We’re used to swiping our credit cards every day and getting the things we need. Some of us even use our cell phones to pay for our weekly groceries at the grocery store — not to mention online shopping. However, in the event of a regional emergency, your credit cards will become useless for quite a while, so it’s important to have cash in your emergency bag, emergency backpack or whatever.
Regardless of the reason for the emergency, most people in the world will still accept cold, hard cash when a disaster strikes. There are many preppers and survivalists who recommend keeping a cash reserve for emergencies, and their reasons vary depending on the event they are preparing for. The establishment of emergency funds is also repeatedly recommended.
What is an emergency fund?
An emergency fund is a cash savings account, or cash stash, that you set up to cover unforeseen expenses. Many people choose to put their emergency fund in a savings account or money market account, but it can also make sense to put a buffer in a short-term bond fund or a short-term government bond fund.
The fund is used to cover unplanned expenses such as medical bills, home repairs, or a job loss. It is also used to cover unexpected changes in your life, like having a baby or getting into a car accident. If you always have a certain amount of cash to fall back on, you will avoid getting into debt and will be able to deal with the situation more easily.
How much cash belongs in the emergency fund?
The amount you need to invest in your emergency fund depends on your situation. If you have dependents, have a high-risk job, or have some health issues that leave you vulnerable to hefty medical bills, you should probably have more cash on hand than someone living a quiet life.
In general, most financial experts recommend that you set aside at least enough money to cover six months’ expenses. That way, in the event of a job loss or other significant income disruption, you can pay your bills while you look for a new job. This assumes you have no savings in your savings or retirement account. If that’s the case, you can still draw on your emergency fund, but you should also consider using what you’ve saved for retirement.
Some experts also recommend always bunkering a certain amount of cash in the pre-packed emergency bag.
Why is it important to maintain an emergency fund?
The main reason for building an emergency fund is to avoid getting into debt. In the event of an emergency, you can use your fund to meet unexpected expenses. If you don’t have an emergency fund, you could take out a loan from a friend or family member, a high-interest credit card, or a small personal loan to help meet unexpected expenses.
With an emergency fund, you protect your future self. If it’s a short-term expense, you might not notice it, but if it’s a long-term expense, you can’t help but notice it. Then you have to pay them either with your equity or with a loan.
But even for minor emergencies, a certain amount of cash in the backhand can be helpful. Just imagine that the ATMs go nuts due to a blackout or something similar – without cash, you would be pretty much stuck in this scenario.
How do you build your emergency fund?
The best way to build your emergency fund is to set up an automatic deduction from your checking account. That way you don’t have to think about it and the money is there when you need it. The amount of the automatic debit varies from person to person, but in general, it is recommended that most people save between 3 and 6 months of expenses in their emergency fund.
If you’re in a low-risk occupation, saving 3 months of expenses as a safety net in the event of unemployment may be enough, but you should still allow 6 months for other types of emergencies.
10 reasons to keep cash in your emergency bag
When it comes to how you should use your money, the situation can vary depending on the region you live in, the time of year and the crisis that might hit your area. Below are some of my reasons that can apply to any type of disaster.
- ATMs Are Inaccessible and Unsafe in a Disaster
If the power goes out and the grid collapses, you won’t be able to use your credit card. Also, the ATMs will quickly run out of money if general panic breaks out. And if the disaster creates favourable conditions for certain elements of society to take action, you don’t want to be near an ATM when the looting begins.
- Shops will not be able to process your transactions
In such a crisis scenario, shops could remain open for a while and offer their goods more or less as usual. Credit institutions, on the other hand, run the risk of being shut down or even hacked because they are much more dependent on electricity and the Internet supply.
So, should the worst come to the worst, cash will get you food and hygiene products longer and faster than relying on your credit card. Because this small plastic card is just that without the corresponding institutes behind it: a plastic card.
- Last Minute Shopping
There will always be last-minute shoppers who need emergency items, and it doesn’t matter if they’re preppers or regular Joes. Cash is king and if the shops are still open and you know what you need to buy, a last-minute purchase will keep you alive longer than those buying bread and milk. You can also keep cash in your bug-out pocket as a loan for neighbours and distant relatives.
- You Can Pay for Services Instantly
If you have cash in your emergency bag, you can pay for any service you need, even if you didn’t plan for it or if it’s something unexpected. So you can pay for pretty much anything you’re not trained to do.
- Vending Machines Just Waiting for Your Money
This may not sound particularly enticing to the hardcore prepper, but in an emergency, you can use vending machines to stock up on food, water, or whatever else they have on hand.
- Bribe Yourself Out to a Tense Situation
When you find yourself in a situation where you have to deal with roadblocks or guards, you’ll be glad you have cash in your emergency bag. You can bribe people to close their eyes and let you pass so you don’t get trapped with the rest of the crowd. You can bribe guards to let you through the private property if your escape routes are blocked.
- Money can be divided into different denominations Carrying
small bills on you means you don’t have to wait for change when making a trade or purchase, which stores don’t have. At the same time, you can most likely do better deals with the cash you then covet. If you plan to keep cash in your bug-out bag, plan for 5, 10, and 20 bills.
- They can use your money to “manipulate the fold”
People always take cash and they have an instinct based on immediate gain rather than a long-term prosperity system. Before most of them realize that cash has lost or doubled in value, they will be ready to take cash for anything. You can use your money to get supplies, but you can also hire a guide to accompany you on your escape through an unfamiliar region.
- Cash Will Help You Stay Under the Radar
If you’re one of those preppers who’ve embraced the grey man approach, you should know by now that if you want to go invisible, you need cash in your bug-out bag. The purchases you make with cash cannot be tracked electronically and you will stay under the radar.
- Get a ride when times are tough
If you lose your getaway vehicle or it breaks down for any reason, you are forced to continue your journey on foot. Things can go in your favour if you keep cash in your bug-out bag and you could easily get a ride in a regional emergency. If you offer to pay cash, you have a much better chance of getting a ride than those who offer to barter in exchange for a safe ride.
The list of reasons to keep cash in your bug-out bag provided in this article is not exclusive and represents only a small portion of the reasons I chose to keep cash in my survival bag. You may have your own reasons for carrying cash in your bug-out bag and I suppose it’s not just about using the paper as a kindling.
It is always a good idea to store some cash. We can never know when the next crisis will come or exactly what a catastrophe will look like. What we do know, however, is why it is important to always have enough cash on hand so that we can react to the situation at short notice in an emergency.