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Preparedness For A Financial Crisis In 5 Simple Steps

FINANCE imagesWhen the nation of Cyprus raided its depositor’s savings accounts to pay for national debt it struck a cord of fear in the citizens of the United States. Many of us were already feeling uneasy about the way the economy is struggling and those fears were brought to a head with the ‘bank raid’ in Cyprus.

After a few days the crisis seemed to be averted and the monies returned. However for those few days a financial crisis was created that left many citizens of Cyprus wondering about the security of their deposits as well as a shortage of cash on hand forcing a run on ATM’s.

The reaction by the citizens in Cyprus left me wondering what would I do if there was a financial crisis like this in this country and what can I do to protect myself in those days following? Going a step further, what could I do if there was suddenly a financial crisis that caused banking and credit to be suspended?

Well one extreme would be to do nothing. The old saying “doing nothing is not a plan” is still true. I’m amazed at the number of people who have the attitude “there is nothing I can do so why bother” or “I will deal with it if and when it happens.” This is not a plan and a bad idea.

The other extreme would be to go all-in like the Doomsday Preppers. Now if this is the route you want to take, who am I to persuade you to alter your plans, however the fact remains this level of disaster preparation is just not logistically practical for most people.

So obviously a balance must be struck between the two extremes and it must be something we all can do.

This is not a dissertation or lesson in financial planning. There are plenty of resources available for that. What this plan does do is give you 5 simple things that everyone can do and should do to be ready should a minor financial crisis happen.

1. Accumulate and keep 3-4 days worth of cash on hand.

If there is a financial crisis that created a run on banks or disrupted credit card and debit card transactions you will need cash. Why 3 -4 days’ worth? History has shown most disruptions of this sort would be brought under control within 3 to 4 days (unless it’s a meltdown of almost biblical proportions).

There are things you may need to buy in that time span and most every business is going to try and continue to do business, but without credit and debit transactions they will be forced to be cash only; those with that cash will be able to get what they need, those without wont.

2. Keep enough food on hand to last for 7- 10 days.

Why 10 days worth? Are we talking about financial crisis or natural disaster? Well, when it comes to food I would reply by asking; what’s the difference?

From a financial prospective, 7 to 10 days is about the disruption time created by a 3 day financial crisis. The food supply chain we have in this country is remarkable, we have access to fruits and vegetables all year round that were once only seasonally available.

But for the marvel that it is you cannot just turn it off and on, once it stops (in the event of a financial problem) it will take 3 or 4 days to restart the supply line and while this is happening, the stores will run out of items, which will require additional stocking times, etc.

Unfortunately, people that are not prepared will panic and rush the stores to get what they can. Anyone who has observed the aftermath of a natural disaster will have a clear picture of what this is like. Now imagine this scenario where people cannot use credit and debit cards.

It would be better to have 7 to 10 days of supplies on hand and avoid the chaos. The best thing about this step of preparedness is that should there be a natural disaster you will likewise already be prepared.

3. Personal protection is a must.

I’m not suggesting you go out and buy a gun (that is entirely up to you) but I am telling you that you need to have some kind of personal protection. If you decide to choose a gun, then learn how to use it properly. If you are not comfortable with a gun there are alternatives; handheld mace or pepper spray dispensers are some examples. Others could be a taser or even a small nightstick.

However your best form of personal protection is your mind. Don’t put yourself in situations that increase your odds of having to defend yourself during times of unrest.

When people are unprepared or do not know how to provide for themselves wind up with no money or gas, they’re alternative may be to try to take what someone else has. Don’t let that someone be you.

4. Keep your car on full.

There is a saying and a truth; “it doesn’t cost any more to keep a car’s fuel tank full than it does to run it empty.” In your preparations make it a habit to fill your vehicle up when you get to a half a tank. Remember any financial crisis is going to create supply shortages, so right after food a fuel shortage will not be far behind.

5. First aid supplies and prescription medicine.

I wonder how many of us have a fully stocked first aid kit at home. How many of us have a first aid kit in our vehicle? Probably fewer than you might think. We have become so accustomed to being able to get whatever we need whenever we need it; it has made us lax in our planning.

Anyone who has gone through a natural disaster will be quick to tell you how important things like a first aid kit can be.

A financial panic may just interrupt your ability to ‘get what you need when you need it.’ First aid kits are inexpensive and there is no reason not to have one.

Having several days’ worth of your prescription medication on hand is another must. For some daily prescription medications are a necessity. You know what your prescription requirements are, and how important they are; don’t wait until you are on your last dose before you act.

These 5 things are simple precautions that everyone can take and the best part is they won’t cost you anything. I’m not suggesting you purchase anything that you shouldn’t already have; you don’t need, or won’t use.

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“An ounce of prevention is worth a pound of cure.” Ben Franklin

 

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