By Tim Gamble
This website, Wealth from Chaos, focuses on creating personal and generational wealth in a highly disruptive world. Part of doing so means being financially prepared for disaster.
Financial preparedness involves taking steps to ensure that you have the resources and knowledge necessary to manage your finances effectively, both in the short term and long term. This is true during relatively normal times, in severe recessions (such as 2008-2010), in times of major disruptions (2020/21), and even in the midst of any future economic or political collapse.
Here are some key aspects of financial preparedness, from a survivalist's perspective. Starting from zero? Don't let this list overwhelm you. Take small steps consistently and you will get there.
Budgeting / Living Within Your Means
Create a budget to track your income and expenses, ensuring that you are living within your means and allocating funds to essential items like housing, food, and utilities. Living within your means may include reducing your lifestyle, giving up credit cards, and even doing without while you save for major purchases. Don't let your ego or your need for instant gratification get in the way of securing your financial situation and future.
Emergency Fund
Establish an emergency fund containing enough money to cover at least 3 to 6 months of living expenses (more is always better). This fund can help you weather personal financial crises, such as a job loss, surprise repair bills, or unexpected medical expenses. Keep most of this money in a savings account or CD at a local credit union or small regional bank. Keep a small portion of it in a hidden place at home in case you need it when the banks are closed and ATMs aren't working.
Capital Fund
A capital fund stands separate from your emergency fund, as it is more about building long-term and generational wealth than being prepared for a temporary emergency. However, having a capital fund could be very useful in covering major expenses after a short-term disaster, such as rebuilding your home. Not strictly necessary for financial preparedness, so work on your emergency fund first.
Eliminating / Avoiding Debt
"The rich rules over the poor, and the borrower is the slave of the lender." --Proverbs 22:7.
The dangers are debt should be obvious to everyone, but sadly most of us, including me, fall into this trap at some point in our lives. Look for upcoming articles on eliminating debt with debt busting ideas.
Insurance
I learned to value of good insurance last year with my fight against cancer. If I didn't have good insurance, I would have been financially ruined. Yes, insurance is expensive, but you need to figure it out before you need it. Obtain appropriate insurance coverage for your health and other assets, such as homes and cars. Life insurance is also a necessity, particularly if you are the major bread-winner in your family. It won't be easy, but you have to figure it out.
Risk Mitigation
Identify and assess potential financial risks, such as high inflation, economic downturns, job loss, home fires, and other disasters. Develop strategies to mitigate these risks, such as maintaining an emergency fund, eliminating debt, maintaining and expanding your job skills, constantly updating your resume, maintaining a professional network, diversifying your investments, and having adequate insurance. For preppers and survivalists, your stockpile of food and other supplies is part of this risk mitigation.
Planning for Life Events
Prepare for major life events, such as getting married, buying a home, starting a family, caring for aging parents, or retirement, by setting financial goals and creating a plan to achieve them. This may include reducing your lifestyle or even delaying major purchases while you save money for these events. This does not include maxing out your credit cards. Getting yet another credit card is not a financial plan.
NOTE: I am working on a "Starting From Zero" guide for those at the beginning of their financial journey. Look for it within the next few weeks
Planning for Retirement
Start saving for retirement as early as possible. Don't rely solely on social security. Take full advantage of employer-sponsored plans like 401(k)s or Individual Retirement Accounts (IRAs) by maximizing your contributions. Plan ahead to retire completely debt-free, including your home mortgage. As preppers and survivalists, we must plan for both disasters AND for things remaining relatively normal. Planning for retirement that may be decades away is part of this.
Financial Education
Continuously educate yourself about personal finance topics, such as investing, tax planning, and estate planning, to make informed decisions and stay ahead of financial trends. Three older but excellent books I recommend are:
- The Millionaire Next Door (Amazon link)
- Rich Dad Poor Dad (Amazon link)
- The Richest Man in Babylon (Amazon link)
All three of those books are fairly easy reads without a lot of jargon, statistics or charts. They are highly motivational with lots of food for thought. Most importantly, they will help you adjust your attitude habits, and thinking in ways that will positively impact your life and finances.
Investing and Saving
Diversify your savings and investments across various asset classes, such as cash, gold, silver, stocks, bonds, real estate and digital currencies to reduce risk and optimize returns.
Learn about investing. The classic investment book by Benjamin Graham, The Intelligent Investor, is a must read (Amazon link).
For a prepper and survivalist, investing should come only after securing your financial foundation of living within you means, eliminating debt, and building an emergency fund. After doing that, then you can start investing part of your excess. Yes, I do think a homestead that provides resources (food, water, wood, income opportunity, etc.) could be legitimately considered an investment.
What about gold, silver, bitcoin? These are not truly investments for growth, but rather are potential safe storehouses for your wealth, protecting it from the ravages of high inflation and dollar decline. Keeping a part of your savings and even investment money in these assets may make sense, but only after securing your other financial foundations, and should never represent the majority of your wealth.
Land/real estate could be seen as either an investment or as a storehouse of wealth — or both — depending on a variety of factors, including how you are using it and your future intentions for it.
Regular Review
Periodically review your financial situation and adjust your strategies as needed to ensure that you remain on track to achieve your financial goals. You circumstances, concerns, and opportunities constantly shift throughout your life, and you financial planning needs to shift with it.
Want more strategies to outsmart the system and build your legacy? Join my email list by clicking here for exclusive insights, updates, and tools to stay ahead of the curve. Don’t stay in the dark — sign up and start fighting back today!
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