Financial Preparedness for Preppers

Financial preparedness is one of the most important skills a prepper can master, yet it is often overlooked. Personal finances are nowhere near as flashy as knives, guns, and food storage- but they are more important than all of these, believe it or not.

41% of people can’t afford a small financial setback without further going into debt. 80% have unwanted debt. 33% of Americans have never created a budget. When you look at these metrics, you can see that there is a huge proportion of people who simply don’t understand financial planning and are, simply put… financially illiterate.

If you are looking to be prepared for whatever the future may throw your way, financial literacy should be one of your top priorities. It is a requirement in our current day and age to become self-sufficient and is one of the most valuable and easy-to-learn skills you can use throughout your life. In this guide, we go over more reasons to become financially prepared and share the steps to get there.

Editor’s Note: Our latest update on October 27, 2026 adds a succinct action plan to help focus your financial preparedness efforts and elaborates on other sections.

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Why Financial Preparedness Matters

Financial problems can happen at a personal level, all the way up to a global catastrophe. There are many pitfalls for individuals, but there are also regional, national, and global risks out of our control.

No country on Earth has escaped trying financial times: from America’s Great Depression, war-torn regions of the World Wars, and the many third-world countries that exist today. Well-established countries attempt to create economic safety nets, but nothing is ever guaranteed.

Financial Literacy

I don’t remember being taught much about finance in grade school. I’ve had military experience, a secondary education, and a financially savvy father that have helped me get ahead over the years. But consider me blessed because the vast majority of Americans do not have any of those things.

Early on, young adults are confronted with financial decisions that can affect their entire lives. Student debt, credit, budgeting, saving, and investing can all be new to them. One misstep and anyone could find themselves in a financial hole they will never be able to escape.

Finance Element of Self-Sufficiency

Self-sufficiency is the ultimate level of preparedness. This means that you rely on as little as possible outside of your control to live your life. Financially, this would mean that you are free of debts and have enough capital or investments to last you and your family the rest of your life. The technical term for this is “Financial Independence.”

Some people can be obsessive about financial independence and grind hard so that they can retire early. These people are part of the FIRE (Financially Independent, Retired Early) community, which has gained some traction over the years.

FIRE chasers are usually financially prepared, but they are an extreme example. You might have to create an extreme budget to save 60% of your income to retire early, but there are plenty of other ways to become financially prepared.

Being well off financially can reduce stress, open up new opportunities, and lower risks every day of your life. With enough financial resources, both individual and global emergencies become less impactful. If you find yourself in a position where finances are constantly a challenge for you, it is a good idea to fix it sooner rather than later.

Seven financial ideas that you should explore include:

• Building an emergency fund
• Understanding and managing debt
• Budgeting basics
• Consumer culture and spending habits
• Thriftiness and spending less for more
• Investing and getting your money to work for you
• Diversification and not putting all of your eggs in one basket

Keep reading to learn how to apply these financial topics as a prepper.

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Build an Emergency Fund

41% of American adults are not able to cover an emergency expense of $1,000 without going into unwanted debt.

This is how people get on track to lifelong financial hardship. Medical emergencies are one of the top expenses that can catch a family off guard and send them into financial disarray. A large car expense that you can’t afford can destabilize your job and employment. Not fixing home problems due to their expense can cause cascading problems that worsen down the road.

Anyone can see the benefit of creating and maintaining an emergency fund, but most people disagree on how much they should stow away and where it should be stowed.

Situations vary, but the preferred method is to:

1. Create at least one month’s income in ‘short-term’ emergency savings for overdraft protection, small emergency expenses, and any budgeting inconsistencies. These savings should be a mix stored in checking, linked savings for overdraft protection, and cash in a lockbox or safe for easy access.
2. Build a larger emergency fund to cover large emergency expenses and potential job loss. This should be built up over time and cover 3-6 months’ worth of expenses, depending on your job security. These larger savings should be in a high-yield savings account or other low-risk investment that can be easily accessed.
3. Don’t put too much money into savings past the amounts you need for the first two steps. You should diversify further, invest, and pay down debt.

How Much Cash

I use a maximum of $1,000 for cash in my emergency fund, and mix in small bills (denominations under $100) so that it is more easily used in an emergency. Don’t put too much money in cash- inflation is a killer even beyond the past few years.

I keep some in my wallet, car, and bug out document bag. Learn more about using cash for emergencies in our dedicated article: Emergency Cash Stash for EDC and Preparedness.

Building an emergency fund should be your first financial priority (followed quickly by addressing your debt) on the way to financial preparedness.

