- Inflation is running free and recession is coming. Prepare your family before hyperinflation and the worst hits with these 9 ways to prepare for financial collapse.
Inflation is running free and recession is coming. Prepare your family before hyperinflation and the worst hits with these 9 ways to prepare for financial collapse.
Ask any long time Six Dollar Family reader and they’ll tell you that I have always stressed the importance of being prepared for whatever type of emergency may come your way. Frankly, it’s just smart.
Sometimes we can’t see those emergencies as they come down the road. These would be weather, health and so on.
And unfortunately, we can safely predict that the United States – at the very least – is headed straight into a true recession the likes that most of us have never seen.
Others though are much more predictable and in this case, the ability to somewhat predict them is a good thing. It’s a very good thing honestly.
In other words, what is coming is going to put “The Great Recession” of 2008 to shame.
To add to it and make all of that worse, too much recession and we end up with hyperinflation and a repeat of 1929.
Before we get into all of that though, you should understand why what is happening and what’s to come is so bad.
Lets go back to class for a minute!
What is Hyper-Inflation?
Hyperinflation occurs when the overall rate of inflation for goods and such exceeds a specific percentage. That percentage can be defined two ways: a 50% increase in cost from month to month OR a 1,000% increase from year to year.
There are other types of inflation. Galloping inflation, for examples, is a 10% increase overall. We have some galloping inflation currently in the United States if you look at each product category by itself and overall, we are almost there with the most recent numbers showing 8.5% rises.
Either way, inflation is bad for those of us who watch our money and even worse for those who are living paycheck to paycheck.
How bad can that be?
Imagine the $4.00/gallon gasoline you’re buying now with a 1000% increase per gallon? Even the smaller, 50% increase would be horrific for anyone trying to fill up their car.
Now apply that to everything you currently purchase or spend money on. Your money no longer goes as far and before too long, you and millions of others will very likely find yourself unable to pay your bills, feed your family and so on.
What Causes Hyperinflation?
Hyperinflation is caused by a couple of different things. The combo of the two is what sends prices skyrocketing.
The first cause of hyperinflation is a government that continually prints money with no economic backing for that money. This is usually done to pay their debts and/or to try and prop up an economy that may not be doing as well as it should be.
The 2020 and 2021 stimulus checks were examples of the US government simply printing money they could not afford.
The second reason hyperinflation happens is called demand-pull inflation. This happens when the demand for supplies is greater than can be met. People get scared and as such they often panic buy and hoard items causing the supply chain to tighten even more and prices to rise right along with it.
The 2020 shortages and those seen since are prime examples of demand-pull.
But isn’t extra money good?
In theory, yes. I mean, who would not want more money in their loves, right. However, in the case of the US economy, it’s a very bad thing.
Because in reality, US money is worth less than the cloth it is printed on.
The United States uses what is known as a fiat currency. In short, our money is quite literally not backed by anything to secure its value other than what society agrees that it is worth.
Among other things, this basically means that our government can print as much as they want without having to answer to anyone about what is securing its value.
Think of it this way; you buy a gold ring for your partner. That ring has a value beyond what you paid for it. That value is secured and backed by the gold in the band.
Now let’s say gold was worthless. How much would your ring be worth? It would be worth nothing except what someone agreed it was worth.
The USD has nothing to back it.
We used to. The USD used to be backed by the gold standard. This meant that every US dollar bill was backed by an equal amount of gold. It was a combination of Presidents Johnson and Nixon who removed us from the gold standard thus ensuring that our economy would run on an honestly worthless fiat currency.
And the US has been printing it whenever they felt the need to ever since.
As hyperinflation takes hold, prices will continue to skyrocket and what value the USD may have will drop. This means that your one dollar bill will start to rapidly lose its value until it is valued at basically nothing.
People will begin to starve, they will lose their homes, jobs, banks will go bankrupt and so on. You only need to look at what happened over the past few years and what is still happening in Venezuela due to hyperinflation.
In short, it sends the country spiraling and pushes into an economic depression.
How do we prevent hyperinflation from happening in the US?
In short? We don’t.
The truth is that we little people have no control over how much money our government prints or what costs we’re paying. Without control of those things, we are pretty well on our own and should be focusing on keeping our own family safe and taken care of.
There are more than a few ways we can do this.
Building a Responsible stockpile is done over time and on a budget versus a panic buy where you spend thousands to do it all at once. It leaves product for others, doesn’t buy more than you need and only purchases necessary items. It is accomplished by taking the time to properly plan your stockpile. In other words, it uses common sense.
Yes. I did say earlier that folks buying too much can cause demand-pull inflation, however, that happens only when people buy in excess and hoard. Responsible stockpiling, however, can be done without causing you to go broke or supply chain stress.
Keeping a few months to a years worth of supplies on hand is smart, especially when you’re staring down the barrel of a recession or depression. By starting now and not waiting until the last minute, you will avoid the need to panic buy and ultimately save yourself money and stress in the long run.
Learn a New Skill
It may sound bad, but if we do in fact see Great Depression 2.0, it will be far worse this time than last. People will suffer more. The reason for this is pretty simple.
The first time, people knew how to take care of their own far better than they do now. They grew gardens. They sewed when needed. They raised livestock. They knew how to redneck something to make it work.
The harsh truth is that most people today don’t know how to do much of those basic life skills at all. These days even cooking a simple meal is often a lost skill. It’s this loss of skill and knowledge that will make a real recession or a financial depression much more difficult for the majority of society.
The answer to making things easier on yourself is to learn as many new skills as you can before things happen.
