How To Financially Prepare for Future Supply Chain Disruptions
The stimulus payments that got America through the pandemic are partly to blame for today’s high inflation, but so are the supply chain issues that started with mass factory closures at the outset of the pandemic more than two years ago.
Check Out: States Whose Economies Are Failing vs. States Whose Economies Are Thriving
Find Out: Here’s How Much Cash You Need Stashed if a National Emergency Happens
There’s little that the average person can do to remedy global shipping bottlenecks and worldwide production shortfalls, but the average person can prepare for the next crisis, whatever that may be. Hopefully, the world is not in store for anything nearly as ugly as another pandemic, but a new catastrophe can always be counted on to make things more expensive and harder to find yet again.
Here’s how to prepare for the next supply chain crunch that’s always right around the corner.
Practice Good Financial Hygiene
People who eat well and exercise are less likely to get sick or hurt than those who don’t — and the same dynamic applies to money. People who stay in good financial shape can absorb economic turmoil better than those who spend more than they earn, fall into debt and don’t save or invest.
The single best thing that you can do to prepare for the next crisis, according to everyone from HSBC and Forbes to the Consumer Financial Protection Bureau, is to follow basic but effective personal finance rules like the following:
Create a budget that tracks income and spending.
Treat saving as a bill by automating your savings as you do your monthly expenses.
Continuously fund a separate account that you never touch just for emergencies.
Invest for the long term with small and steady contributions to ETFs or other stable, affordable and diversified securities.
Reign in excess spending by separating your wants from your needs and avoiding impulse purchases.
Never charge purchases that you don’t have the cash to cover.
Always pay your credit card statement balance in full to avoid finance charges.
POLL: Do You Make a Weekly Meal Plan or Other Regular Household Budget?
Avoid Panic Purchasing — Stock Up on What Sells Out First
You don’t have to become a survivalist with your own woodland bunker, but it’s always a good idea to stockpile the things you can in times of plenty. It was truly unsettling to see how quickly shelves emptied at the start of the pandemic and how long staples like toilet paper and bleach stayed on the hard-to-find list. Panic buying as supplies dwindle is not only nerve-wracking, but it’s invariably expensive — when anxiety rises, so do prices.
If you have some extra cash and a little storage space to spare, the American Public Health Association recommends stocking up on things like:
Emergency supplies like batteries, flashlights and first-aid equipment
Canned food, dried fruit and other nonperishable foods, as well as bottled water, canned juice and protein drinks
Cleaning supplies, medicine and personal hygiene items
Paper products and pet food
Shop Local — and Not Only To Be a Good Citizen
At the start of the year, The New York Times reported that corporate giants from the tech and auto industries were expanding their supply chains stateside to lessen their reliance on overseas suppliers in anticipation of the next crisis.
Consumers can use a version of the same strategy.
The shop local movement is all about supporting local entrepreneurs, but the concept can also provide armor against supply chain crunches. In the fall of 2021, shoppers were staring down a holiday shopping season defined by high prices, product shortages and shipping delays. According to Business Insider, small, domestic supply chains held up much better than sprawling, global logistical operations, and people who shopped locally were more likely to find the things they wanted at a fair price.
By shopping local today, you’ll feel good about where your dollars are going, but you’ll also establish relationships and learn about which stores can be counted on to stock certain products when times get tough.
It’s All About Preparation for Business Owners, Too
The supply chain drama that defined the last crisis was hardest on consumers — but it was no picnic for the business owners who couldn’t stock their shelves, either. Like the customers they serve, those business owners can also take steps to steel themselves against the next crisis.
“My advice for all entrepreneurs who are or aren’t facing supply chain issues is to diversify their sources,” said Denis Leskovets, CEO and product specialist with Office Consumer. “It isn’t economical or strategic to place all your eggs in the same basket. By diversifying, you’re protecting yourself, your business and your customers. If one channel fails, you would still have more to keep your production and shipping operational.”
Just as it is for desperate consumers who are facing empty shelves, it’s important not to panic if supplies do start getting scarce.
“The bottom line is, if you’re experiencing supply chain issues, the best thing you can do is to take a step back and assess the situation,” said Josh Pelletier, chief marketing officer for BarBend. “Try to figure out where the bottleneck is and what’s causing the delays. Once you have a better understanding of what’s going on, you can work on finding solutions. In some cases, it might be necessary to re-evaluate your entire business model and make changes to how you operate. Don’t be afraid to make tough decisions and go with what’s best for your company. Remember, it’s more important to be successful than it is to be stubborn.”
More From GOBankingRates
This article originally appeared on GOBankingRates.com: How To Financially Prepare for Future Supply Chain Disruptions