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Kill Your Debt

80% of Americans have unwanted debt.

I’ve been in a large hole of debt myself and can tell you that it’s no fun. Debt can affect many parts of your life beyond just your finances. The helpless feeling it causes can worsen relationships, draw out addictions, and fuel bad decisions.

Good Debt vs. Bad Debt

There are a few camps that give out two types of advice on debt: keep ‘good debt’ that is low interest, or get rid of all debt. The real answer which you should follow depends on you. If you have a low risk of losing your income, are a homeowner, and are financially savvy… it may pay off to keep ‘good debt’. For most people, getting rid of all debt as quickly as possible is the best way forward.

Credit cards, payday loans, high-interest car loans, and student debt are usually higher interest than an average investment return, and usually fall under ‘bad debt.’

How to Get Rid of Debt

How do we get rid of debt? Here are a few methods:

• Avalanche Method – Pay the highest-interest debt as much as you can budget.
• Snowball Method – Pay the lowest balance of debt as much as you can budget. As you pay off different cards/loans, use the freed-up payments to pay an even larger amount towards the next highest amount of debt.
• Make More Money – Figure out a way to turn your time into more money. Get a prepping-related side hustle, mow some lawns, drive for Uber, or deliver pizzas. It can be grueling to work 12 hours a day, but it’s worth it to dig yourself out of a debt hole that you could be in for your entire life.
• Spend Less Money – The best way to save money is to make a budget.

For that last point, budgeting can be the best tool to regain control of your finances.

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Budget Basics

There are a ton of budgeting apps, software, and even people that you can hire to do it for you. But it doesn’t have to be that complicated. It is just simple addition and subtraction, after all. Don’t get me wrong- some apps and software can make your spending easier to keep track of.

Google Sheets is a solid tool that makes it easy to collaborate on a budget- and it’s free. Still, one of the simplest ways to create a budget is to just sit down with a pen, paper, and a bank statement.

To create a monthly budget, you will need to:

1. List your income for one month (taxed)
2. Find itemized expenses (credit card and checking account records should have these)
3. Categorize your expenses
4. List your expenses under each category
5. Subtract all of your expenses to determine your net income

Once you have your spending categories and know your monthly net income, you can get a good idea of what you can set your category limits to each month to stay within budget. If you have a lot of expenses that were one-time expenses, you can repeat this process for other months and find an average to set your budget.

Using an average of about a year is a great idea because it will account for annual fees and costs that you might not catch looking at just one month’s worth of data.

A budget is a useful planning tool that can help you with your debt strategy, investing, or cutting your costs. The last one is one of the more fun objectives for us thrifty preppers- once you see what you may be overspending on, it is pretty easy and satisfying to cut back the spending in those areas.

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Leave Consumption Behind

Consumption is a large part of American culture. It has been great for our economy and has allowed most Americans to live great lives. Unfortunately, anything in excess is just too much of a good thing.

Impulse buying, keeping up with the Joneses, fast fashion, and other addictive consumerism behaviors are where you’ll find most people who are in a struggling financial position. Ignore the hype and culture that asks you to buy more to fill that hole inside you. Spoiler alert- it won’t fill up when you buy stuff.

We could blame marketers, savvy businessmen, payday loans, or cheap Chinese goods for the consumption culture that has grown into a beast. As an individual, that won’t help you out much. Do what you can do and control what you can actually control.

Two things that you can control are your income and what you spend that income on. Even adjusting your income can be difficult, so the one immediate thing anyone can concentrate on is their spending.

If you’ve developed a budget as we suggested earlier, you know what you are spending on. Consider cutting spending as much as you can- even if you can afford the spending you are doing.

Think hard about whether new designer clothes, a brand-new truck, or other purchases that have no chance of gaining value are worth it. The more stuff you buy, the more stuff you have to take care of as well, which can eat into your time.

Once you’ve decided what you actually need and what you can live without, your budget will be much healthier. A healthy budget will let you eliminate debt or build wealth.