These can include:
- learn how to preserve foods by canning
- Cooking lessons
- Sewing lessons
- Learning how to cut hair
- Learning how to fish
- Learning how to hunt
- Starting a garden
- Consider raising meat rabbits
- Finding new uses for old things
- Making more and buying less
- Learning how to really buckle down and live frugally
The more skills you can teach yourself now, the better off you will be if and when things go south.
Try New Things
We all get caught in ruts where we typically only do what is comfortable to us. This can actually cause budget fatigue and overspending.
The meals we cook is a great example of this. Often we find ourselves making the same things over and over again instead of checking the sale ads, planning our menu around them and doing what we can to save money on groceries. By default, we spend more and save less out of what amounts to us just being lazy.
This same principle can be applies across most of our entire budget.
To prevent it, step outside of your comfort zone a bit and try something new. Pickup a copy of Clara’s Kitchen Great Depression Recipes and try a few new meals. Add smart outlets to your home to help save money on your electric bill. Get a bike and ride it for as many errands as possible.
But no matter what, keep the new things you try to only those that will save you money. Otherwise, you’ll be defeating the purpose.
We are also the land of “more is better” and this has never been one evident than in our homes and cars. While you may be able to afford what you currently have, it’s smart to ask yourself if you will still be able to during a time of financial crisis.
If your answer is unsure or no, the time to fix the situation is now. Downsizing is the only option when your home costs become more than your family budget can handle.
Downsizing may seem like a very scary leap of faith, but I can tell you from experience that it is also a very worthwhile scary leap of faith. In 2017 I downsized myself and my daughter into full-time hotel living and have zero regrets about it.
Get Everyone Involved
One of the reasons people were successful in surviving the Great Depression years is because they made survival a family affair. This meant that everyone had jobs to do and the entire family counted on those jobs getting done. If you didn’t work or help in some way, you didn’t eat.
And for those wondering, yes, children did their part too. From feeding animals to helping clean, they were taught and put to work pretty well as soon as they could walk.
If the US does end up in that type of situation, make it perfectly clear to your family; everyone pitches in so that everyone survives.
Do for Yourself
This kind of goes on with learning new skills, but doing as much as you can for yourself not only ensures you are as self-sufficient as you can possibly be while saving you money at the same time. After all, self-sufficiency and frugal living go hand in hand.
It may not seem like much, but everything you can do for yourself will ultimately save you money in the long run. It may only be a few pennies but in a recession or financial depression, every penny counts.
That can be hard for some people to understand. In fact, it wasn’t until 2015 when I started making THESE 52 things at home and stopped buying them that I truly understood it myself.
By learning how to DIY these things now, you won’t be playing catch up when it really matters.
Learn to Waste Less
If I asked you what the biggest drain on your budget is, you would likely tell me housing or grocery costs.
But what if I told you that you’re very likely wrong?
The biggest drain on your budget is probably waste.
For families, waste comes in many forms. It could be wasted food or drink. Wasted water or toothpaste. Wasted money on impulse buys and so on.
Trying to learn a zero waste living tips is a great place to start, but like I said earlier, your entire family needs to be on board or you will ultimately fail.
But if you succeed? You’ll very likely surprise yourself at how much money can be saved.
Another aspect of reducing waste I’ve already mentioned a little bit. It is finding new ways to use old things.
If you need ideas, I have quite a few posts here that are perfect for helping you get started:
- Ways to Use Fels-Naptha Soap
- Ways to Use Bacon Grease
- Ways to Use Old Bottles and Jars
- Ways to Use Old Sheets
- Ways to Use Old Towels
- Ways to Use Empty Milk Jugs
- Ways to Use Clean Kitty Litter
- Ways to Use Old Denim (More ways to use and crafts for old jeans HERE)
- Ways to Use Newspaper
- Ways to Use Old Coffee Mugs
- Ways to Use Fabric Softener Sheets
- Ways to Use Coffee Filters
- Ways to Use WD-40
- Ways to Use Kitchen Scraps
- Ways to Use Clabber
- Ways to Use Orange Peels
- Ways to Use Leftover Gift Wrap
- Ways to Use Dawn Dish Soap
- Ways to Use Apple Peels
Save What You Can
As we approach a recession or worse, pennies will start to become a whole lot more important. They may not seem like much but in a world where US money may begin losing value, they will add up quickly.
But if you wait until the recession becomes q true issue, you will have waited too long.
Instead, start saving what you can now.
Even if you’re only saving a few dollars a month, you’re still giving yourself a better foundation to work with once things really become hard.
One savings tip that has always worked for me is to use an external savings account that is connected to your regular bank. It works because when you keep your money in a separate bank – without ATM access – it takes 48-72 hours to transfer your money.
In other words, it gives you time to rethink whether you really need to spend that money. If you decide not, it’s only q couple of clicks to send it right back to savings.
I personally like both Chime and Varo for savings. Both accounts are incredibly simple to open and neither require huge deposits. They both offer different benefits so I do advise that you check them both out and decide which set of benefits is best for you and your budget.
Chime Checking and Savings Website
Varo Checking and Savings Website
Make Extra Money While You Can
Finally, one thing we should all be doing right now is making money wherever we can. This can include everything from taking a second job to finding an easy way to make cash from home.
The reason why is pretty simple; the more money you make, the more you can save. The more you save, the better off you’ll be when a financial crash happens.
What you do to earn extra money does not have to be overly complicated. It could be something incredibly simple.
A few good ideas to get you started are:
- Doing surveys with InstaGc
- Searching and playing games with Swagbucks
- Starting a money making blog
- Creating and launching your own video courses
- Selling Used Books
- Working as a tutor
- Moving lawns
- Childcare in your home
- Handyman odd jobs
- Become a freelance writer
No matter what you do to find extra cash, keep your end goal in mind. You’re working all the extra to help prepare your family for a financial crash. Any extra you have should be saved so you are as prepared as you can be.