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 | Ted Zale

Create an emergency fund

Ominous headlines about layoffs. Soaring prices at the pump. “For sale” signs and plummeting stock markets. Everywhere you turn lately, you see a test of your financial faith. Never fear. Here are common-sense tips to survive the current money crunch:

Create an emergency fund. This is called stress relief. Stock away enough cash to cover six to 12 months of bills and, suddenly, the swirling economic uncertainty doesn’t seem quite as scary. Don’t approach this money as an investment meant to yield high-interest returns. It’s a savings account, plain and simple. Stick it in a money market account, a short-term CD or any dependable option you can access quickly. Avoid the temptation to make this cash “work for you” by tossing it into the stock market. The emergency fund does its job by helping you sleep at night. “One of the sad things about our country is we do not have a high savings rate,” Zale says. “It’s even more critical in tough times.”