Happy Thursday, friends! This whole government shutdown fiasco and impending economic crisis has me thinking a bit more seriously about the financial situation of most Americans. Political leanings aside, a long-term shutdown could cause real and present financial danger for the average American. Several things could happen, should we spiral into an economic crisis, that could change daily life for most citizens. Let’s say, for example, that the government doesn’t “put on their big boy pants ” as Grayson over at Debt Roundup so eloquently put it, anytime soon. What does this mean for Americans, and more importantly, how can we be prepared for any economic crisis that might hit should the shutdown be a long-term one? Here are some thoughts:
Have Cash on Hand
When Black Tuesday struck during the Great Depression, the first thing people did was head to their local bank to retrieve their cash. The problem with that plan in today’s America is that the cash you have at the bank isn’t really at the bank, but instead, scores of Americans have used your money (with your bank’s eager permission) to buy new cars and big fancy houses. Banks have a finite amount of cash on hand (when I was a teller supervisor years ago, we kept roughly $250k on hand at the very most), and depending on the severity of a bank run, you may or may not be able to get your hands on your hard-earned cash during an economic crisis if it’s stored in the bank. I’m not against banks in general, but it’s a good idea to have at least some cash on hand for food, gassing up the car and paying bills, just in case financial disaster does hit.
Have a Supply of Extra Food Stocked up When an Economic Crisis Hits
First, you don’t want to be among the crowds of crazy people raiding Walmart for canned beans and toilet paper should things really hit the fan and everyone starts to panic. Granted, this is not likely to happen, but we’ve seen it during natural disasters like Hurricane Katrina, so we know that it can happen during an economic crisis. Two, if a government shutdown goes long-term, there’s a large likelihood of sharply rising food prices, due to job furloughs and possible limited supply and increased demand. Again, this probably won’t happen, but it could. I don’t know about you, but if it does, the last thing I want to be worrying about is how I’m going to feed my kids. Having a little stockpile of extra food is always a good practice, whether it be to cover you during an economic crisis, a natural disaster, or simply a short-on-money month.
Take Steps Right now to Get Your Financial House in Order
It’s well-known that when an economic crisis hits the U.S., the higher up you are on the “financially secure” scale, the less it’s likely going to affect you. Consider this quote from an elderly man who lived through the Great Depression:
Because we never took on debt, we only had to worry about buying food and other basic needs. Because my dad had set aside some money, the Depression was an opportunity for him instead of a curse. He was able to buy houses, land and other equipment that people needed to sell, for pennies on the dollar. We came out of the Depression better financially than we had gone in, but only because my dad had practiced good money-management skills in the years before the Depression hit.
This is just one reason it’s so very important to work toward paying off debt and building up a solid savings account. It’s likely that everything will remain just fine in the U.S., financially and otherwise. But the financial security that comes with taking these three steps will help ensure that you’ve got three less things to worry about during an economic crisis or other crisis where you live.
What are your tips for survival during an economic crisis or other unforeseen malady?
Photo courtesy of: Tax Credits