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The Prepper’s Guide to Personal Financial Planning

Nearly everyone, including preppers, faces at least one personal financial emergency in their lifetime. Because of this, every prepper should have a personal financial plan in place to keep them protected from financial ruin.

A prepper’s personal financial plan should consist of savings, debt reduction, having adequate insurance, and becoming more educated about how money works. It should also include ways to make more money while reducing spending.

This article will go over these topics in a way that can help preppers be more protected from a personal financial disaster. I’ll also cover some financial topics that are more prepper-specific and would help prepare for a total financial collapse. 

Disclaimer

Everyone’s financial situation is different. Because of this, the best advice that I can offer is to seek guidance from a financial professional who is licensed in your jurisdiction. This information is for educational and entertainment purposes only. 

Saving

One of the most important parts of a prepper’s financial plan is saving money. Doing so gives a financial cushion to deal with unexpected problems you may encounter. Having ample money in savings could also enable you to take advantage of opportunities that come your way. It is also the bedrock of a good retirement plan.

Depending on who you listen to, you will get various answers for how much you should save. Some people say $1,000 while others say you should save enough money to cover a year’s worth of expenses. For preppers, having enough money to cover at least three month’s worth of expenses is a healthy start. 

As a prepper, you should also have some of your savings available to you at all times in the form of cash. This cash should be kept in a safe place in your home, such as a fire-resistant safe. A minimum of $500 is a good start for this, but as with savings in general, more is better. 

Having cash easily accessible will allow you to pay for supplies if there is a prolonged grid-down situation. However, it should be noted that in an economic collapse, cash would become virtually worthless. Because of this, I don’t recommend keeping a huge amount of cash in your house.

Keeping a large amount of cash in your home exposes it to the dangers of fire and theft. Have enough to buy supplies that you think you may need during a short-term emergency or during the early stages of something more serious. 

Debt Reduction

Reducing debt is another thing that preppers should focus on when developing their personal financial plan. Staying out of debt and eliminating as much of it as possible is good for many reasons. 

The first is that doing so will keep more money in your pocket. Interest, especially the high interest associated with things like credit cards, is a financial anchor. It can be extremely hard to get out from under. 

Another reason why preppers should avoid or reduce debt is that doing so can relieve a lot of financial stress. Not having a slew of monthly payments gives you more freedom. You could use this extra cash flow to buy more preps, take a vacation, or leave a job that you hate. 

The best way to deal with debt is to avoid it from the start. Many Americans exit college with an immediate financial disadvantage. They start their financial lives buried under student loan debt. What’s even worse is that they have become conditioned to live with debt as a normal and expected part of life. This makes them more likely to get into even worse debt later on. 

How Preppers Can Get Out of Debt

If you are already in debt, you have a few options. The first is to do the debt snowball method. This works by making minimum payments on all debts except the smallest one. Any additional money that you have is placed towards paying down the smallest debt as quickly as possible.

After the smallest debt is paid off, you focus on paying off the next smallest bill. Pay what you normally would plus what you were putting towards the previous debt. This is good if you struggle with staying motivated since it gives you a better chance of success.

The debt avalanche is another method. In this method, you target the debt with the highest interest rate. Make minimum payments on all other debts and focus all extra money on that debt. After that is paid off, moved to the one with the next-highest interest rate. This is beneficial since you will end up paying less money in interest over time.

If you have a bunch of high-interest debt (usually credit cards) it may be beneficial to take out a personal loan. This will allow you to consolidate multiple high-interest debts into one debt with a lower interest rate. You may also be able to reduce your monthly payments as well. However, if you get back into credit card debt, you will be in a really bad position. You will then have more payments to make than when you started.

Keep Up with Insurance Needs

Preppers should also consider insurance to be an important part of their personal financial plan. This includes, but is not limited to, policies covering health, life, your home, and your car. Having these areas insured properly will protect you and your family from the largest financial catastrophes. 

Deductibles and Coverage Limits

In general, it is better to have a high deductible with high coverage limits than it is to have a low deductible and low coverage limits. Having low coverage limits means that your insurance company is off the hook if a situation requires additional money. For example, if you have a wreck and total an $85,000 car but only have coverage up to $75,000, you will be on the hook for the remaining $10,000.

Having a high coverage limit is useful if you are involved in a catastrophic accident that causes severe injury, property damage, or death. These types of accidents can easily cost tens of thousands or even hundreds of thousands of dollars. The downside of having a high coverage limit is that you will have to pay a higher deductible out of your pocket when filing a claim. Policies that have high coverage limits and low deductibles are cost-prohibitive. 

Having a higher deductible usually has the effect of people not filing claims on small things and instead opting to pay for them themselves. Because of this, you will need to have enough money in savings to cover your higher deductible along with any incidents that may occur.

