6 Tips for Preparing for a Financial Crisis
Being prepared isn’t just putting some buckets of rice and beans into your storage. It also means being prepared to survive a financial crisis. As we live our daily lives, we are well aware of the scenarios around us, of countries and companies in trouble financially. We live in an interconnected world and a global economy. A financial crisis that happens on the other side of the planet can affect our financial survival. While crisis is not something you hope for, it is something you can plan to survive.
Here are 6 things you should do to get prepared for a financial crisis:
An emergency fund
You don’t want to lose everything that you have worked for, if a financial crisis happens again. It is imperative that you have an emergency fund. It should be enough to cover all of your expenses for at least six months, but it’s even better to have an emergency fund that is even larger than that.
Thinking toward the future
Next to your emergency fund, your retirement account should be a priority. The chance for financial crisis increases with age, and you need to be prepared for the time when your regular paychecks cease. In addition to your company’s retirement plan, put some money into long-term stocks, bonds, and mutual funds.
Reduce your expenses
A lot of people claim that they can’t put any money toward prepping, but the truth is that we all have room to reduce our expenses. We all spend money on things that we do not really need. Those that are “lean and mean” will tend to do much better during the times that are coming.
Starting a side business
If you do not have much money, a great way to increase your income is by starting a side business. There are many side businesses that you can start for next to nothing. And starting a side business will allow you to become less dependent on your job. In this economic environment, a job could disappear at literally any time.
Paying off debts
Paying your debts is an emergency. Your debt keeps you in bondage to your job and to your lenders. Those two forces will call the shots in your life until your debt is paid off.
Understanding your financial style
Are you a saver? Are you an impulse shopper? Are you quick to charge items on your credit cards? Knowing your financial strengths and weaknesses helps you know what sort of help you may need to avoid financial pitfalls.