The recent plunge in equities value was like a shot across the financial bow for many stock market investors—a warning that darker economic storm clouds are gathering.
Many investors now question whether to “buy the dip” or pull out of the market amidst the turbulence.
But for the average American, staying financially afloat boils down to having essential financial planning and survival skills.
“The time to get your finances in order is always as soon as possible before an actual emergency,” says John Ramey, founder of ThePrepared.com, an emergency preparedness website.
“It’s similar to the people scrambling to buy toilet paper at the start of COVID—the prepared people were at home, already stocked, avoiding the contaminated crowds,” Ramey told The Epoch Times.
Ramey likened the current situation in the stock market to facing an economic correction with one hand tied behind your back.
Prepare For That Rainy Day
However, Ramey said he strongly disagrees people should keep their money out of the financial system as much as possible in these uncertain times.Instead, it’s crucial to have a mix of assets—in a word, diversification.
“You should have a proper mix so that you don’t have all of your eggs in one basket—but on the other hand, there aren’t many places worthy of parking cash outside of the financial system—especially during a high-inflation environment where you lose out on the gains,” Ramey said.
Despite the frequent ups and downs in commodities—especially gold and silver—many people view precious metals as an important hedge against inflation and a potential market or currency collapse.
But there are problems associated with the metals.
Ramey said, “You can look at the prices for those metals in recent months and see they aren’t acting as a hedge against inflation.
“And the world is so interconnected that the ‘localized economic emergency’ value doesn’t exist anymore—if there’s a problem in [the U.S. dollar], there’s a problem in [the euro], and [Chinese yuan], and so on.
“Crypto has spiritually replaced hard metals for many people thinking about these worries. But crypto obviously has its own quirks and should still be thought of as a speculative investment, not a safety plan unless you’re in an extreme environment like Russia.”
Cash Is Still King
Ramey said having emergency cash in physical and digital forms is one way to plan for that rainy day—or a perfect storm.The situation would include other vital necessities, such as food and other “I need to survive today” items already on hand.
On the preparedness website “A Year Without the Grocery Store,” Karen Morris said knowing that we live in difficult economic times is reason enough to be financially prepared.
“First off, we need to recognize that unless you are independently wealthy, there is both potential risk as well as potential reward for having your money in a bank. We need to constantly assess that risk/reward relationship,” Morris said.
“If you decide that you need to take a specific amount of money out of your bank, you need to realize that banks limit the funds they allow you to withdraw.
“Every bank is different. I’ve seen banks that limit the ATM cash withdrawals to $300 [per] day or $800 [per] day, but I’ve never seen a bank that doesn’t limit your ATM withdrawal amount,” she told The Epoch Times.
She added that banks would also limit the cost of purchases when using a debit card daily.
“Even when we went into the bank to withdraw cash to purchase a riding lawn mower from a private seller, they had to get the bank manager’s approval to get the funds from our account,” she said.
Diversify, Diversify
She said that diversifying your funds and researching a bank’s strengths are also ways to ensure financial security.“Which bank would be more easily able to handle a crisis? Which have lent out fewer funds than others? Which ones have more cash on hand and are more stable?” Morris said.
Likewise, keeping precious metals is an option for financial peace of mind.
“If you choose to go this route, I recommend ‘junk silver.’ Coinage produced before 1964 is often referred to as ‘junk silver’ because those coins have actual silver content. Because of this, it makes them less likely to be stolen. Who wants to steal what looks like $10 in change?” Morris said.
“They don’t realize that the value of those coins is worth between 35 [to] 90 percent higher than the coins’ face value.”
Morris advises keeping at minimum one or two months of cash available to pay mortgages and utilities.
“You don’t include your grocery budget in this because you should have a minimum of one to two months of food on hand at all times anyway.
“If you have to go without purchasing most goods for one to two months, in most cases, you should be able to even if you have to go through something uncomfortable—like living through part of the summer without air conditioning.”
It’s not fun, but it should be doable in most cases, and in a financial crisis, barter can work just as well any fiat currency.
Morris said people should take stock of what they own to use as barter and “think outside the box.”
Having a personal skill to trade also helps.
“We’ve talked about planting almond trees on our property. First off, who wants to steal almonds? Seriously? It’s a lot of work to gather and crack the nuts.
“However, our vision is this: If we have the tools to gather and crack the nuts, we can make and barter almond milk—which is super simple to make,” Morris said.
She added that having a “side hustle” skill or job to bring in extra income can fill the financial gaps in a personal budget.
