I will cover all the basics of finances in this prepper’s financial guide. By the end of this guide, you’ll learn how to prepare for an emergency financially, best practices for finance, and how to use your money effectively.
Americans of all income classes have faced the difficulties of restoring their life after a catastrophe or other emergency. Access to personal banking, insurance, medical, and other information is critical in these difficult periods for continuing the rehabilitation process rapidly and efficiently.
That is exactly why we made this guide. Whether you are saving for a rainy day, retirement, or when SHTF and there’s an economic collapse, finances should be understood by every prepper.
Let’s dive in.
Why You Should Do Financial Prepping
Doing financial prepping can bring about massive stress for a lot of households. But it doesn’t have to be stressful if you take some baby steps and stick to a sensible plan.
But why should you even do this in the first place?
Firstly, you will become more independent. Media has told us that we must go to school, learn a profession, and serve for the rest of our lives. They teach us to work for a guy in order to help them get wealthier. You are completely reliant on them at all times.
That will adjust your pay, hours, and can even fire you at any time. We have now been dependent on the government to take care of us while we are in financial difficulty. Millions of people are still receiving aid and food stamps today. However, who would these people turn to if there is a financial disaster? The answer is no one – they’ll need to take care of themselves.
Secondly, you will be able to cover the debt during a financial crisis. During Argentina’s economic crisis for example, people were only allowed to borrow $250 a week from their banks to cover their bills. The bill collectors, on the other hand, would not be flexible.
People are going to take their money no matter what. In reality, during a financial crisis, people would be very violent in reclaiming their hard earned money.
There used to be a place called a debtor’s prison where you could go if you didn’t pay your bills. That is not done in America today. However, there is a chance that something similar to this will reappear after a financial crisis.
Finally, you would have more money to spend on prepping if you were debt-free. We all know that buying prepper gear isn’t easy. At the very least, if you want high-quality prepper gear, you would have to pay a premium.
You have to begin as soon as possible to be even partially financially successful.
Here are two scenarios that shows just how important it is to begin as soon as possible:
- Starting at the age of 25, Jack put $200 a month into a savings account until he contributed $96,000 total. At retirement age, he will have well over $500,000 in there.
- You don’t start saving until you’re 45 years old, like Joey. You invest $200 a month from the age of 45 until you retire at the age of 65, which is a total of $48,000. You have slightly more than $100,000.
The first scenario is the best case! Investing helps you beat inflation and hyperinflation – this is why you don’t want to have just cash, even though having some reserve of cash is important. We’ll get into that in the next section.
Building an Emergency Fund
Now that you know to invest, you’ll need to build an emergency fund before or when you invest. Here is a mini-step-by-step guide to building an emergency fund for you and your family. Having emergency cash on hand is essential for medical, funeral, legal, and other complications.
- Determine how much money you want to save. There is more on this in the budgeting section.
- Set a monthly savings goal. This will have you in the habit of saving on a daily basis, making the job less overwhelming. One method is to get funds transferred to your bank account immediately any time you get paid.
- Automatically deposit funds into your bank account. If your boss has direct deposit, there’s a decent chance they will split your payroll into several checking and savings accounts, allowing you to meet your monthly savings target without reaching your checking account.
- Using mobile apps, you can save automatically any time you make an order. There are banking applications that connect to your checking or other spending accounts to round up the payment sums on your purchases. The excess money is immediately deposited into a bank account. If you normally spend cash, you should put your spare change, or maybe $1 and $5 bills after breaking a $20, in a jar at home. Take the jar to the bank when it is full and deposit the money.
- Maintain the safety of your tax refund. If you expect a refund, you can only do this once a year. It would be an easy way to supplement the emergency fund if you saved it. After you file your taxes, request that your payout be deposited directly into your emergency account. You should even adjust the W-4 tax form such that less money is withheld. Then, put the remaining funds into an emergency fund.
Pay Off Debt
Paying off debt is generally a good financial move, so here is how to do exactly that.
- Make a solid budget that you can follow through on.
- Pay off your largest debts first. Order your credit card rates from highest to lowest, then start with the highest-interest-rate card.
