Protecting What You Save

Q: In the past four years, I've paid off all my debts and saved enough for a six-month emergency fund. Should I invest some of it in the stock market? If so, what percentage? I've never had this much cash sitting in the bank before, and I don't know if it's doing what it should.

A: Paying off debt and building a six-month backup fund is a major accomplishment—good for you! (And keep it up.)

While it's fantastic that you want to make the most of this money, you should definitely not invest it in the stock market. This is your emergency savings—so you need to know it's going to be there for you the next time one inevitably arises. You just can't count on the market in the short term: Say you had $20,000 in emergency savings on January 1, 2008, and you put that money into a stock market index fund. Then, on December 31, 2008, you were laid off. You might have told yourself you'd be okay with your severance and your savings. But when you checked your account, you'd have found that its value had fallen to $12,600, since the S&P 500 stock index fund was down 37 percent.

The key with emergency savings is safety first. And second. And third.

Read More: Suze's 3 ways to be a smart investor

Q: I gave a friend my life savings to put away for me. She has since been laid off and is going through some financial trouble. She has called several people asking to borrow money. I'm afraid she has tapped into my funds. How do I ask for my money back without telling her I know about her financial problems or jeopardizing our friendship?

A: The real question is, why did you give your life savings to someone else to manage? Were you trying to avoid dealing with it? If so, you have just learned one of the most important money lessons: You, and only you, should control what happens to your money. With your financial future on the line, it makes absolutely no sense to push responsibility onto somebody else. You need to find your power and take control of your life.

Even if your friend is a professional whom you hired to help manage your money, that does not mean your finances should be out of sight, out of mind. At the very least you should be receiving a quarterly statement from a legitimate third-party bank, brokerage, or mutual fund where your money is invested. Your panic tells me that hasn't been happening.

You have put your life savings at risk simply because you don't want to hurt your friend's feelings. It is time to summon the courage to be responsible for yourself and your money. There need not be any accusation or apology in your talk with your friend. Simply say you appreciate her willingness to help, but you have turned over a new leaf and are now taking responsibility for your own finances. The fact that your friend was laid off and may be in financial trouble is irrelevant. This is about you gaining control of your future—control you never should have handed off in the first place.

Read More: Why you need to find your money mantra

More Great Advice from Suze

• What to do with a large inheritance
• How to push past your money fears once and for all
• When to follow your partner's advice about money (and when to ignore it completely)