We are living in uncertain times. House prices are falling, the economy is slowing and consumers are under the cosh from the fall-out from the credit crunch, which is sending borrowing costs higher.

Preparation is the best defence for your finances. As Karen Torson, partnerships business manager at the Cheshire Building Society, says: “An uncertain economy can cause worry for many individuals, but taking the time to ensure you are well prepared can provide peace of mind and make a big difference — whatever the future holds.” Whatever might lay ahead, our top tips should help:

* Protect yourself

There are many different insurance policies on the market offering various levels of cover, so consider what you actually need, be it mortgage protection, income protection or both.

Research cost options and check the small print. In comparison with income protection policies, mortgage payment protection insurance (MPPI) plans can be greatly inferior and might even cost you more, according to protection specialist LifeSearch. Typically, MPPI plans only pay out for one year, include a number of important exclusions and both the premiums and the conditions of the policy can be changed at short notice.

* Don’t stop the music

Read other insurance policies carefully to know what you’re covered for.

For example, music fans should think about protecting downloads. Many of Britain’s big name home insurers are still not paying out for claims on the loss of downloaded music — despite the fact that digital sales now form a massive chunk of consumers’ music purchases. They include Endsleigh, Barclays and Bradford & Bingley, according to price comparison website Moneynet.co.uk.

* Save for a rainy day

Inflows into building societies are on a high — and cash savings are an important cushion against hard times. The rising cost of living has made it more difficult for most to save, but every little helps: try and put a small sum into a high-interest savings account each month.

* Shop economically

Think of ways of cutting down on spending. Supermarkets, for example, usually have reduced-priced goods near the end of the day, while TK Maxx sells designer and high street brands of womenswear, menswear, homeware, gifts and accessories at up to 60 percent less than the recommended retail price.

* Know where to turn

There are many services out there that can help if you fall on hard times or have a financial problem. The Citizens Advice Bureau is a good starting point.

* Keep your CV up to date

Regardless of whether or not you feel secure in your job, take time to update your CV. It will mean one less thing to worry about if you find yourself out of work.

Are there other ways you are easing the financial strain? Share your tips with us.