When discussing preparedness, there are several questions we each need to address. How will you locate food? What is your escape route - or your bug-in plan? How will you charge your devices (flashlights, 2-way radios, cell phones)? When disasters happen, do you have the funds to weather the storm and help your family survive? When it comes down to it, ensuring financial security is the basis of everything else that comes with preparing for and surviving a disaster.
That last question is a critical one, and one that is fundamental for any who will experience an emergency. From bank and store closures leading up to and during Hurricane Florence to an inflation and loss of power crisis like we’re seeing in Venezuela (read our Survival Scout about the nationwide power outage there), there are more than enough scenarios you should be prepared for. Those who prepare in advance will be more resilient and more likely to come out on the other side when things do turn south. What goes up always comes down.
Unfortunately, many people aren’t so prepared. According to a recent U.S. Federal Reserve report, “If faced with an unexpected expense of $400, four in 10 adults would either not be able to cover it or would cover it by selling something or borrowing money.”
That’s why today, I’m going to share four tips to keep in mind if you want to make sure your family is financially prepared for the worst. Read on to discover them now!
#1: Plan Ahead
Disasters often strike suddenly and without warning. Uh oh! And if you’re living paycheck to paycheck, you’re taking a gamble on how well you can cope when the worst imaginable happens. An earthquake. A sudden unexpected regional power loss. That’s why an emergency fund, separate from your retirement and normal savings, is a must.
Decide on a reasonable goal amount and set aside a portion of each paycheck to deposit into this account. Whether faced with a personal economic hardship, or a wide-scale economic downturn or emergency, you will enjoy having the peace of mind knowing you have a back-up plan.
Having an emergency fund is one thing--deciding how and when to use it is another. Situations such as storm damage, illness, unemployment, and economic collapse may make sense whereas other reasoning won’t. Don’t dip into your fund unless it’s absolutely necessary.
Additionally, to ensure full preparedness for a disaster, you’ll want to use some of your funds to invest in items before they become too expensive or unattainable. From water purifiers and food storage (we all like to eat a couple times a day) to barter items and solar-powered phone chargers, you will want to stock up on the essentials sooner rather than later.
For example, investing in emergency food kits is a good strategy to protect yourself before money and food become scarce. Most emergency food kits are full of hearty, delicious meals and snacks. They'll store for up to 25 years, so you're ready for a crisis now or decades from now, from financial situations to natural disasters.Additionally, to ensure full preparedness for a disaster, you’ll want to use some of your funds to invest in items before they become too expensive or unattainable. From water purifiers and food storage (we all like to eat a couple times a day) to barter items and solar-powered phone chargers, you will want to stock up on the essentials sooner rather than later.
#2: Stock Up on Cash
These days with credit cards and app-based payments, we’re less likely to be carrying around a supply of cash. It makes sense--it’s a lot more convenient than making frequent stops at the bank or ATM to pull out cash.
It’s also risky to depend on credit cards and electronic payments only to make purchases.
When the power goes out or banks shut down during a wide-scale financial collapse, ATMs won’t be of use. And stores may not be able to accept credit or debit transactions. That’s why you and your family should stockpile an emergency reserve of physical cash, in addition to your fund in the bank.
In order to buy essentials such as fuel for your car if you need to evacuate, or medicine from your local pharmacy, this supply of cash will come in handy. A good general rule is to have enough cash available to pay for one month of your most critical living expenses.
As to where to store your supply of emergency cash, you need to be strategic to avoid possible theft. Whatever storage solution you come up with, make sure:
- You do not store it all in the same place. In case of a robbery, there will be less of a chance that your entire supply gets stolen.
- Don’t keep it in your master bedroom. This is the first place robbers think to look for cash--keep it in less of an obvious place.
- Keep small bills. Others may not be able to break a $20 and it would be in your best interests to be able to pay for things with singles and fives.
Lastly, keep in mind that physical cash is only one commerce-based resource. From post-WWII Europe to modern day Venezuela, there are many situations throughout history where precious metals, such as silver and gold, have been used as an alternative to cash. And more recently, certain U.S. states such as Louisiana and Texas have begun to legally recognize gold and silver as legal tender, which allows citizens to make transactions using precious metals in place of cash. It’s best to have some of your cash-on-hand in the form of coins.
Having a supply of precious metals as assets will add an additional layer of security to your sense of well-being and preparedness.
#3: Consider Alternatives
When things go awry, you don’t want to be solely dependant on using cash or credit to access essential goods and services. It can be easy to forget that in the past, many societies have survived using alternative methods of commerce and payment--such as barter systems. For example, many citizens in Germany during the roaring 20’s resorted to a barter system due to hyperinflation during worker strikes. And barter was also big in America during the Great Depression.
In a more recent example, citizens in Venezuela have turned to barter after, as The Guardian put it, “soaring inflation and vanishing reserves of hard cash made it hard to do business.” In fact, IMF economists predict that the country's inflation rate will exceed 1,000,000% this year. Although this situation is highly unlikely in the United States, it’s a good example of a worst case scenario that we can learn from.
Whether it be food, water, medicine, alcohol, ammunition, or help with repairs to your generator, bartering can be an excellent solution to get what you need. Take the time now to study the necessary principles and strategies used within a barter economy (might be time to plant your own patriot garden) --and stock up on the skills and items needed to have an advantage in negotiations.
#4: Invest in Knowledge
The most valuable investment pre-disaster is in yourself. Take the time to learn with emergency books on how to can fruit and vegetables, grow your own food, hunt, fish, barter, and more. You may be well “stocked” but in the end, knowing these skills and how to be truly self-reliant will make a world of difference.
At My Patriot Supply, we want to ensure you’re prepared in more ways than one. I hope you can take these five tips to heart and build preparedness into your personal financial planning. We’re always more than happy to chat with you about preparing at 866.229.0927.
This way, you’ll be set to better handle a disaster, should it come your way. And one usually does at some point.
Preparedness Advisor, My Patriot Supply
- Tags: Financial Readiness