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Stretch Your Dollar

When can a dollar be more than a dollar? When you have patience and a keen eye for deals. Learning how to make your money go further for you can have a real impact on your finances. Some of the best ways to stretch your dollar include:

• Buying in Bulk – Buying in bulk is a prepping strategy already- you don’t want to run out of critical supplies in an emergency. This makes bulk buying doubly effective because buying in large lot sizes can save you a lot of money.
• Couponing – Not just for housewives- a coupon can be found for almost anything these days. Whether you’re buying tools from Harbor Freight or really just anything online, check for coupons or discount codes on preparedness supplies first.
• Seasonal Deals – Holidays have become magnets for great deals. If you plan to purchase something, waiting until it is on sale can help you make fewer impulse purchases and save you money. Some of the biggest are Black Friday and Cyber Monday.
• Buy Repairable – Buying something that is too cheap means that you will have to throw it away when it wears out or breaks. Buy tools, clothing, and other items that are repairable and tough so that you can repair rather than replace them.
• Thrifting – Thrift stores, yard sales, consignment stores, Craigslist, flea markets, swap meets – there are plenty of places to find used stuff at great prices. You will need to know a little about what you are trying to get since there are plenty of items that are not priced well. Most of these are places that allow haggling, giving you a great place to practice your negotiating skills.
• Freebies – Nothing beats free. You can find free stuff in Facebook groups, Craigslist ads, and through friends and family. We have some free stuff listed in our freebie prepper gear list. Be careful about other ‘free’ claims online- a lot of the time they want you to pay ‘shipping and handling,’ which actually covers the cost of the stuff.

Making your dollar go further is one of the more fun prepping finance practices, in my opinion.

Once you’ve budgeted and saved some money, it’s time to do what makes rich people richer: invest your money.

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Invest Wisely

Make your money work for you.

The problem is that it’s a lot harder than it sounds. There are a lot of different options that come with different levels of risk. There are entire job sectors designed to figure this out for you- for a fee.

Investing vs. Stock Picking

Talking to a financial manager may be a good option if you don’t want to manage the risks yourself. On the other hand, financial managers have been found to not outperform the entire stock market, mainly because of the fees they charge.

The amount a portfolio manager outperforms the market is called ‘alpha.’ There are plenty of smart people with high alpha, but they also have high fees to match. Add to this that past performance- which alpha is based on- does not imply future performance, and you can figure out why portfolio managers have not performed as well as a low-fee S&P500 index fund.

Individual stocks are very tough to predict, and even harder to time entry and exit points. Financial analysts sift through tons of data and information every day, so unless you know something they don’t, you are unlikely to get an advantage over fund managers on individual stocks.

SPY, or VTI – both indexes of larger chunks of the stock market have given a good performance. Although these are some of the best options according to multiple sources, it doesn’t make sense to place your money in just one investment.

There is a risk that the investment may not perform well, but there are also broad risks that can affect your investments, like financial collapse and pandemics. This is why diversifying not just your portfolio, but all of your investments is important.

Investment Tools

One of the easiest ways to invest in a low-fee S&P index fund is to use a free trading platform.

I use Robinhood- a user-centric investment app that lets you buy stocks, ETFs, cryptocurrencies, and even stock options without any trading fees.

Competitors have caught up to the no-fee trading Robinhood introduced, so most trading platforms are worth exploring at this point without the fee barrier to get started.

Robinhood has also recently added banking and credit cards to their platform, with significant upsides including a 3.60% APY interest rate on Gold Checking accounts, and 3% cash back on Gold credit cards. These were significant enough to have me jump ship from my long-time bank, USAA.

The checking interest rate alone is competitive with High-Yield Savings Accounts (HYSAs), and helps with my investment diversification.

It’s worked for me, so check out Robinhood for yourself to see if it’s a good fit for you. You’ll get a free stock valued at $5-$200 when you deposit money into a new account when you follow that link.

That’s not a significant enough amount to move to it, but if they make sense for you, the free stock is a nice way to get started.

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Diversification

Diversification is just a fancy finance word for not putting all your eggs in one basket. It’s common sense. As preppers, I suggest you do this with pretty much everything: from food storage to survival caches. It can be even more important with finance since diversification has been proven to be more effective for financial success because of how it minimizes risk.

Eggs in a basket all break when the basket is dropped. You don’t want your financial ‘eggs’ to have this risk, so you spread out your assets. Every investment has risks, but if you do different types of investments, they have different risks.

There are plenty of investments with diversification built in, as we discussed in the Invest Wisely section above. Funds, like mutual funds and exchange-traded funds (ETFs), lump several securities into a fund to lower risk versus a single security. But even these diversified funds can be diversified.

