Banking Debacle In Cyprus Illustrates The Need For Financial Preparedness
At the Food Storage Reviewer, we mainly discuss preparedness in terms of food, water, and other supplies. The reason is we are mostly concerned with natural disasters that can cut off the supply of life-sustaining goods and services. But what about man-made natural disasters?
If you have been following the news recently you have no doubt read about the financial fiasco unfolding on the small island nation of Cyprus (located in the Mediterranean just off the shore of Israel). There banks seized, or are planning to seize, up to 60% of creditors’ deposits in order to satisfy the demands of a bailout levied by the European Union. Additionally, banks imposed a 300 euro per day withdrawal limit in order to try and stem a “run” on the banks.
The interesting lesson for Americans is this sad scenario could absolutely happen in our country too. Forget about the fact America can print its own money and is not beholden to a centralized banking system like Cyprus is. The terrifying prospect is that a government entity can do pretty much whatever it wants whenever it wants. Considering all that has happened to our country over the last five years, is a seizure on bank deposits really out of the realm of possibility? I don’ think so.
So what can you do?
First of all, get your financial house in order. Reduce your debt either completely or down to manageable levels.
Second, have at least a 3-month reserve of liquid assets in case of emergency.
Third, keep your spending habits in check. Learn to make do with less.
Fourth, keep a supply of cash in your house in case you need to leave the area quickly or are worried something like Cyprus may happen here. You will need small bills and enough cash to keep you going for at least a few weeks.
Financial preparedness is just as important as emergency preparedness. Having a reserve of cash is equal to having a reserve of food. Both are necessary. Finally, remember that events that happen in other parts of the world are usually previews for what ends up happening in the US. It just takes a little time.