Editor’s Note: The largest cybersecurity breach in U.S. government history just compromised the personal data—including Social Security numbers—of millions of current and former federal employees. We cannot underestimate the damage a hacker can do to our wealth online. Tom first wrote about the importance of protecting your online security in August 2010. These valuable tips are just as critical today.

  Tom Dyson: Three Simple Steps to Secure Your Money Online

From Tom Dyson, publisher, Palm Beach Research Group: Computer hackers have broken into one of the world’s most important systems for controlling infrastructure…

Siemens is one of the largest engineering and technology companies on earth. One of Siemens’ biggest businesses is selling industrial control systems. Companies use these systems to run giant infrastructure operations like chemical factories, power plants, or subway systems. Siemens calls these products “Supervisory Control and Data Acquisition,” or “SCADA,” systems.

Two weeks ago, Siemens announced that hackers had attacked—and entered—its SCADA systems. These hackers can steal data and sabotage the operations that use the SCADA systems. Siemens admitted one company had already been breached…

If it was this easy for hackers to enter the systems used by the richest and most powerful companies in the world, imagine how easy it is for hackers to steal personal information from you…

First, unauthorized charges appear on your credit card. Then, large chunks of money disappear from your bank account. You get a bill from a utility charging you for services you never received. Finally, the police show up and treat you as a suspect in a crime you didn’t commit.

This might sound far-fetched, but the Federal Trade Commission says identity thieves successfully target 9 million Americans each year.

Two weeks ago, at the annual Black Hat security conference in Las Vegas, one expert showed how around 50% of wireless Internet routers—the kind you have at home—are vulnerable to hackers… even when protected by a network password.

Another expert showed how hackers can intercept information you send and receive through SSL connections—the secure Internet connections you use when you access your bank or a payments website. (You’ll see a padlock in your browser’s address bar when you’re using an SSL connection.)

The Wall Street Journal is running a series of articles on Internet privacy right now. In one experiment, researchers visited the 50 most popular websites in the world using a test computer. Afterward, they found these websites had installed 3,180 tracking devices—known as cookies—on their test computer.

In other words, when you surf the Internet, chances are every website you visit and every link you click on is recorded by third parties.

Fortunately, it’s easy to protect yourself…

First, make sure you secure your wireless network with a password… and give your wireless router a password, too. You can find instructions for creating these passwords online, but I recommend you grab the nearest tech-savvy teenager and ask them to help you. He or she will secure your network in minutes.

Second, buy a password manager like KeePass, LastPass, or RoboForm.

You install the software on your computer like any other piece of software. It keeps all your usernames and passwords in a log. Whenever you need a username or password, you simply click on a button in your browser’s toolbar, and it enters the password you need automatically.

This is incredibly convenient. You don’t have to remember hundreds of passwords, and you can make all your passwords look like this: “YhC89Euj3.” This article gives a good overview of the best password managers.

Finally, subscribe to a basic Internet privacy service like Cryptohippie, Anonymizer, or Secure Tunnel… especially if you use public Internet connections.

These services run a virtual “pipe” into your computer that protects the information coming and going from your machine. No one can steal your information, intercept your communication, or figure out who you are or where you’re located.

The official names for these services are “Virtual Private Networks” (VPNs). They’re the same networks large companies and governments use to keep outsiders from accessing their information.

It’ll take you a few minutes to set up your VPN initially, and a couple of extra clicks every time you connect to the Internet. But the peace of mind is worth it…

The reality is, every time you send an email or visit a website, someone is gathering data on you. Hackers are figuring out ways to steal your identity and enrich themselves at your expense.

Your data is valuable, but it’s not safe.

If you take these basic steps to protect yourself, you will be light-years ahead of most people in terms of security.

Hackers, thieves, and saboteurs will focus on low-hanging fruit and leave you alone.

Reeves’ Note: Tom’s investigative team conducted extensive research into how to protect your personal data from hackers, corporations, and the government. It’s easier than you think. They compiled this information in an eye-opening special report entitled, “How to Protect Yourself From America’s New ‘Secret Police.’” It’s just one of the 37 reports in The Palm Beach Letter’s extensive (and growing) special reports archive.