It comes as no surprise to most of us that money makes it easier to survive a crisis. We all know about countries where the middle class is struggling, the poor are starving, and the wealthy … well, the wealthy aren’t quite sure what all the fuss is about.
I have often said that you are never too poor to prep for emergencies. In fact, if your financial situation is less than ideal, you have a vital need to be prepared. You don’t have a portfolio of assets that can be liquidated to get you through a crisis.
It’s harsh but true – the more money you have, the easier survival will be. If you’re struggling to make ends meet now, you’ll be part of the starving poor during an economic collapse.
So if finances are as important for your long-term survival as food storage, survival skills, and medical supplies, what can you do now to improve your finances and prepare for an economic crisis? Because let’s face it – if you lose your job or the price of groceries quadruples, a nest egg will give you some breathing space to figure out your next step.
Did you know that, throughout North America, barely half of us have $1000 in savings. If pressed to come up with $2000, most of us can’t do it – even if we’re given a month to gather the money!
Your savings are that wonderful safety net that buys you time – that is, time to find your feet when the ground beneath everyone else is falling away.
Plan your budget
This is the most important step. It may seem restrictive to plan your expenses, but in reality, a family budget will give you freedom over time. Start off by writing down all your expenses in a month.
You’ll notice several areas where you’re spending money on frivolous things. Stop smoking, reduce your consumption of alcohol, cancel your cable subscriptions, stop buying magazines and newspapers, etc.
Do whatever it takes to free up some money. Save whatever you can. The more you practice, the better you’ll get at it. It’ll be difficult initially, but once you see that you’re putting aside money, you’ll be more motivated.
This may seem like a Herculean goal to many people. Saving $5000 when you can barely save $100 may seem impossible… but it’s not. All it takes is a time and discipline. We managed it when we were living well below the Low Income Cut Off. Our goal at the time was to have enough in cash savings to help us get out of poverty – and we succeeded.
Slowly save until you hit the $5000 mark. Look for ways to save money every day.
Once you can do this, do not immediately splurge on a plasma TV or something extravagant. This is your nest egg that will tide you over a crisis.
Now, calculate how much money you need to replace 6 to 9 months of your monthly income.
Start adding on to your $5000 and aim for that amount.
If your take home wage is $1700, for example, you should be aiming for $10,200 to $15,300. Once you have hit this amount, you’re quite safe and have enough to survive an economic collapse for a few months at least.
The fastest way to increase your savings is to eliminate debt as quickly as you can.
Pay up all your credit card bills. The interest rates really add up and you’ll be shocked at how much money you’re wasting on interest alone.
Start with the card that has the highest rate of interest. Pay that one off first while making minimum payments on the rest. Once you pay the first one off, start paying off the next one with the money you usually used for the first card.
This is the fastest way to eliminate debt.
NEVER allow your balances to ‘roll over’. Paying the minimum sum on your credit card bills will make you a slave to the banks… and that’s exactly what they want.
Never spend money that you don’t have. Carry only one or two credit cards. You don’t need more than that. These two cards are for emergencies and if you do use them to buy items at the mall or online, always pay your bill in full.
Increase your income
There’s no better way to increase your wealth than by increasing your income. Improve yourself and develop skills that are in demand in the marketplace. Charge for your services and aim to keep improving till you’re making a decent income.
Keep in mind, though, that you absolutely must avoid lifestyle creep. I’ve known people who earn half a million or more a year – and spend three quarters of a million. That’s no way to become financially secure!
Spread your investments
Lastly, diversify your portfolio.
Don’t invest all your money in one stock or with one firm. Don’t put all your money in one bank, especially if you live in a place where banks aren’t entirely trustworthy. Spread out your risk.
During an economic crisis, many institutions can go belly up.
So, be wary and invest wisely. Having cash stashed away for an emergency will give you flexibility and more options should you face a crisis. The best financial advice for an economic collapse is to start planning and saving today and you’ll be better off tomorrow.0