A stimulus package may not happen real soon, so it’s imperative you take practical steps to grow your bank account.
Sharon Ko: It could take weeks or months for a coronavirus stimulus plan to get done, so deal or no deal a financial advisor goes over money smart rules to shrink your anxiety and grow your bank account. Rule number one, change your spending habits.
Karl Eggerss: I guarantee there’s going to be money that is leaking out into different areas. It could be that cup of coffee every morning on the way to work. It could be too many subscriptions to streaming services.
Sharon Ko: Rule number two, start a fund you can tap into.
Karl Eggerss: Oftentimes, I meet people that have a good 401K and they have their savings in their. They have a lot of money in equity in their home, and they’re really one accident away, or a job loss away from having some significant cashflow issues. In other words, their 401K isn’t really accessible until they retire or older, and their home isn’t accessible until they sell it, or move.
Sharon Ko: Rule number three, put your money on autopilot.
Karl Eggerss: Work backwards. Break it up into months, or paychecks, and then put it on autopilot. You’re bank can set it up to move so many dollars to your savings account.
Sharon Ko: Rule number four, set goals.
Karl Eggerss: The general rule of thumb is to put away about three to six months of your expenses into a liquid savings account, money market, something you can get access to. Let’s say you’re a one income household, and maybe you have a job that’s not so steady because it’s in a service industry, or you could lose your job, you may want six to 12 months.
Sharon Ko: And rule number five, pay down your debt.
Karl Eggerss: Think about your debt in relation to your rainy day fund. I oftentimes see people paying a very high amount of credit card interest, but they are sitting in a money market, or a savings account with a good amount of cash in the rainy day fund, and they really should be taking some of the money and paying down their debt.