By Jeanne Sahadi, CNN

(CNN) — With so many unsettling things happening beyond your — or any individual’s — control, it sometimes can help to proactively do something concrete that would be helpful to you and your family.

Take, as just one example, the state of the US economy. There is no shortage of confusing signals and analysis. Is it in a recession, edging towards one, or on the verge of recovering from one? Or — extra fun — are we in for a protracted period of stagflation?

Whatever the answers (which may only be confirmed — annoyingly — in hindsight), you can take steps now to shore up your own personal safety net to protect yourself and your family against potential headwinds and unwelcome events.

They all come down to figuring out what is true about your life as it is today. Here are four suggestions:

No. 1: Get clear about your spending

You may feel a little better if you quit doom scrolling and instead begin “focusing on your personal economy, not the macroeconomy,” said Douglas Boneparth, a certified financial planner and founder of Bone Fide Wealth.

By that he means your household finances.

For starters, Boneparth recommends getting a realistic assessment of how much your monthly outlay is for essential living expenses (e.g., housing, utilities, food, health care, debt payments) versus those expenses that you could forgo if push came to shove.

The total for your essential expenses is what will give you a reliable sense of how much you may want to set aside for emergencies like a layoff — or, if that’s not possible, at least have available to you (e.g., through a home equity line of credit).

How many months of living expenses you’ll need depends on your circumstance: For instance, are you the sole breadwinner? Do you have kids? Are you just starting a new business that won’t generate income for a while? Are you working in an industry where it’s hard to find a new job quickly? Are you likely to get some severance?

For most people, the range of living expenses they might want available just in case might be anywhere from three months to a year.

If you’re a new or soon-to-be retiree, knowing what your essential expenses are also will help you determine how much to have in a liquid account that you can draw on for income when the market is down and you don’t want sell assets and lock in those losses from your investment portfolio.

No. 2: Review how insured you are

Unwelcome events — like illness, disability or death, or natural disasters — will happen at some point. But no one can know exactly when or who will be hit next.

That’s an argument for insuring against the financial fallout from such events for yourself and those you (someday will) leave behind.

Whether you need a given insurance policy – and if so, how much – depends in part on where you are today.

Take life insurance. It may be essential if your children are young and you still are carrying a big mortgage or if you bring in the lion’s share of your family’s income.

But if your kids are launched and your house is paid off — or you don’t have kids and you only support yourself — you might not need it at all.

Figure out, too, how much insurance coverage you have if you become disabled and can’t work for a spell. This coverage is a must for many, regardless of whether you support others or just yourself. Such insurance will replace a portion of your salary over a specified period of time. Often, employers provide some disability coverage to you as part of your benefits package, but you may be given the choice to augment it for a monthly cost if you think you would need more.

Also consider whether your current home insurance policy sufficiently insures you financially in the event of extreme weather events that could destroy your home or possessions.

No. 3: Revisit how much risk you’re taking

US stocks have been doing very well. Despite plunging in the wake of the April announcement of the widely criticized Trump tariff regime, they have more than recovered, with the Dow, S&P 500 and the Nasdaq all hitting record highs recently.

That trend won’t last, of course. It never does.

And that’s not a bad thing, Boneparth said. “You can’t compound returns over time without (there being) volatility and down markets. You have to be willing to go down 35% sometimes to go up 300% over time.”

That said, how much actual risk you’re taking in your investment portfolio today — in terms of your exposure to equities and alternative investments like crypto or real estate — should match your current ability and willingness to take that risk. “What felt fine in 2020 might feel reckless in 2025,” he said.

For instance, those in their 50s and 60s are now five years closer to retirement. You still have decades to be invested, assuming you live into your 80s. But you don’t have decades to go before having to tap some of your investments.

Or, whatever your age, you are now five years closer to a specific goal that once may have seemed far off, like sending your child to college or buying a house.

In addition to considering your time horizon, Boneparth said, the right amount of risk to take has to strike a balance between a) how much is needed for your investments to meet your long-term goals (eg, hiding in low-yielding cash assets likely won’t cut it); and b) how much risk you can handle emotionally without panicking when a bear market or recession hits, or stocks drop like a stone in response to shock events.

No. 4: Create a roadmap for those who will take care of your affairs

If you want your loved ones to remember you fondly, one thing you can do now is compile a list of all the locations, passwords and account numbers for your insurance policies, credit cards, email and social media accounts, as well as bank, brokerage and retirement accounts. Also include contact information for the people whom you’ve dealt with in relation to those accounts and policies.

But keep it all in a secure location.

“I have a letter in our safe called the death note,” Boneparth said.

The idea isn’t to be morbid. It’s simply to minimize the time and frustration of someone else having to manage your digital and non-digital life after you’re gone or if you become too incapacitated to handle things yourself.

Whatever you do, pace yourself

Reassessing and making changes to anything having to do with your finances takes energy and time.

The key is not to get overwhelmed and think everything has to be done all at once.

On the contrary, Boneparth suggests, aim “for progress over perfection. Give yourself some grace and start with what’s easiest for you. Get that win. Then (that can help) build momentum.”

The-CNN-Wire
™ & © 2025 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.