Today, following the conflicts between Ukraine and Russia, financial education can play the most important role in survival. Why? Many people left their homes with the idea of escaping the war and its consequences. We understand very well that when you take refuge, you leave everything behind. Starting with the house, clothes, and other valuables, leaving on the run we will take only the necessary things.
The media shows us how many citizens of Ukraine stand in line at ATMs to withdraw their money in cash. Where is the problem here? Simple, banks have limited reserves per day, in other words at such times the chances are very high that you won’t be able to withdraw money. And then what do you do? Are you leaving without money? Given that today money is the most liquid instrument, without which you can hardly do anything.
What solutions are there for such situations?
1. If you are standing in front of a wolf, and you are looking for escape solutions, the escape is not to have entered the forest. What I’m trying to say is that the best decision is to prepare for possible situations ahead of time. In specialized terms “hedge your risks”. This means that not all of the money we hold has to be in a bank checking or savings account. Any person must have cash in the house for at least one month before the expense. Attention “cash”. It is usually recommended in the national currency, and in other places, the most traded currencies are entered, such as USD – in the first place or EUR – in the 2nd place.
2. As much as possible, diversify your money in other banks outside the country. Banks that are not involved in a military conflict or are not in Crisis. Examples: Revolut, Skrill, etc. Because in crisis situations, even banks can go bankrupt, until the guarantee fund intervenes, people need money for vital needs. Today you can top-up, and the money is transferred to you in a few minutes.
3. If you have the money in trading accounts, there is no point in taking it out of your current account, because most of the time, the money in an investment account is in outside banks. Which allows you flexibility in moving them to other banks.
4. For investors – Some investors strongly believe that in a crisis you must have cash. In reality, money is made during the crisis because that’s when volatility appears, and for an investor, volatility is like air. If there is no volatility, there is no profit. From this point of view, during the crisis, the money must stay in an investment account, without being locked up in various asset classes, the money must be in fiat, made available to invest. For example, investing in the {sp500, nasdaq} index because they fall during the crisis, allows us to buy at a cheaper price and increase our units in the portfolio.
5. Value boxes. Another tool to protect your frozen money. Because it is not a good decision to keep the money at home, for safety reasons we still have to have some cash set aside, such as the safety fund (monthly expenditure * minimum 6 months). For example, today in Ukraine when people have problems withdrawing money from an ATM, such difficulties do not appear in a safe deposit box, which allows us free access to money.
6. The Crypto Market. Perhaps for some, now will be the time to use coins for their primary purpose of transferring value. When there is no possibility to do it through banks, there is the possibility to pay by crypto (some exchanges even have a card with which you can pay from crypto to fiat) or if there is the possibility then we can pay crypto-crypto.
I recommend that people educate themselves ahead of time. Most of the time man reacts to a problem but does not think how to prevent it. Today the need to understand the electronic financial system is greater than ever. More and more money is transacted electronically than physically, therefore the transfer methods and the legislative part must be understood as such because in certain force majeure situations, they can save your life.
