Who doesn’t like defense? We always talk about it when it comes to football, politics, war and most importantly our personal health. But how often do people talk about defending their finances?

Nearly all the financial advice is geared towards offense (how to make more money and make it grow) but hardly any time is spent on defending what we have. While nothing can ever be 100% safe, there are four steps or assurances you can take that will put you in the best financial position to succeed in your financial offense.

First though, what kind of things are their to defend against? There are three main groups that can sabotage your financial future: The government, other people/businesses and yourself. The four steps I will outline address each of these potential risks…

1. Documentation

While certainly the least exciting form of protection, keeping your records organized can go very far in keeping your legal, and tax responsibilities clean and clear.

2. Legal Entity or Investment Accounts Choice

Where you keep your money can be even more important than how you invest it. Whether you’re a business looking for legal protection (deciding between an LCC or C Corp.) or you’re an individual deciding how to protect your assets against taxes (Taxable Account vs IRA vs Roth IRA), deciding where to hold your resources can become increasingly important as assets grow.

Proper Reserves

Most people in the U.S. don’t have even a couple thousand dollars in case of emergency. What kind of protection do you think they have against unforeseen financial bumps in the road? Not much. Businesses need reserves as well. Setting aside money each month in what’s called a sinking fund (an account designated for a specific purpose) is a responsible step for any business or person.

Insurance

The last of the four main lines of defense is insurance. Why isn’t insurance first on the list? Because by nature, insurance is meant to be a last resort. Using the first three steps and therefore not relying entirely on insurance is a fantastic way to secure yourself. However if all else fails insurance is a great last line of defense.

Conclusion

In each of these categories there are many specifics that I don’t have space to get into. However talking with your financial  or tax advisor about these things is certainly an overarching prerequisite to each of these forms of defense. Never take anything for granted. Finance is just as much defense as it is offense.