Home > 4. Money
Money is often the biggest factor in ensuring you can remain in a safe location. Moving into a gentrified neighborhood or a gated retirement home, immigrating to a more peaceful or less polluted country, ensuring you have access to health care, etc. cost a lot.
Secondly, money is often the best tool to escape faster and further from the disaster area, saving yourself and your loved ones from increased hardship. Ask any refugee from a war-torn country who has tried to flee across borders.
When facing a catastrophe, money will help immensely to dampen the blow by allowing you to purchase immediate necessities (food, shelter, security, health care, etc.). Especially at a time when their price might suddenly go up quickly.
Once the event has passed, money will also ensure you can replace lost items if your house, vehicles, gear, etc. were destroyed. Paying for insurances prior to a disaster can be a tremendous boost in the recovery period (see list below).
Unfortunately many people are just one life event away, or even one paycheck away, from a financial catastrophe whether it be a divorce, a health issue, a business going belly-up or an expected bill. That is even before considering the economical impacts of a global disaster affecting an entire region or nation, such as food shortage, hyperinflation, or massive unemployment.
In order to do so, you need to:
consolidate and pay down all your debts
minimize expenses (see saving tips below) and increase income (learn new skills that you can monetize)
build up your savings
make a long-term financial plan and stick to it.
For example, saving an amount equivalent to 3 or 6 times your monthly salary will help cushion the blow of losing your job, or suddenly not being able to earn an income due to poor health. This can be achieved by reducing frivolous consumer spending (e.g. expensive vacations paid on credit) and avoiding bad debts*.
* Having to go into debt can be useful if the debt works for you, not you for the debt, e.g. getting an education instead of a flashy car.
Diversify your saving portfolio in terms of different assets **, sector, and geography, i.e. "Don't put all your eggs in one basket".
Keep some of your finances liquid **, i.e. easily accessible. Remember the capital controls put in place by governments of Malaysia in 1997, Cyprus in 2013, Greece in 2015, Lebanon in 2019 when banks were shut and ATM withdrawals limited?
Save in various currencies: No matter how much money you save, it won't help if you keep it all in one currency that could lose its value suddenly. Think of the currency crises of the Weimar Republic in 1923, Argentina in 1989, Russia in 1998 and 2022, Zimbabwe in 2008, Lebanon in 2021. So spread your savings between:
. local currency
. foreign currencies (Euros, US dollars, Swiss francs, Japanese yens, Australian dollar, New Zealand dollar)
. crypto currencies.
** Example of a diverse savings portfolio in order of decreasing liquidity:
. cash: bank notes, cheque accounts, credit cards, cryptocurrencies
. saving accounts
. national / local government bonds
. portfolio of mixed investments, e.g. managed funds, Exchange Traded Funds (ETFs)
. equities (stocks and shares) and bonds (loans) issued by listed companies
. precious metals and precious stones (gold, silver, jewelries)
. term deposits
. real estate (properties) either commercial or residential
. art pieces
. direct investment in non-listed companies.
Protect yourself and your loved ones against catastrophic financial losses due to:
accident and illness --> health insurance, trauma insurance, disability insurance
redundancy and unemployment --> income protection insurance
partial or total loss of your home, vehicles, business, personal gear, etc. --> mortgage protection, content insurance
away-from-home mishaps --> travel insurance
old age --> pension plan
death --> life insurance.
Become self-reliant as much as possible, e.g. invest in solar energy, collect rainwater, repair and fix broken items, build your own, grow your own vegetables.
Reduce wastage of stockpiled items by using food, clothing and medicine in rotation.
Reduce consumption, e.g. use half a quantity of toothpaste or washing powder.
Find an alternative to buying something, e.g. buy second hand, borrow if one-off use, do it by hand, repair it, make it yourself.
Build a community you can rely on – it is a form of wealth (see the Community page).
Reduce unnecessary purchases and use up what you already have before buying anything new.
Think about problems with a fresh mindset, e.g. look for an online supplier instead of relying on local stores, or do the opposite.
Talk to other people interested in finances and stay curious to learn about cheaper alternatives.
And always think: Reduce, Reuse, Repair, Repurpose, Recycle.