Prepper Recon

Resilience- Part 2- Financial Resilience

Resilience: an ability to recover from or adjust easily to misfortune or change.

Resilience is an essential aspect of preparedness. In this series of posts, we will discuss three different layers of resilience. We have covered  personal resilience, which is your  mental and physical ability to cope with adverse circumstances. If you didn’t get a chance to read it, here is the link to Personal Resilience. There is also financial resilience, which we cover in this post. Finally there is basic resource resilience. This envelopes all of your basic resources such as food, shelter, and water.

The foundation of financial resilience is a budget. It is nothing to be afraid of, it is simply any means you would like to use to track how much money is coming in and how much is going out. Once you know that, you can figure out your priorities and make adjustments. First, list all of your bills and grocery spending for the month. These items are your non-discretionary spending. Then list all of your shopping and entertainment spending. Most of this is discretionary spending and this is usually the easiest place to find ways to cut spending.

Now, let’s set some savings goals. Do you want to buy a house or pay off your mortgage early? Are you saving for retirement? There are only two other options to planning for retirement. One is working until you die and the other is dying early. We have some links to some very good budgeting forms on our Economy and Finance links. Dave Ramsey has an online budgeting form as well as free printable budget forms to get you started.

Once you get a budget going, you can start to look at ways to cut spending and increase savings.  Let’s say you can cut your spending by 20%. That 20% can go directly into savings. This builds financial resilience into your budget. The money saved is there to bail you out of unforeseen events without taking on more debt. You will also grow accustomed to living on 20% less. If your income is cut for any reason, the impact to your standard of living will be less. If you took a 20% pay cut due to cuts at your job, you may no longer be able to save the 20% you were saving before, but you would not have to cut your standard of living. You will still be living within your means because you had voluntarily cut that spending from you budget  previous to the pay cut.

One big budget buster is entertainment. Cable and satellite TV companies are always trying to get you to upgrade to a more expensive package.  How much could you save by getting the minimum package? Groceries are another budget buster. Stocking up when items are on sale is a great way to build resilience. You can also put coupons on the sale items to save even more. You will spend less and build a stockpile for emergencies. Our Coupon Corner has great tips on couponing as well as links to several coupon sites.

Our  nation’s biggest threats are financial, so financial resilience is the best way to prepare yourself and you family. Living below your means will actually increase the quality of life even if you reduce your standard of living. You will  have more peace and be better prepared for economic crisis on a personal or global level. If you have not read our 7 Step Preparedness Plan, I encourage you to do so. You will find much more information on financial resilience in step 1 “Budget” and step  6 “Bonds”.

Happy Prepping!