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Whether you’re a committed prepper or just thinking about living more strategically, creating a financial plan is essential to prepare for a time when you may no longer have a job, and the banking system — and perhaps the government — no longer function like it does today.
Why might you be facing such a time? Because threats pile up every day. Cyber crime and cyber theft are on the rise. If hackers can steal your identity, is it really a stretch that they could cause a collapse of the banking system or the government?
ATMs could become disabled around the globe as cyber-hackers gain control of your accounts. Governments could be disabled and unable to function — and that’s just the beginning.
Let’s face it. We’ve already seen situations where people have lost their homes in natural disasters, like floods and hurricanes. Others have become sick and unable to work because of radiation, like those in Japan.
Job loss alone is a reason to have a financial plan, but across the world, people have been displaced by war, bombs and carnage. Think it can’t happen here? Think again.
On top of that, approximately half the people in the United States wouldn’t be able to come up with $500 for an emergency.
What would you do if any of the crisis scenarios above occurred? You need a financial plan. Here are three tips on how to create one.
Get a Handle on Your Expenses
Your first order of business is to create a budget. If you don’t know how much you spend every month, you can’t plan to either cut expenses or save.
If you don’t already have a budget, start with a spreadsheet. Enter all your fixed monthly expenses, like mortgage, utilities, groceries and any debts. Then, assess your budget. Sometimes, people find their budgets are fine and have disposable income to allocate to savings. But other times, people find they need to cut back on spending.
There are many ways to reduce your expenses. Simplify your cable package and stick to Netflix, or rent DVDs and books from your local library. Start a garden and grow your own food to cut back on grocery bills. Always shop on sale. Sew your own clothes. Reduce the number of times you eat out each week. Choose less expensive get-together and recreational activities. Can you hike with your family instead of going to a fancy lunch, for example?
The more you consider less expensive ways, the more cash you’ll be able to save. Plus, many of these methods will benefit you as a barter skill later on.
Create a Prepper Budget
Once you get a handle on how much you’re spending, you’ll need to create a prepper budget — that means you’re going to start saving and preparing for upheaval.
First, if you don’t already have a category for saving, start one. Your first goal is to have a three-month cash cushion in case you lose your job or banks are inaccessible. And, by the way, when we say cash, we mean cash — not digits in your bank account. Long and green and in a safe place.
Second, focus on paying down debt. You can either use the debt avalanche method or the debt snowball method. If you do a debt avalanche, you pay down the smallest amount of debt first. As soon as that is paid off, you move the debt service money to the next-smallest debt. If you do a debt snowball, you concentrate on the debt with the highest interest rate, as those cost more over the long run.
Third, start putting money toward what you’ll need to survive. Most people put between two and four percent of their income toward prepper activities. If you absolutely cannot save, consider taking a second job to generate income or relocating to a less expensive living area.
Stock Up on What You’ll Need
Once you’ve got your finances under control and a prepper budget started, it’s time to start stocking up on what you’ll need when a crisis happens.
Although the banking system and the very governments that issue money may collapse, the fact is you’ll need some money, at least at first. Think about World War II in Europe, for example. People who had money to pay for transportation and even to bribe officials were better off than those who didn’t. If cities become uninhabitable here, you may need money to get to where it’s safer, to buy a home there and to buy whatever food and other supplies are available.
After your first three months of savings, keep your saving in cash. Ideally, you want at least a year’s worth of expenses.
Be sure to keep it in a secure place. It’s best to save a combination of small bills — for smaller purchases — and large bills — for deposits and more substantial expenses.
Precious Metals and Jewels
In times of peril throughout history, precious metals like gold and silver and precious stone jewelry have come to people’s aid. Why? Because you can use them as currency. Gold, silver and jewelry like diamonds hold their value throughout time, so you can trade them for items you need. Plus, they have a universal value — every society accepts them, no matter their currency.
You can save gold or silver in bars or coins. Silver is cheaper than gold, but both can be bought in small amounts. If you have jewelry, such as diamond rings or other precious stones, store them in a very safe place.
Bitcoins are coins that can be used to pay for goods and services through a ledger called block-chain. Bitcoins are one of a class of crypto-currencies that rose considerably in value last year. They have been more volatile since then. Preppers who buy and hold bitcoin and other crypto-currencies do so because these exchange mediums are independent of government control. Although few merchants accept them as payment now, their usage might rise in the future.
Banks and lending institutions like credit unions are, right now, the way we get what we need. We get money to pay for food, clothing, shelter and everything else. But what if we don’t have banks? What do we do when the money runs out, or if we’re trying to save for a more significant emergency?
The answer is simple. We will barter to get what we need. Bartering is a system people have used for centuries. Even during the Great Depression of the 1930’s, people traded chickens or produce in exchange for doctor visits.
Think about something you can offer other people in a crisis. Some examples are:
Food and Other Supplies
Stock up on food and other supplies, as well. Ideally, you should have a year’s worth of nonperishable food items. Other supplies include:
- First aid kits and expendable contents
- Hunting gear, to include spare rifle and pistol parts and ammunition
- Survival gear like flashlights, binoculars, tents, solar batteries and rechargers
- Water and food
- Mobility gear, walking shoes, boots, walking aids
- Knives, sharpening stones
A strong financial plan will see you through any crisis that comes. Stay strong and follow these three tips to always be prepared!
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