Monthly Finance Message:

Proactive Financial Strategies for Uncertain Times

March 2013

Barbara O'Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

With a fragile economy, high unemployment rates, employee benefit cutbacks, and other negative economic realities, it seems like there is one source of financial uncertainty after another in many people's lives. Research indicates that "feeling out of control" is a major cause of unhappiness and stress. Most people don't like living without at least some type of game plan. That's why commuting always ranks high as a major source of unhappiness in life. Commuters often run into unplanned obstacles such as traffic snarls, road closures, and weather-related incidents over which they have little or no control.

What to do? Control what can about your personal finances and develop contingency plans for negative life events. Below is a description of six strategies to take charge of your finances during uncertain times:

  1. Program Your Dollars - Develop a spending plan (budget) where income is greater than or equal to savings plus household expenses. Rutgers Cooperative Extension has several online resources to assist with budget preparation. Download a worksheet that can be completed with a pencil and a hand-held calculator, or download a spending plan spreadsheet that uses pre-programmed Microsoft Excel® software to make income and expense calculations with a computer.
  2. Build Precautionary Savings - Having a chunk of money in the bank increases feelings of control during a financial crisis. Many financial experts today recommend holding more than the "standard" 3 to 6 months of expenses because it is taking laid-off workers longer to find new jobs. For example, eight months of $2,000 monthly expenses equals $16,000. Realistically, many people don't have savings anywhere near this level, but it is important not to give up. Any amount of savings is better than none and, the more money people have set aside, the bigger their "war chest" to tap during a financial crisis.
  3. Downsize Your Debt - A financial crisis event is less stressful when an individual or family isn't carrying a lot of non-mortgage debt and making payments equal to 10% or more of net (take-home) income. Pay off outstanding balances as quickly as possible. The Web site www.powerpay.org has a debt repayment calculator that shows the time and interest saved by accelerating debt repayment. Once debt is repaid, previously owed monthly payments can be reallocated to build up emergency savings.
  4. Build Human Capital - Do everything you can to make yourself "marketable" to employers in a tough economy. Learn new skills and cultivate new business contacts. In addition to keeping up with your profession or trade, invest the time to learn technological skills such as social networking and the use of a smart phone. Many employers now expect new and current employees to have these skills.
  5. Practice Healthy Behaviors - Like outstanding debt, health problems compound the effects of a financial crisis. Do what you can to stay healthy and avoid non-routine medical expenses. Eat nutritious food, exercise at least 30 minutes a day, lose weight (if necessary), and quit smoking (if applicable). Good health is an important part of a person's human capital. When people "invest" in their health, they reduce the risk of incurring expensive medical bills. If health insurance ends as a result of unemployment, seek alternative coverage through COBRA or the purchase of an individual health insurance policy. To keep costs down when income is reduced, consider purchasing a high-deductible policy.
  6. Develop a "Sideline" Source of Income - When you're concerned that your "day job" might end with a pink slip, it helps to have another source of back-up income. Investigate opportunities to freelance your skills during off-work hours and develop a base of satisfied customers. A sideline business can also provide an opportunity to learn new skills and expand your network. In addition, there are opportunities to save for retirement in tax-deferred savings plans for the self-employed (e.g., SEP and Keogh plans).


  1. Rutgers
  2. Executive Dean of Agriculture and Natural Resources
  3. School of Environmental and Biological Sciences