Convince Reluctant Loved Ones To Prepare
August 22, 2011 by David Morris
Once you realize how important and urgent it is to prepare your family for disasters, getting loved ones on board can be one of the most frustrating and heartrending parts of the process. Whether it is getting someone in your own house to “see the light” or getting a friend or loved one to take threats seriously, this can cause almost as much stress as the disasters you’re trying to prepare for.
I’ve got a couple of approaches that I want to share with you today that will help you with people who have investments or see the wisdom in saving.
I was listening to Dave Ramsey’s financial radio show on the way home earlier this week, as I often do. He was suggesting, as usual, that someone needed to follow his steps to financial peace.
The first step that he suggests is to get a $1,000 emergency fund. Interestingly enough, the reason for doing this is “for those unexpected events in life that you can’t plan for… It’s not a matter of if these events will happen; it’s simply a matter of when they will happen.”
The second step is to pay off all debts except the house.
And the third step is to build up three to six months of savings to serve as an emergency fund.
I can’t remember ever talking to anyone who thought that having an emergency fund was a bad idea. Even people who are dead set against preparedness or even simple food storage will agree that having a rainy day fund is a smart idea.
I’d venture to say that every adult has either benefited from having an emergency fund or wished that they had one at some point in his life. I’ve experienced both of those situations, and I can tell you that when you find yourself in “emergency” mode, you will always wish you had more in your emergency fund than you do.
Most people stop with the thought that an emergency fund is a good thing. But if you peel this onion back a little bit, it opens up a whole new way of looking at emergency funds/rainy day funds and preparedness and will give you a solid foundation for talking about preparedness with someone who believes in having an emergency fund.
Let’s start by looking at the kinds of expenses that people think they’ll use their emergency funds for. In many cases, it’s for a car repair or medical expenses. But in today’s environment of high unemployment, people generally accept the fact that they might be using their emergency fund to pay for basic necessities like food, shelter, fire, water and possibly fuel for transportation after losing their job(s).
Forget about the fact that there may be a regional disaster; people lose jobs every day and experience their own personal emergencies. Unemployment rates are on the news almost every day. And if you know more than 10 people, chances are very high that you know someone who’s lost his job in the past year or two. The loss of a job is much more realistic and easier for the general public to accept than the possibility of a failure of the electrical grid, rioting, fuel or food shortages, or any other major disaster that could cause a breakdown in civil order.
So, if you’re talking with someone who has an emergency fund set aside for a rainy day, ask him if he found himself in a situation in which he needed to use it, if some of that money would go to buy food.
This makes sense for a few reasons, namely:
- If he simply buys larger quantities of the items he currently eats, there’s a good chance he will save money. If he has three to six months of expenses set aside, then he is already planning on spending a portion of that money on food. There is no additional expense to holding some of his emergency fund in food rather than dollars.
- If the disaster that causes him to tap into his emergency fund causes a breakdown in the supply chain for stores, he will be able to eat his emergency fund if some of it is in food rather than dollars.
- If he is keeping his emergency fund in the bank and there is an emergency that affects the banking system, he is stuck. If he converts some of his emergency fund from dollars to food, then he will still be able to feed himself.
- This is one of the most important points: food inflation. If you convert some of your emergency funds to food right now, you could get significantly more for your money than if you wait until an emergency happens. Food prices might go down; but droughts in China, bad U.S. money policies causing a weaker dollar and wasting farmland and corn to produce ethanol will all serve to keep food prices high and possibly push them higher.
You might need to actually pull out a pad of paper and write out some numbers on this. Let’s say that the person you’re talking with has $3,000 in his emergency fund. Ask him how much of that he would be willing to spend on food in an emergency. Let’s say it’s 20 percent, or $600. It may be more or less, but let’s use $600.
Whatever number he comes up with, ask him if there’s any reason why he wouldn’t want to go ahead and buy $600 of nonperishable foods before the prices go up.
If the light clicks with food, you can use the same line of reasoning to get him to keep extra fuel for his car, grill and heating system on hand, as well as any other necessities. This isn’t a complete survival plan, but it is a good, solid baby step.
Preparedness as Asset Allocation and Diversification
Asset allocation and portfolio diversification are strategies financial planners have been pushing for years to try to protect their clients from market risk. One oversimplified way of looking at it is that someone in his 20s who’s saving for retirement can stick all of his money in high-risk investments that have the potential for high rewards. As you get older and have less time to recover from any losses in your retirement account, you allocate a bigger and bigger percentage of your retirement money to conservative investments.
I recently talked with a gentleman who sells ranches and ranchettes who uses this exact strategy to sell properties. He’ll ask people how much of their retirement they have in very conservative investments that aren’t making them any money. When they give him a number, he figures out how big of a ranch or ranchette they could buy and stock with the same money in case TSHTF. Normally, they are people who have car insurance, homeowners insurance, health insurance, life insurance and sometimes long-term care insurance. This is simply a way of converting money that isn’t doing anything for them into SHTF insurance.
If you or a loved one has a big nest egg, this may be an approach you can take to talk with them about preparedness that will ring true with them.
If you aren’t at the stage in life at which you have money to go out and buy land, but you are saving for retirement and some of your money is going into very conservative investments, you might want to take some time and look at food storage and preparedness items as a great way to diversify your savings.
Are you a financial planner or stock broker and a prepper? I’d love to hear your thoughts on this approach. Have you used this approach to get to where you are today? Have you used this approach to get loved ones to buy into preparedness? Please share your experiences below. Do you have other strategies that you’ve used successfully to get loved ones on board with preparedness? Please share them below.