The 3 Layers of Financial Preparedness

Guest Post by Daisy Luther

As our banking system implodes all around us, you may be wondering how on earth we can be financially prepared for the future in a world where our national currency is at extreme risk. While it’s easy to say, “Invest in precious metals,” it’s also important to know that PMs, while important, aren’t your first layer of financial preparedness.

In this article, I want to talk about how to layer your financial preparedness to help yourself through the tough days ahead. Keep in mind that you may not be able to delve into every single layer, and that’s absolutely fine – you have to prep for your unique financial situation just the same way you prep for your unique living situation. Being realistic is the key.

Layer 1: Your financial foundation

The first layer is the foundation for the other layers. If you don’t have this in place, then the others aren’t really extremely worthwhile.

To establish a basis of financial preparedness, you need to get your personal finances in order. This includes things like:

1. Paying off debt/maintaining freedom from debt. Here’s how to pay off debt fast.
2. Having the supplies to go for a month or so without spending money – these are your basic stockpile items like groceries, shampoo, laundry soap, pet food, etc.
3. Establishing an emergency fund (we used to recommend a thousand dollars but at this point, it won’t get you too far. I would suggest your bare minimum should be one month of your family’s expenses.) Here’s how to build one.
4. Getting your budget to a manageable level – you may need to cut your fixed expenses to do this.

If you’re sensing a theme here, you’re right. The first layer of financial preparedness goes back to the money-savvy wisdom of the frugal community. Get your expenses under control, reduce your output, and be prepared to go for at minimum a month without any additional money coming in.

Layer 2: Tangible essentials

Once you have your basics established, it’s time to move on to the next layer. This is where our passion for prepping comes in handy.

You’re going to want to invest some of your excess money in the supplies that will get you through a difficult period. Whether that difficult period is related to your personal finances or national supply chain instability, your preps will see you through it.

This is a very important layer of financial preparedness even though it’s not cold, hard cash. Before you start investing every spare dime into hunks of gold and silver, make sure you have your basics covered. (That’s something Selco talks about any time you’re in an uncertain situation – go back to the basics.)

This includes things like:

• Stocking up on food
• Learning skills like gardening and herbalism
• Home and automotive repairs
• Taking care of medical and dental issues
• Putting back non-food items
• Focusing on sturdy manual tools

In this layer, you are building your personal preparedness. You’re taking care of things that might be difficult to address in the future, whether due to money or other issues. You’re learning skills, buying tools, and putting back essential supplies that will see you through a longer period of time.

Layer 3: Financial assets

Finally, once you have the other things handled, it’s time to focus on the bigger picture. A lot of folks make the mistake of thinking they should be hoarding gold and silver like a dragon, but this doesn’t come until after you’ve covered the basics. Once your preps are in order, your debts are paid off, and your home, vehicle, and family are maintained, then it’s time to put some money back for later when the crisis is over.

A lot of folks say that they use precious metals as a medium of exchange right now. I suppose that’s possible if you are dealing with folks who will accept junk silver dimes as payment or gold ingots. However, I see metals as more of a medium of savings than of exchange.

The purpose behind stocking up on precious metals is that gold and silver will hold their value when the dollar may not. After the economic disaster is over and our society is beginning to recover, precious metals will have value regardless of what has happened to the dollar. Even if we have moved on to an entirely different currency by then, whether or not the dollar is still the reserve currency of the world, or whether we have turned into a cashless society, the value of a precious metal remains consistent. When you need to make a payment on your property taxes or some other expense, you can convert precious metals to whatever the currency is, at whatever value the currency has at that time.

How can you invest in precious metals?

A lot depends on how you personally want to do it. If you are thinking that gold might be an important bribe, a suggestion from Selco is to buy a lot of plain gold wedding rings. You can slip one of those off your finger to offer a guard or other person you might be bribing, and nobody will expect that you have six more just like it. It’s one of those things that seems like it’s probably the only thing you have. I have followed this advice and often hit up pawn shops to check out their bands. I’ve also gotten some good pieces from yard sales mixed in with bags of “costume” jewelry.

You can also invest in other types of gold or silver jewelry. If you are going out to purchase jewelry, you want to be sure you’re getting a good deal. This information comes from when I was married, and my husband and I owned a jewelry store.

It’s a great idea to have one piece that you know the weight of so that you can test the digital scale at the shop. I’ve seen these scales be off by several grams, so having your own piece to confirm it is important. Secondly, you need to know the price of gold and silver that day to be sure you are getting a fair price. If it has stones or other inclusions, you’re paying for that too, and they are generally not as easy to convert as metals. I tend to go with plain gold or silver pieces when making investments so that I know exactly what I’m getting.

Look for a hallmark or stamp on the jewelry to indicate the karat purity of the gold or that the silver is 925. You don’t want anything that says GP (gold plated), GF (gold filled), or GEP (gold electroplated.) Gold and silver are generally not magnetic, although there are some rare occasions when the secondary metal is iron. If a piece responds to a strong magnet, it’s likely not what you’re looking for. Here are some more tips to make sure you’re getting what you’re looking for when shopping for gold.

While jewelry is one way to purchase precious metals, buying bullion or coins may be the best method. This is how governments and central banks create their reserves. Bullion is gold and silver that is at least 99.5% and 99.9% pure and is in the form of bars or ingots. This medium is ideal because of its purity, set weight, and recognizability. I purchase all of my solid gold and silver this way from ITM Trading. They actually offer a completely free strategy session if this is something you’re considering. I strongly suggest you set up a call – you’re under no obligation to buy. But the information you receive may make it some of the most valuable financial education you ever get, particularly given that our banking industry is in such dire straits.

This is a unit of storage.

Just to be clear, gold and silver pieces are stores of personal savings. They aren’t emergency funds, nor are they generally easy to spend. This is for money that you do not need immediate access to, although you can liquidate them reasonably easily today. This investment is made so that when things finally settle down after the current economic crisis, you still have wealth and it hasn’t all dissolved or dwindled in value like money in the bank can do.

How are you preparing financially?

I hope you find this little primer useful. I’m not a financial adviser, and none of this should be construed as legal, tax, investment, financial, or other advice. This is just my personal strategy that I’m sharing in the hopes that it provides you with a direction for your own research.

Are you preparing financially for the looming economic crisis? Do you have other strategies not mentioned in this article that you are comfortable with sharing? How bad do you expect the situation to get? Let’s talk about financial preparedness in the comments section.

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