Health Insurance

When selecting health insurance, try to select a plan that has an out-of-pocket maximum. This is the largest amount that you are responsible for when paying. (This is provided that your policy covers all of your expenses.) The downside to this is that the policy will usually have a higher deductible. High deductible policies like this seem to be the new norm with co-pay policies becoming more expensive. 

Also, be sure to know what types of procedures that your policy covers as well as your network providers. Not knowing this information could cost you a ton of money.

Life Insurance

When it comes to life insurance, preppers should try to get as much coverage as they can. Many people think that a $1,000,000+ life insurance policy is way too much coverage. However, life insurance is designed to pay your beneficiary (usually a spouse or children) the money that you would have provided them if you did not die early.

Take, for example, a 27-year-old person who makes $50,000 per year. Over their working years, they are expected to earn $1,900,000 if they retire at age 65. That doesn’t even take into account raises or inflation. If that person were to die today, then their family would lose nearly 2 million dollars in earnings.

Having as much coverage as possible will allow you to support your family financially after you die. You will still be able to help them pay for their house, higher education, and other expenses. 

Home and Car Insurance

Your goal for homeowners and car insurance should be for it to completely replace what you have lost. Coverage limits are extremely important for this. 

When it comes to your homeowners policy, make sure that your possessions are well-documented. Having a record of property such as electronics, furniture, and even firearms is a must. Keep it in a safe place and have a cloud-based backup copy. 

Also, be aware of any coverage limitations that are in your policy. Some items, such as firearms, are usually only covered to a specific dollar amount. If you have more than that, those won’t be covered, even if the policy as a whole is sufficient. You will need to purchase additional coverage for those items. 

Get Insurance from a Reputable Company

One of the worst things that preppers can do is purchase their insurance from a company simply because it is the cheapest. Get your insurance from an established company with good consumer reviews. 

Bargain bin insurance companies tend to make their money by not paying claims. If they do pay a claim, it is after making their customer or whoever filed the claim jump through tons of hoops. I know this through experience. 

In one situation I was rear-ended on the way to work. The person who hit me had insurance from a less than stellar insurance company. The damage was minor but the claims process was ridiculous. I won’t say which company because I don’t want to get sued for libel. However, I will say it was one of the bargain-bin insurance carriers. 

In another situation, an overly-medicated neighbor ran into my yard with her truck. She messed up the yard and knocked a small tree into my gutter and damaged it. Her more reputable insurance carrier covered everything. I sent them a couple of quotes and got a check. Simple, easy, and done. 

Have a Side Gig

Every prepper should have a side gig as part of their personal financial plan. Doing so will help you bring in more money each month that you can put where you need it most. You can use it for savings, paying down debt, or even to pay for more preps. 

Another good thing about having a side gig is that it provides protection if you lose your primary job. Having at least some money coming in each month is way better than having nothing. You could also use your experience from your side job as a way to get into another field if you want or have to do a career change. 

Having a side gig could also give you a marketable skill that you could use during a long-term emergency or TEOTWAWKI. For example, someone who knows how to work on guns could trade their skills for food and water. 

There are many options for preppers needing a side gig. If you are tech-savvy, then web design, blogging, and Youtube are all options. If you are a skilled marksman, putting on handgun classes may be a good fit. Here are some more examples of side gigs that you can do in your spare time:

  • Photography
  • Web design
  • Carpentry
  • Yard service
  • Handyman work, including furniture assembly
  • Rent spare rooms via Airbnb, VRBO, and others
  • Teaching skills (CPR/First Aid, survival, music lessons, etc)
  • Real estate investing (rental properties, flipping houses)
  • Walking dogs
  • Babysitting

I have written an entire article about ways that preppers can make more money. It is primarily geared towards helping raise more money for preps, but the information in it can be used for other purposes, such as saving. You can find it by clicking here. 

Get Educated

One of the most important things that a prepper can do to strengthen their personal financial plan is to get educated. After working in public education for nearly 10 years, I know for a fact that traditional education does very little to teach people about finances. People graduate high school (and college) with general knowledge of language arts, mathematics, and science. However, they understand very little about how money works.

Because of this, people tend to fall into the same financial traps over and over again. Lack of savings, student loans, and addiction to credit cards tend to keep people financially bogged down most of their lives. The best way to avoid making those mistakes (or making them again) is to learn more about how money works.

There are a variety of resources available for preppers wanting to learn more about personal finance, but my favorite are books. The Richest Man in Babylon is probably the best book to start with, especially if you are just getting started. It focuses on the importance of saving and using your money wisely. Robert Kiyosaki expands on its “pay yourself first” in his best-seller, Rich Dad, Poor Dad.

If you struggle with debt, your best bet may be to start with Dave Ramsey’s Total Money Makeover. It takes a hardline stance against debt and focuses on fixing your finances by eliminating it. I prefer to have more in savings before tackling debt, but his approach has worked well for many people.

