Financial Prepping & Planning Guide

Are you a prepper? Do you have food, water, and weapons to survive a disaster? You may have all of the physical supplies, but have you considered your finances? Financial preparedness is often overlooked by preppers, but it is one of the most important skills to master.

Why Financial Prepping Matters:

Did you know that 41% of people cannot afford a small financial setback without going into further debt? Or that 80% of people have unwanted debt? These numbers show that a large proportion of people are financially illiterate. Financial literacy is crucial for self-sufficiency, and it's an easy-to-learn skill that can benefit you throughout your life.

Financial problems can happen on a personal level or a global scale, and no country is immune to financial difficulties. Even well-established countries attempt to create economic safety nets, but nothing is ever guaranteed. That's why it's essential to become financially prepared.

Self-sufficiency means relying on as little as possible outside of your control to live your life. Financial independence is the ultimate level of preparedness, where you're free of debts and have enough capital or investments to last you and your family the rest of your life. Financially independent people reduce their stress, open up new opportunities, and lower their risks every day.

If you find yourself struggling with finances, it's a good idea to fix it sooner than later. There are many ways to become financially prepared, including:

1. Create an emergency fund: Set aside some money for emergencies so that you can handle unexpected expenses without going into debt.
2. Manage debt: Understanding your debt and making a plan to pay it off can help you achieve financial stability and avoid costly interest charges.
3. Create a budget: Develop a budget to help you track your income and expenses and make better financial decisions.
4. Resist consumer culture: Avoid the temptation to overspend on things you don't need. Learn to differentiate between wants and needs and prioritize your spending accordingly.
5. Embrace thriftiness: Look for ways to spend less and get more value out of your purchases. This can include shopping for bargains, buying used items, and repurposing things you already own.
6. Invest your money: Investing your money wisely can help it grow over time, providing a source of income and financial security.
7. Diversify your investments: Don't put all your eggs in one basket. Instead, spread your investments across a variety of asset classes to reduce your risk and increase your potential returns.

Creating an Emergency Fund:

As a prepper, it's essential to be prepared for any emergency that comes your way, including financial emergencies. Did you know that 41% of American adults are unable to cover an emergency expense of $1,000 without going into unwanted debt? This is a significant concern that can lead to lifelong financial hardship.

One of the leading causes of financial emergencies is medical expenses. Additionally, a car breakdown or unexpected home repairs can also destabilize your job and employment, leading to financial disarray. That's why it's crucial to have an emergency fund in place to help you weather any storm.

But how much should you save, and where should you keep your emergency fund? While everyone's situation is different, here is a recommended method:

First, create at least one month's income in "short-term" emergency savings. This can be used for overdraft protection, small emergency expenses, and any budgeting inconsistencies. It's best to store these savings in a mix of checking, linked savings for overdraft protection, and cash in a lockbox or safe for easy access.

Next, build a larger emergency fund to cover significant expenses and potential job loss. This should be built up over time and cover 3-6 months' worth of expenses, depending on your job security. These larger savings should be in a high-yield savings account or other low-risk investment that can be easily accessed.

Remember not to put too much money into savings past the amounts you need for the first two steps. You should diversify further money, invest it, and pay down debt.

When people tell you that you need a specific amount in your emergency fund, it's important to keep in mind that everyone's situation is different. Therefore, building an emergency fund should be your first financial priority, followed quickly by addressing your debt, on the way to financial preparedness.

Being prepared for any emergency requires more than just stocking up on supplies. It's also essential to have your finances in order, so start building your emergency fund today!

Eliminating Your Debt:

We know that being prepared for any emergency requires financial stability. However, 80% of Americans have unwanted debt, which can affect many parts of your life beyond your finances. Debt can lead to feelings of helplessness, worsen relationships, draw out addictions, and fuel bad decisions.

There are two schools of thought on debt: keep "good debt" which is low interest or get rid of all debt. The answer depends on your situation. If you have a low risk of losing your income, are a homeowner, and are financially savvy, keeping "good debt" may pay off. However, for most people, getting rid of all debt as quickly as possible is the best way forward.

Credit cards, payday loans, high-interest car loans, and student debt usually fall under "bad debt" since they have higher interest rates than the average investment return.

Here are a few methods to get rid of debt:

1. Avalanche Method – Pay off the highest interest debt as much as you can budget.
2. Snowball Method – Pay off the lowest balance of debt as much as you can budget. As you pay off different cards/loans, use the freed-up payments to pay an even larger amount towards the next highest amount of debt.
3. Make More Money – Figure out a way to turn your time into more money. Get a side hustle, mow lawns, drive for Uber, or deliver pizzas. It may be grueling to work 12 hours a day, but it’s worth it to dig yourself out of a debt hole that you could be in for your entire life.
4. Spend Less Money – The best way to save money is to make a budget.

Budgeting can be the best tool to regain control of your finances. By making a budget, you can track your expenses, prioritize your spending, and cut back on unnecessary costs. It's important to take action and work towards financial freedom, so start tackling your debt today!

Budgeting Basics 101:

Creating a budget is an essential part of being financially prepared for whatever comes your way. While there are many budgeting apps and software options out there, it doesn't have to be complicated. In fact, all you really need is a pen, paper, and your bank statement.

To get started with creating a monthly budget, follow these simple steps:

1. List your monthly income after taxes.
2. Look at your credit card and checking account records to find itemized expenses.
3. Categorize your expenses (e.g. housing, food, transportation, entertainment).
4. List your expenses under each category.
5. Subtract all of your expenses from your monthly net income to determine your remaining funds.

Once you have a clear picture of your spending categories and net income, you can set limits for each category to stay within your budget. If you have a lot of one-time expenses, consider repeating this process for other months and finding an average to set your budget. It's also a good idea to look at your expenses over the course of a year to account for annual fees and costs that may not be apparent from just one month's worth of data.

