Getting your finances in order is one of the most important things you can do to prepare. It’s never too early to start — even if (especially if!) the numbers are small. This guide explains how an average person can improve their money habits to build a great foundation both for daily life and emergencies.
Don’t be one of those people who has massive stockpiles of prepping gear but lives paycheck to paycheck with high credit card debt and no emergency or retirement savings.
Being prepared means lowering your chances of bad situations happening and being ready to handle them when they do. Being a rational prepper means preparing based on which emergencies you’re most likely to face.
Even though it’s easy to think about zombie fantasies, you’re much more likely to face personal financial hardship than a huge SHTF collapse event, where cash is worthless and you’re bartering bullets for bread.
Personal economic hardship, and a general sense of things going in the wrong direction (both personal and at a larger economic level), represent two of the biggest reasons why people are preppers. Money is usually the #1 or #2 most popular answer given when researchers ask people what causes them the most pain in life.
Some shocking facts about America, “the wealthiest country in the world”:
43% of American families — that’s 51 million households — struggle to afford a reasonable level of housing and food.
14% live in poverty. 20% of children go hungry for at least a portion of the year.
57% have less than $1,000 in savings.
25% have a significant life-disrupting financial hardship per year.
46% can’t afford to handle an unexpected $400 emergency (like a sudden car repair) without using their credit card. 61% can’t afford a $1,000 expense. Yet 33% of households have a major unplanned expense per year.
77% of Americans don’t have enough saved up to cover six months of expenses. 26% have $0 in emergency savings.
The average 35-65 year old American is $125,000 in debt.
The average American with a credit card balance carries $16,000 in debt at a 17% interest rate.
2016 college graduates have an average of $37,000 in student loans.
25 million people per year choose not to get medical help or take important medications because they can’t afford it. 620,000 people per year declare bankruptcy due to medical expenses.
Over 50% have $0 in retirement savings, and the median is only $5,000. Only 18% of people feel confident they have enough saved for retirement.
Millennials have a nest egg 30% smaller than all previously-recorded generations at the same age.
About 35% of millennials have $0 saved for retirement and 20% say they will never retire.
Even though it might seem like the economy is doing well, over 80% of the gains go to the wealthiest 1%. The vast majority of normal people haven’t seen any real economic improvement in decades.
Things are only going to get worse. There is almost no data that suggests things will get better for people outside the top 1-5%. Future changes like automation and job loss combined with changing demographics will only accelerate the problem.
Money troubles have a huge impact on your life: stress, bankruptcy, divorce, depression, physical and mental health problems, poor work performance, your children are disadvantaged, and on it goes. Perpetually living hand-to-mouth, or digging yourself out of a debt hole, is just a horrible experience.