AVOID HIGH COSTS
If things do get rough, avoid high-cost
alternatives to get cash.
That means no running up high-interest credit
card debt, using payday loans with astronomical
interest rates or withdrawing retirement funds.
These can often leave you in a worse position
than you started thanks to fees, interest
and more.
For those tempted to touch their 401(k), think
twice: You’ll get cash but you’ll also get hit with
penalties and steep taxes. You’ll also lose out
again later when it’s time to retire and your
balance is much lower.
If you are over 59 ½ there are no restrictions for
making withdrawals from your IRA or 401(k),
so you can pull out some of that money for
emergency savings with less consequence than
younger counterparts. But Beasley suggests
doing so in small increments as needed, to avoid
spending down your nest egg.
IGNORE THE GOAL
While some experts say to focus on the goal,
if you are just getting started that may be
daunting. Instead, don’t worry as much about
the end goal as much as the practice of savings.
Even having a small amount of money can
help provide some cushion in times of need
— such as being able to buy groceries during
a quarantine.
“Every dollar you can set aside in savings is one
less dollar you will have to borrow in a time of
emergency,” McClary said.