Already have an emergency fund? If you have three months' worth of expenses saved up, consider boosting that to six months' worth. Set up automatic transfers from your checking to your savings account to build up your fund painlessly. Also, make sure bank fees aren't eating away at your stash. Online banks typically offer interest rates around 1% and no account minimums.
5. Protect what you've got
The role of insurance is to protect you against catastrophic losses. It's not meant to cover expenses you could easily pay out of pocket.
So ditch the cellphone insurance, and make sure you have the coverage that actually matters: renters insurance if you're renting (your landlord's policy doesn't cover your stuff), health insurance if you can possibly afford it (a high-deductible policy can get your premiums down), adequate liability coverage on your home and cars ($100,000 should be the minimum you buy; otherwise, buy an amount at least equal to your net worth).
If your employer offers long-term-disability insurance, sign up. If you have people who are financially dependent on you, such as minor children or a spouse who needs your income to pay the mortgage, you probably need life insurance as well.
All these policies can protect you or your family against financial disaster. If you're finding it tough to pay all the premiums, try increasing your deductibles on your property insurance to $500 or $1,000. Being willing to cover this much of any loss can lower your premiums by 20% or more.
Adequately covered? Boost your deductibles even higher, if you've got cash in savings to cover the bill in case you have to make a claim. And look into an umbrella insurance policy, which offers $1 million or more in liability protection. If you're a homeowner or have a teenage driver, this coverage can give you extra peace of mind for about $300 to $400 a year.
Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.
