How to prepare for an economic crisis: 10 practical steps

Economic crises come in waves: 2008 to 2010, the pandemic in 2020, the inflation that followed 2022. Each hit differently, but they had things in common: prices rising faster than wages, layoffs, higher loan payments, uncertainty. You can’t control the economy, but you can control how prepared your family is.

Note: Preper doesn’t give financial advice. For decisions about loans and investments, talk to a professional.

1. Build your emergency fund

Essential expenses for 3 to 6 months, in a separate account. It’s your first line of defense if you lose your income. Details in emergency fund and budget.

2. Cut expensive debt

Credit cards, personal loans and payday loans carry high interest, and their payments weigh heaviest exactly when income falls. Start with the debt that has the highest interest rate (or, if you need motivation, the smallest balance) and pay more than the minimum.

3. Make a clear budget

Do you know exactly what comes in and goes out each month? If not, start here. A budget shows you where you can cut quickly if needed.

4. Check your loans

If you have a variable-rate mortgage, work out how much your payment would rise if rates went up by 1 or 2 percentage points. If that would be hard to manage, talk to your lender early about options.

5. Diversify your income

A single source of income is a vulnerability. Think about which skills could bring in extra money: tutoring, translation, repairs, handmade products, online work. It doesn’t need to be much; what matters is that it exists.

6. Invest in yourself

In a crisis, the people most in demand are those who can do useful things. A training course, a foreign language, a new driving license category or a certification in your field improve your chances of keeping your job or finding another.

7. Build a supply of basics

An emergency pantry with non-perishable food and toiletries for a few weeks protects you not only from disasters but also from sudden price rises: you buy when the price is good and eat from your supply when prices climb.

8. Reduce fixed costs

The lower your fixed monthly costs (rent, loan payments, subscriptions), the easier it is to adapt. Think twice before taking on new credit, especially for things that lose value.

9. Protect long-term savings

Money you won’t need for several years can be protected from inflation with instruments of varying risk: government bonds, diversified funds, pension schemes. Each has risks and benefits; don’t invest money you need in the short term and don’t put all your savings in one place. On precious metals, see gold and silver in a crisis.

10. Avoid panic decisions

Crises always bring:

• “opportunities” promising big, guaranteed returns (almost always scams);
• pressure to sell investments after they’ve fallen;
• quick loans with huge interest rates.

If someone promises safe, fast profit, especially by phone or on social media, it’s almost certainly a scam. Check any investment firm against your financial regulator’s register.

In short

A family with no expensive debt, an emergency fund, a clear budget, a small supply of basics and more than one source of income can get through almost any economic crisis without losing its peace of mind.