With all the bad news coming out of Wall Street, you may be wondering what you can do to protect your money. The first step: Breathe. Jean Lewis used to laugh when her grandfather insisted on hiding his savings under his mattress. “He lived through the Depression and always distrusted banks,” says Jean, a graphic artist in Santa Fe, NM, and mom to Charlotte, 10. But the upheaval on Wall Street has made Jean wonder whether her grandfather had the right idea after all. “My mattress is looking like a safer place for my money than the bank or the stock market,” she says. And she’s not alone in her desire for a cash stash close to home. While no one can control the stock market, there are other parts of your personal finances that you can control, says Kristine McKinley, CPA, CFP, the founder of Beacon Financial Advisors in Lee’s Summit, MO. McKinley recommends starting with small steps, such as making sure you have an adequate emergency fund, paying off high-interest credit cards and investing in yourself. “Take classes or upgrade your skill set,” she says. “This could make the difference between unemployment and employment, especially in a tough job environment, and could also pay off in higher future salaries.” Next, key in on these four areas to better guarantee that you’ll safeguard your hard-earned savings—and sleep better, too.

Your Bank Accounts

You can check on the safety of the money in your savings account by contacting your bank (or go to fdic.gov and click on Deposit Insurance and then Bank Find) to confirm that all deposits are FDIC insured. “If you have your money in an FDIC-insured bank, then you can be confident that it’s safe, even if your bank should fail,” says McKinley. The FDIC hasn’t lost a penny in its 75 years of existence. You don’t have to apply for this insurance; if your bank is insured, your accounts are automatically insured. However, you do want to make sure your deposits are within the FDIC coverage limits. These limits are per owner, per account title, so depending on the number and type of accounts you have, you may have more coverage than you think. The bailout brought coverage up from $100,000 to $250,000 per owner, per bank. This higher limit is in effect for one year only, through December 31, 2009. Joint accounts have also increased and are covered up to $250,000 per co-owner, so if you have a joint account with your spouse, you are covered for up to $500,000 total. IRAs and other retirement accounts are insured up to $250,000. It’s important to note that if you have multiple holdings with one bank, such as checking and savings accounts, money market funds, CDs and an IRA, the total amount insured depends on the title and ownership category on each account. You can estimate your coverage with the FDIC’s “EDIE the Estimator” tool at fdic.gov/edie.

Your Mutual Funds

Most mutual funds are equity funds—a managed group of stocks—so they’re investments in the stock market. Thus there’s no guarantee on their performance. You make or lose money on them depending on whether the stocks in the fund go up or down in value, says Carmen Wong Ulrich, a working mom and host of CNBC’s On the Money. However, if your broker goes under, as in the case of Lehman Brothers, your fund holdings will remain the same—as long as you’re not invested in the stock of the brokerage itself. “Brokers and managers don’t mix your money with the company’s money, so if your broker collapses, another broker will step in and take over your account,” says Wong Ulrich. If any of your holdings get lost in the process, the Securities Investor Protection Corporation (SIPC) steps in to cover funds. You can find more information at sipc.org. Indeed, there’s an important distinction between bank savings deposits and mutual fund investments purchased through banks, says Karin Maloney Stifler, CFP, president of True Wealth Advisors in Hudson, OH. “Mutual funds purchased through a bank or brokerage firm are never FDIC insured,” she says. The amount of the risk in the mutual fund depends on the objective of the fund. For example, an equity (stock) mutual fund is riskier than a bond mutual fund. What’s the safest investment bet? Treasury bills (T-bills). Treasury securities are backed by the federal government, the folks who print the U.S. dollar. If your main concern is to preserve your principal (while earning some interest), T-bills will guarantee you at least a dollar-for-dollar return since they’re backed by the “full faith and credit” of the United States government. “As long as you hold the bonds to maturity, you’re guaranteed to get your principal back, as well as earn interest on the bonds,” McKinley notes. Since these are the safest bond investments, “investors have flocked to Treasury securities during market turmoil to be as protected as possible from loss of principal,” says Stifler. However, Wong Ulrich notes that because so many investors have jumped to T-bills, their returns on the investment have been driven down to less than 2 percent (as of press time). Even T-bills aren’t entirely risk-free. There is the interest-rate risk, the possibility that interest rates will rise after you purchase the bond; and inflation risk, the chance that inflation will be higher than the interest you earn on the bond. Matthew Tuttle, CFP, MBA, president of Tuttle Wealth Management in Stamford, CT, and author of Financial Secrets of My Wealthy Grandparents, cautions that at recent interest rates, after taxes and inflation, you could be losing money by investing in T-bills. “But if you cannot sleep at night, then this option might be better than the market storm in the short term,” he says.

Your 401(k) Plan

If your 401(k) plan is tanking, and you’re considering bailing out, hold on. “It’s never wise to react based on emotions alone, or to react without a plan,” says Stifler. Long-term investors with a time horizon of at least five to ten years are positioned to recover from current market downturns, experts say. In fact, Stifler says, long-term investors are wise not to take money out but to put more savings into down markets, when prices are a bargain. “When the Chinese write the word crisis, they join together two words: danger and resourcefulness,” she notes. “One opportunity for investors with long time horizons is to buy low and to invest in diversified stock mutual fund options within the 401(k) to benefit from years of tax-deferred growth.”

Your Credit Line

Establishing a home equity line of credit can be a good Plan B for some working moms concerned about a possible loss of employment. But this, too, has its risks, according to our experts. “If you believe you may need to tap into your home equity, you want to establish a line of credit before you need it,” McKinley says. “If you lose your job, chances are you may not qualify for the line of credit, so you want to have it already in place.” She cautions, however, that you should draw on your home equity only in an emergency. “You don’t want to risk losing your home in the event that you are unable to repay that home equity line of credit,” she says. Wong Ulrich takes this cautionary note a step further. “If you take out the equity in your home and your home value goes down, you risk being underwater—owing more on your home than it’s worth. That’s definitely not a risk worth taking,” she says. “Turning equity into debt is one of the big reasons we got in this mess in the first place.”