riskBefore I get into the ways to protect yourself in a bad economy I want to share a quick story that happened to me not too long ago which prompted me to write this article. 

You Don’t Want To Fall Into This Position

About a year and a half ago, while I was still in financial services, I had received a referral from a client of mine who was looking for some financial help.  So I gave them a call and set up an appointment.

At the clients place I did a total financial review with the couple and in the end decided that buying some life insurance would be the best course of action for them.

In fact, the policies were only going to be $20 per person for $100,000 in life insurance.  These were very inexpensive policies and but nonetheless they would cover their needs. 

However, in this couple’s situation they had a lot of issues with money at the time.  They couldn’t even afford, or at least felt they couldn’t afford, the policies at that time.  I even advised them if they could just save a few extra dollars a week they would be able to pay for these policies.  We concluded the meeting and decided once they had taken care of their money situations we would set up the policies.

When I left that appointment I felt as if I should have tried harder.  Knowing that they didn’t have any other insurance in place, I knew all it would take is one disaster and they could lose everything.

About a few weeks ago, the couple called me back after a year and a half and asked if I could set that insurance policy up for them.  I informed them that I was no longer in the business, but I would refer them to one of my friends in the business.   After all, I was happy they had called back and decided that they should have the insurance.

However, this is where everything went wrong.  A few days ago, the wife had a stroke.  This just made a bad problem worse.  On top of a bad economy, job layoffs, and housing foreclosures, their problems shifted into high gear.

Unfortunately, this could have all been prevented but now that she had a stroke she may never qualify for a life insurance policy again.  I feel bad for the couple and wish I could have helped them. 

Why You Need To Protect Yourself

There are a lot of risks in the world and unfortunately we don’t have control over when or where it will happen.  As in the story above they didn’t expect in a million years that she would have a stroke.  That’s the way these things happen.

Risks come in all different shapes and sizes and the truth is that we can’t ignore them.  I know I’ve had my fair share of incidents, everything from the water softener going out to problems with the transmission on my SUV. 

Simply taking time now to prepare for them will lower the risk involved and make incidents like the ones mentioned go a lot smoother.  As I’ve always said, ‘Hope for the best, expect the worse.” 

3 Ways To Protect Yourself

Risk is lowered when you learn to minimize it.  If you protect yourself with the 3 ways I will talk about, you will be better off than most people in these turbulent times. 

So here goes.


This is obviously the first way to build protection.  The two types of protection I feel everyone should have are life insurance and health insurance.

Now, before I go any further I don’t want to make this some blurb about why you should buy insurance.  That’s not what I’m trying to do here.  I’m simply trying to make you more aware of your situation.

The thing about life and health insurance is that you don’t know when you are going to need it but I can guarantee you will need it at one point or another.  The truth is you will get sick and you will have to go to the doctor.  The same goes with life insurance, you don’t know when you will die but it will happen.

Now, I hope you don’t have to use them anytime soon but having them cuts the risk down.  With all the things you have to deal with in life, this is actually the easiest way of the 3 to protect yourself if you haven’t done so yet.

Emergency Funds

Having extra cash on hand for emergencies solves a lot of problems, period.  I learned this the tough way. 

When you really think about it though, an emergency fund is kind of like an insurance policy.  It’s not for your life or health but it is for those instances where you just need that extra cash for the unexpected.  Here are my recommendations of articles discussing emergency funds.

Your Business

How in the world can a business protect you?  Well, with an economy in shambles, having an extra income-producing asset is gold right now. 

Even a part-time business that produces an extra $500 a month can be enough to fight off recession fears and keep you from bankruptcy or foreclosure. 

Now, I’m not going to dive into any specific business opportunities here but you can check out some of the ones I recommend here. 

Not only does a part time business protect you from a cash shortage or the loss of a job but it has many other perks like tax advantages.  Even a part-time business is a good way to reduce your taxable income and free up some extra cash flow.

What Are Other Ways Do You Protect Yourself Form Risk

Got any ways you protect yourself in these turbulent times? I know there are a lot of other strategies, so let us know how you protect yourself.

This post was recently featured on The Carnival of Personal Finance by Money Ning.

About Christopher

Chris is a personal finance blogger with Stumble Forward helping people avoid life's financial mistakes and live a higher quality financial life.

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