Why Prepare For Economic Uncertainty?

Too many people live day-to-day on paychecks and have no preparations or planning for any uncertainty in their life.  Heck, an individual with a $5,000 emergency fund is considered "extreme."  The reality is that until recent decades, preparing for economic uncertainty was a very common practice.

People used to save money, they used to keep extra items, and they used to be proactive about their self-reliance.  Unfortunately, today, people's lifestyle and personal finance style is more characterized by debt, living paycheck to paycheck and being dependent on the overall "system."

It is absolutely crucial that you and your family take even basic preparations to secure your well being.  There are simple measures that you can take in order to make enormous progress in this area.

I recommend you talk to your spouse and family members about taking the following actions:

1. Cut your lifestyle spending by 10-15% so that you can ramp up savings by that much more - You need emergency cash representing 6 months to a year of regular expenses in my opinion (also keep some of this fund in actual cash at your home).
   
2. Consider scaling back some of your winning stock positions that have done well in the stock market rally since March 2009.  Taking profits is never a bad thing.  It's not necessary to sell your entire position but maybe taking some money off the table will help you sleep better.
3. Work on a second income stream.  Diversifying your income is probably the best thing you can do to prepare for uncertainty, yet it's also probably the least pursued option by the masses.

By taking the above steps or some of the above steps, you can better position yourself financially for a downturn in the economy.  Take action now while things seem to be working for you and your family.

If you're currently unemployed, work hard to regain your income and then implement the above steps.

What are you doing to protect yourself from economic uncertainty such as unemployment or a stock market crash?