Tony Robbins is another good source of information. His most popular personal finance book, Money Master the Game, features interviews with finance experts. It has good information for preppers of all income levels. I haven’t read it yet but it does come highly recommended. However, I have read one of his other books, Unshakable. It is a great resource to help you find a financial advisor who will work for you as a fiduciary who is legally obligated to act in your best interest.

Protect Against Inflation

Inflation is always going to be a problem. It is the reason why our grandparents paid pennies for a gallon of gas while it can cost $3 or more today. A prepper’s financial plan should take this into account along with the possibility of hyperinflation.

Hyperinflation is when a currency’s value drops rapidly, which results in the prices of all goods skyrocketing. This happened in Venezuela and is what many preppers mean when they talk about an economic collapse. A government printing too much money combined with excessive demand for products results in hyperinflation.

One good way to insulate yourself from hyperinflation is to begin (or continue) to store food and water supplies. Food is a resource that you can’t live without. If hyperinflation does occur, food prices will go through the roof. Setting aside shelf-stable foods today is a good way to get ahead of it. 

Even if hyperinflation doesn’t occur, storing food today is still a good way to insulate yourself from the “normal” inflation that happens yearly. Food prices are constantly going up. I have seen the price of Mountain House meals go up while portions become smaller. Keep in mind that many supplies are never going to be cheaper than they are today. Because of this, it is best to go ahead and stock up now.

Bartering Items and Skills

If hyperinflation does occur, paper money and what you have in your bank account will become virtually worthless. Having things to trade and deal-making skills will help you get items that you need without having to run around town with a wheelbarrow full of cash. Here are some items that you can trade:

  • Soap and shampoo
  • Toothpaste
  • Coffee
  • Over the counter medications
  • Flashlights
  • Water filters
  • Fuel
  • Shelf-stable foods
  • Precious metals
  • Skills and labor
  • Natural resources from your property (water, lumber, etc.)

Preppers should also learn how to negotiate. This will enable them to get the most out of supplies that they are planning to barter. Going to swap meets and flea markets is a good way to practice now.

Be More Frugal

Every prepper should strive to be more frugal. This will help them buy fewer things that they don’t need and spend less on the things that they do need. Here are some ways that preppers can trim the financial fat and be more frugal. 

Keep an Eye on Sales and Coupons

Every prepper wanting to improve their finances should keep an eye out for sales and coupons. Sales tax holidays are another thing to look out for if you live somewhere that has them. 

Sales and coupons can also be double-edged swords. They can influence you to spend more money than you should or get things you don’t need because “it’s such a good deal”. Be sure to be intentional and only get what you need. 

Buy Used and Save the Difference

Buying certain items used is another good way for a prepper to improve their finances. You can take it a step further and put the money that you saved into savings or buy more preps. 

I stole the phrase “Buy used and save the difference” from Jim Bob Duggar. The “Bunch of Kids and Counting show is another thing that I have seen because I’m married. If you have a spouse you probably know what I mean. However, that saying is very true and good to keep in mind. 

Clothes, tools, and household items are all good items to purchase used. You can find really good deals on these types of items at garage sales and flea markets. 

Related: How to Get Good Tools Cheap

Eat Out Less

This one hits very close to home and is something that my family and I really need to improve upon. Eating out is incredibly expensive and can cost double or more of what a home-cooked meal does. If you are busy it can be a very difficult habit to break. 

For a prepper concerned about their finances, this is a big problem. Excessive eating out can prevent you from being able to purchase food storage preps. It can also hamper your efforts to save money or get out of debt. In really bad situations, it can even cause you to go further into debt.

Check Your Memberships

Many people have memberships that they don’t use and may not even know that they have. A gym membership is the most obvious one but there are others that can cause problems too. 

One example would be movie clubs. My wife and I were part of one and it was nothing but a financial drain. We paid around $40 a month for one DVD or Blu-ray plus “special deals” that we never used. It was nothing but a financial black hole so we got rid of it. 

We had another “membership” that we didn’t even know about until they charged our credit card. My wife registered for a race, and in the process, signed up for a free trial with the company handling the event registration. It was one of those automatically selected checkbox things that “you could cancel at any time”. 

The problem with these types of memberships is that many times, people don’t always realize that they have signed up for them. Combine this with not checking your card account summaries, and you could end up paying hundreds of dollars for something that you never use. 

Because of this you should always keep an eye out for recurring payments and payments for things you have never heard of. Also make sure that you know what you are signing up for when making purchases and competing registrations online. 

Become More Self-Sufficient

Becoming more self-sufficient is another way that preppers can reduce financial stress. Doing so will help you save money on expenses and help you learn how to handle problems on your own. 

One area that preppers can be more self-sufficient in is basic home repairs. Simple things like clogged drains can cost hundreds of dollars to fix. However, with the right tools and a little knowledge, many of these things can be done yourself.

Related: How to Clear a Clogged Shower Drain

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