Five ways to weather the financial storm

Times have been tough for the U.S. economy over the last few years, and the debt ceiling issue has not made things any easier. However, there are ways to help make sure that you don't end up on the rocks in the financial storm.

"Having a sound financial strategy is one way to survive the many ebbs and flows of markets and investments," says David Lerner, owner and president of investment firm David Lerner Associates, Inc. "There are definitely strategies that may help ensure you make it through the tough times."

Here is some sound advice to help you stay the course:

1. Know your finances

If you aren't sure, or only have a vague idea where your money is being kept and where it is invested, you should immediately find out. Know what bank accounts hold your funds, and what they are earning. If you have a pension, know where it is, how often it is supposed to pay and the state of the company hosting the pension. Know where you money is invested, and keep good tabs on how those investments are performing. In short, know your finances.

In addition to knowing the whereabouts of your finances, get to "know" or understand your investments before investing. Consider, among other things, the risks inherent in investing prior to agreeing to invest.

2. Diversify

A balanced portfolio is usually considered the most prudent strategy in investment. There are many ways to invest, from stocks to commodities, from hard assets to real estate. It is well worth a comprehensive dialogue with your investment counselor - and some good homework on your part - to do all you can to see that your portfolio is appropriately diversified and designed to fit your financial needs and goals. In times like these, perhaps a conservative, long-term investment that pays regular dividends should be part of your portfolio.

3. Have adequate insurance

As we all know, life can take unexpected turns. Part of weathering a financial storm is to take care that your assets - and these include you and your loved ones - are properly insured. Home and vehicle insurance are a given, but don't forget life insurance, disability and long-term care in case they are ever needed.

4. Have an emergency fund

As many have discovered through the turmoil of the last several years, steady employment can quite suddenly disappear. For such eventualities it is wise to have - and regularly pay into - an emergency account that isn't touched unless absolutely needed. In the current financial climate, most experts recommend such a fund be able to support the primary earner or earners, along with dependents, for six months.

5. Minimize debt

Every time you purchase a product or service on credit, you are deepening your financial liability. When hard times strike, that liability can be overwhelming and can mean foreclosure, bankruptcy or worse.

"Don't spend what you don't have" is an age-old and very sound financial adage. Use cash for purchases whenever possible. The bank can't foreclose or take away anything that you own outright.

Applying these five methods can help you find your way to a more secure financial future through almost anything the U.S. government or the economy does.