11/07/2013 07:39 pm ET Updated Jan 23, 2014

Could Your Finances Survive a Harsh Winter?

Winter is coming.

That's both a fact of the current season, and a catch phrase from the Game of Thrones television series. Game of Thrones is set in a world where winter comes at unpredictable intervals, but when it comes it tends to be long, harsh and filled with unknown terrors.

The financial environment can be equally unforgiving. Stocks may be enjoying a long, hot summer of record prices, but that is often a precursor to a long winter for the market. Meanwhile, low interest rates and stubbornly high unemployment have kept a chill in the air for many Americans.

Coping with harsh financial conditions

So, bundle up and get ready. Here are five ways to prepare your finances for nasty weather:

  1. Creating an all-weather portfolio. Given the unpredictability of winter weather, motorists need tires that can perform in snow, ice and rain, as well as on dry roads. You also have to make sure those tires are in good shape. The financial equivalent is to make sure you have a portfolio that is diversified enough to include both growth and defensive stocks, as well as some income sources and surefire guarantees, such as savings or money market accounts. Check that all this is up-to-date by rebalancing your portfolio, selling stocks that have run their course and making sure you are earning competitive bank rates.
  2. Insulating against money leaks. Replacing your insulation and upgrading major appliances can save you from having money slip away to energy waste every moment of the day and night. Similarly, avoiding checking account fees, getting competitive insurance quotes and right-sizing your telecommunications packages can save you from continuous drains on your finances.
  3. Making provisions for special needs. Animals storing food or fattening up for the winter don't do it all at once -- it is a process that results from anticipating what's coming. Whether it's a down payment on a house or college tuition, you may have special needs in the future, and you'll only prepare for them adequately with a long-term plan.
  4. Keeping a reserve for heavy weather. At times of the year when a major storm may cut you off from the grocery store, it pays to have a little extra food in the pantry. In a weak job market, it makes sense to have some extra savings set aside just in case. With the average duration of unemployment at around 37 weeks, this can be an essential survival strategy.
  5. Stocking up for retirement. Look at retirement as a long season when you can no longer produce but have to live off what you've stored. This requires a long stretch of diligent saving to get ready, but also detailed planning so you'll have an accurate idea of how much you'll need. You also may find it rewarding to put off the start of this period as long as possible.

Winter can be a test of strength and will, but surviving it can make you stronger and better able to enjoy the warming of spring. People who were well prepared for the last downturn in stocks have been the best positioned to take advantage of a stock market that has more than doubled since hitting bottom in early 2009. In other words, getting ready for heavy weather takes work, but it can be rewarding.