Climate change is getting worse. Ascending temperatures contributed to the devastating Australian wildfires of 2020. Meanwhile, coastal surges and extreme rainfall are causing more hurricanes to touch down in the United States.
Amid increasing climate disasters, the average person is left with little in the way of their own protection. Perhaps the only thing many of us can do is to prepare our finances for a worsening climate.
But this is easier said than done. With the impacts of climate change around every corner, how do we navigate our financial planning for security even in the event of a disaster? Answering this question requires an exploration of the financial impact of climate disasters as well as useful strategies for financial preparation.
The Financial Impact of Climate Disasters
In the discourse surrounding climate change and its impact, the economy is rarely discussed. However, climate change has the power to collapse industries and devastate economies. These financial impacts will undoubtedly make for a recessed future, one we can all take steps to prepare for today.
Experts suggest that an increase in global temperatures could cost the U.S. as much as $520 billion per year. In the meantime, the cost of climate disasters is already causing substantial financial damage. Morgan Stanley reported that the U.S. lost $415 billion due to climate disasters in the last three years alone, indicating the currently dangerous state of the climate.
For individuals, climate disasters risk the loss of homes and jobs. With 40% of Americans only one missed paycheck away from poverty, a climate disaster could send millions into homeless and poverty cycles that are difficult to overcome.
We got just a taste of what large-scale lay-offs could be like due to climate change when the coronavirus appeared. Millions became unemployed, with massive government aid needed to sustain any kind of economic function. Climate disasters of increasing scale will put people all over the world in the same position, illustrating the desperate need for a sustainable urban future.
How to Prepare Financially as Climate Change Worsens
Fortunately, however, there are steps that the average person will be able to take in preparing themselves financially for potential climate-caused disasters. The extent of what you can do comes down to your personal situation. Skills, savings, and investments will all play a role in comprehensive preparation.
The following tips can help you better prepare for a tight future in a changing climate:
There are many skills that you can incorporate into your daily life that will help you out in a crisis or a tightened, climate-devastated economy. These skills can be acquired through community classes or even online learning on both free and paid platforms. With the right skill set, you’ll be able to save on repairs, stay employed, and secure your financial future.
Here are just a few of the skills you’ll need as climate change gets worse:
- Household and auto maintenance. Easy DIY car and home maintenance projects are a great way to cut down on your yearly expenses. Plus, these skills will continue to be highly desirable regardless of the state of the environment and economy.
- Programming and computer literacy. Not only do programming and tech jobs pay better, but these skills will also carry workers through the age of artificial intelligence. There are few better ways to stay employed than by honing your computer literacy.
- Financial literacy. Knowledge and expertise in various financial operations can help you navigate the difficult economy of a chaotic climate.
By gaining experience with these skill sets, you will be better prepared in the event of financial difficulties as climate change causes problems. However, skills alone won’t help you maintain financial security. You’ll need to implement saving strategies, as well.
Ways to Save
Saving is one of the best things you can do to prepare yourself financially for the future. But money can be tight, especially for the millions of us one paycheck away from poverty. However, there are a few simple things you can do now to help store up a nest egg in the event of a climate disaster.
Here’s what you should know:
- Consolidate and eliminate debt. Removing debt is your first step to financial self-sufficiency. Some debts, like medical bills, can even be forgiven with the right approach, such as setting up a repayment plan.
- Build up your credit score. Having a pool of credit to draw from can be a significant benefit in the event of a disaster.
- Put aside an emergency fund. While much easier said than done, storing away a rainy day fund with enough money to last up to a month could be a lifesaver. As little as $10 from every paycheck can quickly add up to significant savings.
These strategies can be much harder to perform in reality than they are to plan for. However, by navigating a thorough savings approach, you give yourself a safety net if a climate crisis causes financial problems for you and your family.
While you’re building that safety net, consider ways you can grow your finances even faster through investments.
Not all investments are made equal. For example, putting money into oil companies right now is likely not in your or anyone else’s best interest. But it can be hard to be certain of what investment types will pay off as the world grapples with climate change.
You should always talk to a financial professional before making a big investment decision, but here are a few worthwhile ways you can protect and grow your finances:
- Get insured. Renters or homeowners insurance that protects against climate disasters can help you avoid devastating loss.
- Contribute to sustainability efforts. Plenty of nonprofits and sustainable companies already exist. Donate, patronize, or volunteer with these to support a cleaner climate.
- Invest in energy-efficient goods and appliances. Clean energy helps you save money while reducing contributions to climate change. Make these investments now to start building an emergency fund while doing your part to combat global warming.
These investments stand to help you succeed even in the chaos that can arise from climate change, such as natural disasters and other economic impacts. With insurance, a sustainable industry, and energy-efficient tech, you can weather these disasters in a cost-efficient manner, giving you hope for the future.
The economic impacts of climate change present a real danger, one that could easily eclipse the problems caused by COVID-19. The good news is you can start preparing financially now with the skills, savings, and investments you’ll need to come out okay. Follow these strategies for a more secure financial future-even if the climate continues to get worse.