Nearly two million jobs have been shed since this recession began last December, and the employment picture seems to keep getting worse. In fact, November was the worst month for job losses in over 30 years, with more than half of a million jobs lost. If you're worried about keeping your paycheck, your investments might be taking a back seat to more immediate concerns.

Almost paradoxically in light of the economy, now seems like a tremendous time to invest, thanks to the stock market meltdown that's accompanying the general economic malaise. But if the only cash you have available to invest is money you might need to use to cover your living expenses if you lose your job, investing it now might still be a really bad idea.

First things first
The reason is simple: If you're forced to liquidate your holdings to pay the bills, there's still no guarantee that you'll be able to sell your stocks for more than you paid. As a result, investing now without having the rest of your financial life in order puts you at serious risk of buying low -- and selling lower.

So before you start -- or resume -- investing in this market and economy, you absolutely have to get the rest of your financial house in order. You should:

  • Pay off all your debts, with the possible exceptions of your mortgage and your student loans (depending on their terms).
  • Stock an emergency fund with at least three months of unemployed living expenses, including the additional out-of-pocket costs of health insurance you'd have to cover.
  • Build a savings plan for big ticket purchases you plan to make in the next three to five years. Plan to cover those costs with saved up cash, not stock market capital gains.
  • Live on a budget that spends less money than you make, so that you can reliably have cash available to invest.

Why it matters
Even this far into the current market meltdown, investing in stocks has been a tremendous way to build wealth over the long term. If you're looking to fund your retirement, for instance, your working career can easily span four decades. Looking back over just half that amount of time, check out the money you could have earned by investing:


$1,000 Invested 20 Years Ago Became*


Disney (NYSE:DIS)






British Petroleum (NYSE:BP)



General Electric (NYSE:GE)



Lockheed Martin (NYSE:LMT)



Pfizer (NYSE:PFE)



PepsiCo (NYSE:PEP)



* Assumes reinvested dividends, as of Dec. 5.

Even better -- those companies' four- and five-star CAPS ratings indicate that many of the top-rated Fool investors expect them to perform well in the future, too.

Of course, nobody is going to retire from a single $1,000 investment. It takes multiple contributions to your retirement accounts, made regularly over the course of your career, to amass the kind of nest egg needed to live your golden years in comfort. And to reliably make those contributions, no matter how the rest of the economy is doing, your own financial house needs to be in order. That's as true today as it was twenty years ago and will be twenty years from now.

Start early & well
Reliable, consistent investments, made regularly and over a long period of time. That's the method by which anyone who starts young enough can wind up a millionaire. The toughest part is getting started while you're still young enough to let time work its magic. Having an early, firm grounding in how money and investing works is the missing link in most people's lives.

That's why The Motley Fool has partnered with to fund classroom projects specifically geared to helping at risk students learn financial literacy. Every project that reaches a student improves that student's chances of getting the right start. And with a strong foundation in place early, there's no limit to how wonderful their poverty-to-prosperity stories can be.

If you yourself got a late start investing, then you know from firsthand experience how important those early years are. To help the next generation get started on the right footing, simply click here to see the projects that the Fool is sponsoring, and when you've found one you like, donate. If your donation doesn't fund a project, it is pooled with the cash from other donors until the project is completely covered. Every contribution, no matter how small, is appreciated.