How much do you have in the bank right now? No wait, don’t tell me. Instead, just look for yourself. Then ask yourself one question:
“What would happen to my family if all of income sources went away?”
Do you have an answer? Is it a bad one? Is it a good one? Would your family be able to survive only on what’s in your bank accounts right now?
If you’re like most people, the answer is unfortunately, “probably not.”
Preparing your family for a financial crisis is honestly the single most important prep that you can do. You can prep all you want for weather related incidents, but in truth, if the weather is bad enough, all of your preps might not make a difference. Failing to prep for a financial crisis though can literally tear your family apart at the seams though. Loss of income can cause loss of your home, kids going hungry, marital fights and more.
So how do you protect yourself?
You save. It really is that simple.
To prepare yourself for financial trouble, you need to have at least 3-6 months’ worth of expenses saved up. When I say expenses, I mean your bare expenses. Take all of the luxuries out of your bills and you’ll know exactly how much money you need to survive each month.
Your basics are household costs, food, utilities and any school costs that your kids have. Everything else should be considered a luxury and if you’re living with no income coming in, unable to be paid for. These are the items that you pay extra to have in your life so if you don’t have extra money coming in, then doesn’t it make sense that you can’t have extra items in your budget?
Three to six months is the absolute minimum that you should have, but if you want to be really prudent about it, save a year’s worth of expenses. Loss of a job can sometimes be a very long situation and if you have a year of expenses in the bank, you’ll know 100% sure that you’re covered.
As I said in the very beginning of this post, not preparing your family for financial stress and trouble is just asking for trouble. If you don’t feel as if you can save even 3 months expenses, that’s fine. Just try to do something. A little bit in the bank is better than nothing in the bank.