Worried about what 2017 will bring? Six ways to help shore up your finances in uncertain times.

As we head into 2017, many of us are feeling apprehensive about what’s in store for our money. And I get that; there’s a lot up in the air: taxes, interest rates, health care choices and costs, the future of Medicare and Social Security, the list goes on. All of these things have the potential to impact the economy and the financial markets—and our wallets!

But here’s some good news. Even though we can’t predict or control the future, we can prepare ourselves by sticking to some time-tested basics of money management. Even as market forces change, these principles hold true. In fact, it is in times of uncertainty that they are probably the most valuable of all.

1. Don’t overreact. Regardless of what’s happening in government or politics, don’t panic. As an example, look back to the dramatic market decline of 2008. It was an extraordinarily stressful time, but the investors who suffered long-term were those who panicked and sold at a low. To illustrate, the S&P 500 Index climbed to 1,576 in October of 2007 and then when the recession hit, dropped by two-thirds to 676 in March of 2009. Almost eight years later (as of December 2016), we’ve not only regained all that ground, but are up over 40 percent from 2007.

In other words, when it comes to your money, your emotions can lead you astray. When we’re feeling confident, we tend to take on a lot of risk. When something happens to make us feel less confident, we retreat. Both reactions are human nature, but not prudent ways to manage your money.

Instead, take a hard look at your situation, your personality, and your goals—and choose your investments accordingly. Money that you know you’ll need in the next three to five years shouldn’t be in the stock market. And if you’re close to retirement, make sure you have a healthy cash cushion. Just don’t panic. 

2. Rebalance your portfolio. Periodic rebalancing is always important, but it’s probably even more crucial when markets adjust. This is because as “winning” investments gain in value and take up a larger portion of your portfolio, other investments shrink in comparison. This will change your asset allocation, potentially exposing you to increased risk.

As an example, let’s say that you’re a moderate investor with 60 percent of your holdings in stocks, 35 percent in bonds, and 5 percent in cash investments. When the stock market soars, you could find yourself with 80 percent stocks, exposing you to a much higher level of risk.

One way to help compensate is to sell a percentage of the asset classes that have performed well and use that money to buy more of the asset classes that have done poorly. This way, you're not only taking profits, you're actually buying low and selling high—your ultimate goal as an investor. Alternatively, if you’re adding money to your portfolio, you can direct those funds to the categories that have underperformed. Sounds counter-intuitive, I know, but rebalancing is a cornerstone of smart investing.

3. Make sure you have an emergency fund. Everyone should have an emergency fund that will cover at least three to six months of necessary spending. That’s always the case. But if you’re feeling uncertain about the future, and especially if you’re nearing retirement, you may want to increase your cash reserves even more.

4. Reduce your debt. An industry rule of thumb is that no more than 28 percent of your pretax income should go toward home mortgage debt, and no more than 36 percent should go toward all debt. If you’re feeling at all skittish about the future, though, I would recommend that you stay well below these levels. Certainly if you’ve carrying credit card or other expensive, non-deductible debt month to month, make a plan to pay it off as soon as possible.

5. Make sure you’re well insured. Insurance often seems like a colossal waste of money—until you need it. If you don’t have great health insurance, get it now. Ditto for auto, disability, and homeowner’s insurance—and possibly life or long-term-care insurance, depending on your situation. At the same time, be cautious about falling for sales pitches for products you don’t need (e.g., life insurance for a child).

6. Make a plan. Numerous studies have shown that planners prevail. They set goals, establish priorities, and obtain more wealth. To me, this just makes sense. Managing your money isn’t different than managing your career: don’t just leave it to chance!  If you’ve never worked with a financial planner, this could be your year.   A plan can be a great way to organize your finances and make sure that all the pieces are working together. Or if you’re not ready to go the formalized route, at a minimum take a hard look at your goals (Retirement? A new home? College?), and then crunch the numbers to make sure you’re on the right path.

I’ve always loved New Year’s. For me, it’s an optimistic time of year—the time for a new start and new opportunities, as well as a time when we can reflect on the past and envision the future.

With that in mind, my wish for every one of you in 2017 is health, happiness, success in your career, and financial stability. Yes, there are unknowns ahead. But if you’re smart and diligent about your money, you can protect it and help it grow. And then you’ll be in the best position to do great things.

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Investing involves risk including loss of principal.

Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly.

Diversification, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.