Ways to Diversify as a Prepper

Beyond investing, there are other ways to diversify the ways your money works for you. You can invest in:

• Stocks, ETFs, and Stock Options – Great for aggressive retirement plans or longer-term savings.
• Cryptocurrency – Good as a way to hedge inflation or currency manipulation, as well as a speculative investment.
• Securities, Bonds, and CDs – Okay for very low-risk retirement plans, but some do not outperform inflation.
• Savings and High-Yield Savings – Great for short- and long-term emergency savings.
• Private Equity – Good if you fully understand a company and have a lot of capital, since there is usually a large minimum investment without guaranteed performance or timing.
• Real Estate and REITs – Great for DIYers who like some control over the performance of their investments.
• Bullion – Great for hedging for a financial collapse or SHTF events. Silver and gold are the big two, with a good value difference letting you get precise denominations.
• Side Hustles – Excellent for anyone looking for more income. Our Prepping Side Hustle Guide can give you more ideas here.
• Invest in Yourself – It’s a good idea to invest in learning skills, acquiring survival resources, or increasing your survivability.
• Cash – A needed resource to get things done in emergencies and everyday life. Keeping a cash stash is a good idea for anyone.
• Barter Supplies – Hard-to-find supplies that will be in demand during disasters and emergencies that don’t take up much space. Stored food, clean water, medicine stockpiles, ammunition, and vices (alcohol/cigarettes) are some barter items preppers typically go for.

The key is not to be in just one or two of these, but most of these. We won’t go into too much depth on what your mix should be since it varies a lot depending on your financial position and interests.

Since we’re a prepping site, we’ll just emphasize the importance of diversification and leave the specifics to you.

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3 Tiers of Financial Preparedness – The Action Plan

While all of the information we’ve covered is comprehensive, here is the action plan broken into three distinct tiers on how you can accomplish financial preparedness in a prepper-focused way.

Tier 1: Zero-Debt Defense

Eliminate consumer debt, create a liquid buffer, and audit expenses. This is the most time-consuming and daunting of all of the tiers- it requires some research, a mindset change, and plenty of action.

• Create a $1,000 emergency fund, easily accessed as a liquid buffer. Revisit the emergency fund section if needed.
• Eliminate your high-interest consumer debt by using one of the debt paydown methods we discussed in the debt section. This includes credit cards and loans other than mortgages.
• Create a budget if you do not have one. Review it for savings opportunities, income needs, and recurring costs. Earmark the budget basics section if you are just starting.

Once you have ‘leveled the ship’ with the first tier, you can move on to creating a 3-6 month operating reserve.

Tier 2: Operating Reserve

Having an operating reserve of 3-6 months of your expenses is practical resilience. Put this calculated amount in investment vehicles that are still accessible when needed, such as High-Yield Savings Accounts (HYSAs), but diversify it to hedge against inflation.

Tier 3: Wealth Preservation

As you strive for complete financial independence (the ultimate financial preparedness goal), remember to continue to diversify your wealth as it accumulates.

While we highlighted the historic performance of index funds as a way to make your money work for you, it’s not wise to ‘put all of your eggs in one basket’.

Create a strategy that involves physical (not remote) precious metals, land, tangible trade goods, and even homestead infrastructure to meet both your financial and prepping goals.

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Financial Resources

There are plenty of finance-focused sites and resources mentioned throughout this article that can be helpful, from creating a budget to investing with free trades:

• Robinhood – Great for stock, cryptocurrency, ETF, options trades, and even banking now.
• Investopedia – Learn investment terms or find quick info, like which HYSA has the highest rate.
• Mr. Money Mustache – One of the quintessential ‘financial freedom’ blogs, popularized by the FIRE (Financial Independence, Retire Early) concept.
• YNAB – “You need a budget” is a paid budgeting service that is simple and effective.
• Reddit Personal Finance – Over 21 million members can help answer your specific finance questions.

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The Final Word

Financial preparedness is one of the cornerstones of prepping. Without your finances in order, any emergency or disaster becomes extremely difficult to handle. As we mentioned, most Americans fall into this category. Simple emergencies put stress on the majority of people’s finances- but it doesn’t have to!

Self-sufficiency is a common goal for preppers, and planning your financial situation is one component of this. If you need to rely too much on others, or safety net systems for your and your family’s financial readiness, you may find yourself in a tough situation when SHTF.

Stash some money, pay debts, create a budget, don’t buy as much stuff, hunt for deals when you do, invest smartly, and diversify your portfolio. Once you have the basics down, you’ll lead a much more stress-free and prepared life!

Here are some more guides our subscribers have found helpful:

• Prepping Side Hustles | Translate Your Skills into Money
• Free Survival Gear and Prepper Samples
• How to Start Prepping: Prepper 101

Keep exploring, stay prepared, and be safe.

See more of our expert-written guides, resources, and reviews in your search results – add TruePrepper as a preferred source.

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