A lack of food and water is something that many people frequently consider while dealing with any kind of survival situation. However, the reality is that you must learn how to become a financial builder.
Economic turbulence is more likely to affect the majority of people and it often happens so subtly that you don’t even realize it until the situation becomes chaotic.
The good news is that you can plan for this. You can prepare for any form of financial strain (including a total economic collapse) if you pay attention and follow a plan of action, regardless of whether inflation sends prices spiralling out of control or a recession causes you to lose your job and make it difficult to pay expenses.
Even while our discussion will center on how to support oneself financially, keep in mind that in extreme survival situations, money may not even be an option. Don’t forget to stock up enough to support your family and utilize items to barter for what you will need in the future if you plan to trade goods and services.
Depending on where your finances currently are, you should bear in mind the six points listed below as you watch the economy go through a downward spiral where everyone is concerned and things start to become a little hard.
Being A Financial Builder Will Keep You Aware of Your Finances
Your best line of defence when it comes to surviving the economic instability in America or the rest of the world is going to be awareness and knowledge. It pays to pay attention to the news because many individuals are unaware of what is happening until a calamity strikes.
The issue is that because the media has turned political, depending on which political party they support, they might not be completely honest about the bad condition in order to favourably portray one party over another.
You need to listen to actual financial marketers rather than simply relying on what talking heads are advised to say. Consider keeping an eye on the stock market.
The following is crucial as a financial builder:
Look at what corporate leaders such as Elon Musk are saying about the future of their sector and workforce, as well as what bank executives are predicting. All of these subjects will help you see the truth, especially when combined with world events.
By looking at the costs of everything you’re purchasing, you can learn a lot. It’s a poor indication for the economy when your grocery budget isn’t as generous and you can’t afford to fill up your petrol tank.
If you have a landlord, your rent may become unaffordable or your mortgage and interest rates may increase. Look for signs not only in your neighborhood but also elsewhere in the country so you can predict what is to come.
2 Ways To Obtain Financial Peace
A two-pronged strategy must be used while becoming ready for a financial catastrophe. The first is to lessen any harm to your financial capacity, including your ability to make bill payments, keep your home and car, and spend money on basics like utilities, food, and gas.
The ability to keep up with or even improve your lifestyle comes in second. You can theoretically minimize damage by assessing and altering your lifestyle so that you’re operating on a shoestring budget.
You wouldn’t be able to take advantage of any of the comforts you’re used to, like occasionally eating out, watching your favorite show on Netflix or Hulu, or even taking your family on a little getaway once a year.
Maintaining your current way of life is crucial, particularly when it seems like everything around you is imploding. You want to be able to indulge in those little extras without breaking the bank.
It’s crucial that you can increase your income above what you currently need to live comfortably. You may wish to expand your family, or you may just want to reach personal goals for a better life and future.
Naturally, you must first concentrate on limiting damage. You don’t want to experience any sort of financial difficulty where you can’t afford to pay your bills or feed your family.
But once you’ve done that and have a safety net in place to cover your basic needs, you’ll want to work toward the objective of preserving and improving your existing standard of living. It’s crucial that you resist the temptation to accept your financial vulnerability as the new normal merely because it affects the majority of people.
Everyone would not be having difficulties if they were as well-prepared as you will be. Ensure that you prioritize your family’s and your own financial demands. There may be people in your life (friends or family) who depend on you to save them every time.
Although it might begin with you buying them lunch, eventually they will ask you to assist them with paying their bills. You must learn how to say no because this kind of conduct may become more common during hard financial times.
It is usually preferable to give money as a gift rather than a borrowing arrangement where there may be tension between you and the other person. However, it’s critical that you communicate to others when they ask for aid that you are concentrating on your family’s needs at this time as you develop your financial safety net.
A fast reference guide with the names and phone numbers of organizations that can assist these people, such as those that assist with utilities, rent, food, and more, is helpful to have on hand.
In this way, you don’t make them depart empty-handed but rather equip them with what they need to survive without having to sacrifice your family’s financial stability in order to save others.
Be Sure to Have an Emergency Fund
The first thing you should do is gather your emergency fund. No real emergency fund should be substituted simply because you may have credit available on a credit card.
When something arises that requires those dollars, you don’t want to run up a credit card and have to pay interest. All that can result in is an additional strain that you might not be able to shoulder.
Your emergency fund should act as a financial safety net between life and death. Not being able to put food on the table, not being able to pay your mortgage, or having your car repossessed are things you don’t want to be concerned about.
The emergency fund needs to be built up gradually over time, with a lot of attention given to it at beginning. Consider how long you could continue to pay your bills even if your income were to disappear.
For the entire month, would you have enough? possibly no more than three months? Some people struggle to pay their payments for longer than a week or two at a time because they live paycheck to paycheck.
Your emergency fund should ideally be enough to cover your living expenses for six to twelve months. You should have ample time to look for a new job as a result. However, it goes without saying that the longer you can save enough to support your family, the better.
You should add up all of your expenses when you compute it, including those for your housing, car, utilities, health care, education, and more. Consider expenses you don’t pay for every day, such as veterinary care, lawn care products or services, dental treatment, and more.
Decide how and where you’ll save money for this emergency fund. For instance, it’s wise to place your money in a savings account that pays interest. However, you should also keep some cash on hand.
In case of a natural or artificial calamity, you should have a bio-safe that uses your fingerprint and is waterproof and fireproof. Make sure your money is not entirely concentrated in one location.
