Money Management 2009

The news seems to go from bad to worse. For months now, interspersed with the generally bad state of the economy and stock market, we also learn that even the rich and their accountants aren’t above being taken in scams that were probably too good to be true if looked at closely enough. While there may be a slight element of schadenfreude in this, it should equally be a wake-up call that in the current economy, it is more important than ever to make sure our assets are appropriately invested and protected to the best of our capabilities.

Anyone who still has the luxury of being able to maintain any kind of retirement account should not only contribute the maximum amount possible, but also keep a careful eye on where and how the money is invested -- especially if one’s employer is kicking in any money at all to a 401K. If possible, have a trusted accountant review the ratio and investigate what recourse exists if you are uncomfortable with the mix. Often there is no immediate way to change the situation, but when that time does come, it is best to be prepared with what you want to do.

It is equally wise in the world of money management never to keep all your eggs in one basket. While 401Ks have traditionally been the best source for retirement funds because they take the money out of our paychecks automatically and before taxes, thus saving us time and effort; it is best to make sure to have a backup plan -- especially in this precarious economy. More staid investments such as IRAs, CDS and even savings accounts do not bring the high returns a successful stock portfolio can, but they also have considerably better security for the money that is invested.

There is also a new phenomenon building in the market-- high interest savings accounts. These accounts usually require a substantial minimum deposit, with comparable penalties for closure. Different companies will have different requirements, but these are also worth looking into as a way of maintaining your current finances and planning for the future.

The main point is to be alert. The days of assuming our money will take care of itself are gone. It is important for us to carefully manage our finances, to monitor our credit reports, avoid identity theft, and ideally have enough in savings, CDs or IRAs to cover our retirement as well as any unexpected calamities.