- Pay more than the minimum balance. I personally do X2 the amount. For example, if my minimum payment was $100, I would pay $200.
- Leverage bank transfers. Switch the debt to a card with a zero-interest balance transfer plan.
- Cut up your credit card if you are a shopaholic. Sometimes, you don’t have to, but generally, try to use credit cards less. This will reduce the accumulation of debt.
- Now, this part is generally not required, but I like to reward myself when I hit a milestone and reduce my debt by $10,000 or $15,000. The logic behind this is that you probably won’t follow through completely if this whole entire process is a punishment for your accumulation of debt.
Do Simple Things to Reduce Expenses
At the most basic, frugal financial preparation for preppers simply involves working within your means to create a financial buffer for yourself.
This is critical for preppers just starting out to ensure that they can create adequate emergency resources and cash reserves (cash on hand, not at the bank).
Simply rearranging goals and implementing some realistic thrift strategies in your family budget is a good way to save some extra money.
The first thing you can do is go thrifting. If you haven’t been to a thrift shop in a while, you may be shocked by the prices you discover.
It’s not unusual to come across high-end, lightly-used clothes, kitchenware, and other household products. And, if you shop at thrift shops in more expensive locations, the service improves.
Next, a warehouse store subscription often pays off, because if you are buying food for both current use and storage, it is the perfect way to buy bulk at a huge discount.
Next, coupon clipping has become a form of hobby for many people who want to save money at the grocery store. Hardcore clippers claim to save hundreds of dollars each month. The trick, of course, is to combine discounts with sales to optimize savings.
Clippers will reassure you that the discounts are better than those available at warehouse stores. This works very well. However, coupon clipping does take strong organization and committed work to optimize your savings, but it does make a HUGE difference in financial planning and preparedness.
Following a financial, you will not have access to a vehicle or gasoline, and now is not the time to start thinking about new modes of transportation.
Bikes will most likely become the preferred mode of transportation. If that is the case, now is the time to get used to riding a two-wheeler.
Using your bike as your one means of transportation will save you money and improve your health, all of which will come in handy.
Do more DIY’s
Learning vital skills is not only necessary for survival; it will also help you save money almost instantly.
Car repair, sewing, first aid, home cleaning, farming, fishing, and hunting are all skills that can be very useful in a survival situation, and they can all be acquired for very little money at the nearest community college or by transferring to Electric school classes from the internet on your computer.
Make a Budget
To make a budget, I like to follow a simple four-step process. Here they are:
1. Figure Out What’s Coming In
Begin by calculating how much money you earn after taxes every month. If the pay varies, an average would be okay; but, the more precise, the better. Now that you know what your money flowing in is, you can look at where it is heading.
2. Figure Out What Your Expenditure Are
Now, divide the monthly spending into distinct categories. Many people would categorize this as shelter, transportation, energy, and food. Following that, you should use additional buckets such as restaurants, traveling, clothes, and so on.
There are many tools available that can do this, but if you’re like me, you’ll prefer to use a pen and paper.
Remember that certain expenditures can’t bill on a monthly basis, so look back at previous months and get a complete image of your monthly spending.
3. Fix Up a Budget
If your current liabilities outweigh your current assets, you have two options. Increase your salary or reduce your expenses.
In general, it is preferable to reduce expenses rather than increasing salary since you can control it. Analyze the budget and see if there are any areas where you can save expenses.
Can you go out less? Purchase less new clothes? It’s great if you’re putting in more than you’re taking out. Two more questions are: Are you happy with how much money you’re saving? If not, is there anything else that can be ruled out?
4. Keep it Consistent
Start to make this a habit. Of course, you may slip out here and there, but generally, you want to stay on top of it.
Don’t Fall in American Consumerism
Consumerism, especially in America, can be tough to get around. So, we have a few tips for you to stop buying junk you don’t need.
1. Figure Out Why You Buy the Things You Buy
The first step in not buying stuff you don’t need is determining why you’re buying crap in the first place. Now, I’m get the feeling of buying a bunch of stuff and getting a huge dopamine surge. That’s normal.
I remember that I used to have a shopping obsession. Now, I have a strong mind to hold it at bay. Maybe you’re not a shopaholic like I was, but you’re susceptible to the Diderot Impact. To stop buying things you don’t need, you must first find out what you’re buying.