Keep a Close Watch on Your Spending
Understanding how to reduce your spending is a necessary part of surviving a challenging economy. This is crucial if your financial position is dire and you’re counting on your next salary to help you make ends meet.
Knowing what is coming in as opposed to what is leaving is necessary for effective preparation. Make a spreadsheet that details the exact amount of money that is being deposited into your account after taxes.
Make a spreadsheet list of every expense. Also, avoid relying solely on memory from the top of your head. To identify all spending, go back and review previous bank statements and check registers.
Have the means to indicate whether something is a need or a small indulgence as you start compiling a list. No matter how much you want a cup of coffee from Starbucks in the morning, it is still a luxury.
Also, don’t just look back a month. Keep coming back for a year. You might forget about expenses like dental cleanings or any kind of school-related costs like clothes or a class fee that you only have to pay for occasionally.
You can establish a plan to make savings where you can if you are aware of your current situation regarding your inflow and outflow of funds. Add up all the unnecessary expenses you made and then consider the money you could have saved.
In the upcoming months and years, you will be able to set away that money for your emergency fund. However, don’t completely get rid of everything. It’s crucial that you continue to enjoy life, so set aside a tiny sum, say 5%, for pleasures for you and your loved ones.
By altering your spending habits, you can increase your savings. Instead of going without a list, plan out your weekly grocery needs and use store circulars to find deals that will go well with the menus you’ve created.
Don’t limit yourself to grocery shopping alone. For items like your phone service, energy, and other services that you must pay a monthly price to use, look for better deals.
Additionally, you should compare insurance policies. To avoid having a significant financial impact in the case of something happening, you should plan for items like a car, a house, health insurance, and life insurance.
Have a list of percentages for your expenditures for basics, emergency funds, and small indulgences that won’t jeopardize your financial security but still let you enjoy life whenever you are budgeting.
Increase Your Income to Keep Up with Inflation
After making efforts to discover spending patterns and reduce pointless expenditures, you can begin to increase your income to prevent a scenario where your income is not keeping up with inflation.
In a prosperous economy, you might have been able to get by just fine, but as soon as things got tough financially, your income wouldn’t be enough to cover the skyrocketing prices for things like food, gas, rent, and other necessities.
If you are employed by a corporation, the first thing you should do is request a cost of living increase. Some employers may make an effort to make sure their staff members can keep up with inflation, but not all will make accommodations for you.
If not, search for a new position with a pay raise along with the same advantages and benefits you currently enjoy. If you’re willing to relocate or work remotely when it’s an option, you can find businesses fighting for new employees online and in other places.
You should start your own business or work as a side hustler for a company where you can choose your own hours and the quantity of work you complete if changing jobs is not a possibility for you or if you’ve already lost your current position.
You can increase your income when you’re not working for another company by engaging in a side hustle. Weekends and nights could be included. If your current employment is lost owing to the recession, you can also pursue it full-time.
There are various side businesses you can start that will be profitable for you. Some of your options will take more time to generate a sizable quantity of revenue, but they have the potential to give you long-term residual income.
Such actions include starting an affiliate marketing blog where you recommend products to customers and receive commissions. Another option is to use social networking accounts to establish yourself as an influencer who receives payments from advertisers, brands, and creator funds.
You’ll need to invest some time into growing your content and follower base to a considerable proportion using this kind of business plan. These solutions may help you prepare for a long-term survival situation that will have an impact on your finances if you are not currently in financial need.
Another choice exists that can enable you to make money more quickly but does not offer ongoing, long-term earnings. If you’re skilled at graphic design or ghostwriting, you may write content for other online business owners and charge them for it.
If you’d rather work offline, you can join up for a rideshare program or a food or grocery delivery service and get paid for each delivery or ride you give on your own time after work hours.
Consider the investments you will be making when your income increases as another way to expand your money. By investing in fixed income instruments, you can keep your risk low, or you can take on more risk for a larger return by choosing something riskier, like stocks.
When it comes to increasing your income, diversifying your possibilities is the one thing you must do. This is true for both your incoming cash flow and the investments you make in an effort to turn it into more.
Eliminate Debt and Boost Your Credit
In order to be free of any obligations to repay money to another person or company during financially difficult times, you must make sure that you are making progress toward paying off your debt as you get ready for a financial survival event.
Make a list of every debt you have first. Maintain a record of the total amount needed to pay off the debt, the minimal payments required, and the interest rate you are being charged.
Many people advise paying off the lowest debt first, but if the interest rate is not the highest, you will be needlessly pouring money into another debt just to feel better about crossing one off the list. When organizing the debt, make sure you are paying off the highest interest rate account first.
Consolidating your debt into fewer consumer loan accounts is something else you might wish to do. Numerous businesses will let you move your debt to a new card or loan with a substantially reduced interest rate.
For a certain number of months or years, certain businesses will provide a deal with an interest rate of 0%. Therefore, it could be a good idea to shift the debt to a card with a 0% interest rate if you had $5,000 in debt on two cards with interest rates of 21% and 23%, respectively.
The important thing is to make sure you pay off the card you used to consolidate your debt before it starts to charge a higher interest rate. A smaller minimum payment will typically allow you to pay more each month rather than having to make two separate minimum payments.
You should also keep an eye on your FICO and credit scores. This may be a reliable indication of your financial situation and enable you to refinance bigger loans, like your mortgage, as needed.
Whether one is struggling or has plenty of money at the moment, everyone should be making preparations for an economic survival event. You never know when a personal issue or a more significant, worldwide incident will affect you.