open a new savings or investment account to put aside the money you'll need in the future.

2. Revise your budget.
In today’s economy, a household budget can help you economize and save money for your short-term and long-term goals. If you haven't updated your budget for a while, get out your receipts, checkbook and credit-card statements, review your expenses and reprioritize your spending. If you can save even a little more each month, you'll be that much closer to your goals and you may feel more financially secure.

3. Make sure your accounts are insured.
The Federal Deposit Insurance Corp. (FDIC) is a government agency that insures bank accounts against the possibility of bank failure. Financial institutions pay the premiums, and you get the protection. Most accounts are covered, but there are limits and not all financial products that you can get at your bank are FDIC-insured. Call your bank to make sure your accounts are in order, so your savings will be 100-percent protected.

4. Reduce your risk.
If you've set aside savings for an emergency or short-term goal such as buying a home within the next few years, you might want to invest that money in safe FDIC-insured accounts and deposit certificates (CDs) that won't suffer capital losses. If you’ve put money that you won't need within the next few years into other investments, don't obsess over day-to-day ups and downs in your accounts.

5. Monitor interest rates.
Keeping a close watch on interest rates can help you manage your money more effectively because interest rates affect the finance charges you pay on your credit cards, car loans, mortgage, home-equity loans and other debts. If interest rates fall, you may be able to save by negotiating lower rates or refinancing your mortgage. If rates rise, you may want to put more money into interest-bearing accounts. Review your mortgage and make sure you understand whether your interest rate can be adjusted and if so, when and by how much. If you have reasonably good credit and at least some equity in your home, you may be able to refinance at an affordable interest rate.


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