While budgeting may seem overwhelming at first, remember that it's just simple addition and subtraction. By taking the time to create a budget and sticking to it, you can better prepare yourself financially for any situation that may arise. And who knows, you might even find that you have more money to put towards your prepping goals.

The Problem with Consumer Spending Habits:

As preppers, we know that being financially prepared is just as important as being physically and mentally prepared. And that means taking a hard look at our spending habits. In our culture, consumption is often seen as a measure of success, but excess consumption can lead to financial struggles and debt.

One of the biggest culprits of overspending is impulsive buying and the desire to keep up with others. We're bombarded with ads and marketing every day, telling us we need the latest and greatest products to be happy. But the truth is, buying more stuff won't fill the void inside us.

We could blame external factors like marketing or cheap goods, but as preppers, we know it's more productive to focus on what we can control: our income and our spending. While it's not always easy to increase our income, we can all make a conscious effort to reduce our spending.

One of the best ways to do this is by creating a budget. This will help you see exactly where your money is going and where you can cut back. Think carefully about purchases that won't add value to your life, like designer clothes or a new truck. Remember, the more you buy, the more you have to take care of.

By cutting back on unnecessary spending, you'll be able to create a healthier budget and eliminate debt or build wealth. As preppers, we know that being financially prepared is just as important as being physically and mentally prepared, so let's take control of our spending habits and secure our financial futures.

Spending Less and Getting More:

In the world of prepping, being able to make your money go further is an essential skill to have. By mastering a few simple techniques, you can stretch your dollar and make a real impact on your finances. Here are some of the best ways to make your money go further:

1. Buying in Bulk - Bulk buying is a prepper's best friend. Not only does it ensure that you have enough critical supplies in case of an emergency, but it can also save you a lot of money in the long run.
2. Couponing - Coupons and discount codes are available for almost anything these days, from tools to online shopping. Always check for coupons before making a purchase.
3. Seasonal Deals - Holidays are great times to snag a deal on something you need. By waiting for sales, you can save money and avoid impulse purchases.
4. Buy Repairable - Don't waste money on cheap items that will need to be replaced when they break. Instead, invest in quality tools and clothing that can be repaired when necessary.
5. Thrifting - Thrift stores, yard sales, and consignment stores are great places to find used items at affordable prices. Just be sure to do your research and know the value of what you're buying.
6. Freebies - Everyone loves free stuff, and there are plenty of ways to find it. Check Facebook groups, Craigslist ads, and ask friends and family if they have anything they're getting rid of.

By using these techniques, you can make your dollar go further and build up your savings. And once you've saved up some money, don't forget to invest it wisely to make your money work for you.

Strategically Investing Your Money:

Investing your money wisely is an essential part of prepping for any future uncertainties. While there are numerous investment options available, choosing the right one can be a challenging task, and the risks involved can be daunting. Financial managers may provide guidance but are often known to charge hefty fees, which can affect your returns in the long run.

Portfolio managers are evaluated based on their ability to outperform the market, which is referred to as "alpha." However, even the smartest fund managers may not perform better than a low-fee S&P500 index fund. Past performance is no guarantee of future performance, and the market is unpredictable.

Investing in individual stocks can be risky, as it requires a lot of research and analysis, and even then, there is no guarantee that you will make profits. Hence, it is recommended that you invest in a low-fee S&P index fund. Robinhood is a popular investment app that lets you buy stocks, ETFs, cryptocurrencies, and stock options without any trading fees.

While SPY or VTI index funds are good options, it's essential to diversify your portfolio and investments. Diversification can help you mitigate risks and safeguard your investments against unexpected events like pandemics, financial collapses, or natural disasters.

Investing your money can be a great way to make it work for you and help you achieve your financial goals. However, it's important to do your research, diversify your investments, and choose an option that aligns with your risk tolerance and financial objectives.

Diversification of Your Cash & Assets:

As preppers, we know the importance of not putting all our eggs in one basket. This is common sense, especially when it comes to our survival supplies. But did you know that diversification is just as important when it comes to our finances? Diversification means spreading out our investments and assets to minimize risk and increase financial success.

Think of it this way: if you put all your eggs in one basket, and that basket falls, all your eggs will break. You don't want to take this risk with your financial "eggs." Every investment has its own risks, but if you invest in different types of assets, they will have different risks.

One way to diversify your investments is to invest in funds like mutual funds and exchange-traded funds (ETFs), which bundle several securities into a fund to lower risk compared to single securities. However, even diversified funds can be further diversified.

Beyond investing, there are many ways to diversify the ways your money works for you. You can invest in stocks, ETFs, and stock options for aggressive retirement plans or longer-term savings. Cryptocurrency can hedge against inflation or currency manipulation and also be used as a speculative investment. Securities, bonds, and CDs are okay for very low-risk retirement plans, but some do not outperform inflation. Savings and high-yield savings accounts are great for short and long-term emergency savings. Private equity is good if you understand a company and have a lot of capital since there is usually a large minimum investment without guaranteed performance or timing. Real estate and real estate investment trusts (REITs) are great for those who like some control over their investments. Bullion is great for hedging against financial collapse or TEOTWAWKI events. Side hustles are an excellent way to earn extra income. You can also invest in yourself by learning new skills, acquiring survival resources, or increasing your survivability. And, of course, keeping a cash stash is always a good idea.

The key is not to be invested in just one or two of these assets but most of them. Your investment mix should vary depending on your financial position and interests.

As preppers, we understand the importance of diversification, and we can apply this knowledge to our finances. By diversifying our investments and assets, we can minimize risk and increase our chances of financial success. Remember, don't put all your eggs in one basket!