Are you tired of being bored? Are you lonely? Looking for a solution to a problem but unable to look inside first? When we understand why we buy products, we will really strive towards smarter money habits.
2. Declutter What Isn’t Necessary
Once you’ve taken inventory of the products in your house, begin purging all the junk you’ve acquired over the years that no longer serves you. This includes surplus clothes (no, you don’t need the same shirt in five different colors), beauty products, kitchen supplies, and other unnecessary things.
3. Unsubscribe From Unnecessary Things on Your Email
Examine your mailbox and unsubscribe from all the tempting offers! This includes every store that gives you discounts or flash deals, coupons, and even big-box retailers like Walmart or Kroger. You would not be tempted to shop for a deal if you are unaware of it.
4. Find Other Ways to FulFill Your Shopping Temptations
Shopping, or even browsing, consumes a lot of time, which you’ll find when you stop shopping for the sake of shopping.
Find a new hobby or sport to occupy your spare time with something productive so the frustration doesn’t drive you back to the shops. Now is an excellent moment to watch one of those YouTube fitness videos you’ve been saving for when you “have time.” For me, not shopping allows me to use time for creativity instead.
Here are a couple of my best tips to invest wisely. This doesn’t necessarily mean stocks. This can mean your 401(k), bonds, and other forms of investments.
Max Out Retirement Accounts
If you’ve just started a new career and your company has a 401(k) retirement account, make sure you sign up. It’s a simple way to save money that you’ll use after you retire decades from now.
One advantage of a 401(k) is that a part of your paycheck will be immediately deposited into your retirement savings account, which will provide you with an array of diverse investing opportunities to select from.
Since standard 401(k) savings are done from pre-tax dollars, you can also reduce your tax bill. Another advantage is that most companies add to the 401(k) by matched contributions.
Investors sometimes try to wait until the “best” moment to begin investing in the stock market. However, the more they wait to spend, the longer they can lose out on potential returns. Dividends are not to be taken lightly.
These individual payouts can seem tiny, particularly if you’ve only been investing for a few years, but dividends have contributed to more than 40% of the S&P 500’s historical returns.
As an investor, you have the option of cashing in your dividends as soon as they become available, or reinvesting them in the market, either manually or automatically.
Automatic dividend reinvestment allows you to grow your portfolio with little effort on your side.
You can buy new shares that receive additional dividends when you reinvest your dividend payouts. In other words, dividend reinvestment will help you take advantage of the compounding effect. Dividend accumulation will add considerable value to your portfolio.
Go In For the Long Term
Sometimes it’s better to just leave your fund there. I know this may seem a little counterintuitive to what most preppers think, but unless times really get difficult and you know for certain that SHTF is happening soon, then I would highly discourage extracting your funds.
There are tough times, but in the long run, according to history, a 6-8% return per year is expected.
When you first start your long-term plan, you must decide how and when you intend to purchase your investments. You have the option of purchasing the investments all at once (lump sum investing) or starting an investment schedule for dollar-cost averaging.
Banks and financial institutions such as credit unions are currently the primary means of obtaining what we want.
We get funds to cover the costs of food, clothes, lodging, and other necessities. So what if there are no banks?
What do we do should our funds run dry, or if we are attempting to save for a more serious emergency?
The solution is straightforward. We’ll haggle to get what we need. Bartering has been practiced for decades. And during the 1930s Great Depression, people exchanged chickens or vegetables for doctor visits.
Consider what you can give anyone in a time of crisis. Here are some examples:
- Sewing and mending clothes, tents, and sleeping bags
- Wound care, holistic medicinal therapies
- Making equipment and guns, teaching survival skills
Here is a list of bartering items.
In this article, you learned how to financially prepare. Hopefully you have taken your financial preparedness to the next level.
Here are some beneficial resources to help you with your prepper journey:
- Free Survival Gear Ultimate List (UPDATED 2021)
- Stores That Hand Out 5-Gallon Buckets For Free
- 12 SHTF Home Security Tips To Fortify Your Home
- Urban Survival Skills List [25 Skills You Should Know]
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