How to Build a Hedge for More Security in Hard Times

We all like to have a little reassurance that we'll make it through hard times.  We want something we can lean on or gather around us for comfort.

Business people call that kind of safeguard a "hedge."  Hedging, in finance, is a risk management strategy.  It deals with reducing or eliminating uncertainty.  For example, if you buy homeowner's insurance, you're hedging yourself against fires, break-ins or other calamities.  Generally, when people hedge, they try to protect themselves against a negative event.

Common hedges

If you live in tornado, hurricane, or blizzard territory, you likely keep at least a few days' worth of non-perishable food, water, batteries, a radio, and other supplies on hand.  Some hedgers adopt a prepper mentality.  They stockpile large amounts of survival necessities, along with guns, cash, gasoline, and more.


Having a few extra essentials on hand is probably a good idea, and certainly a means of reducing anxiety in the event of a likely scenario, such as a power outage or an illness.  The zombie apocalypse is pretty improbable, but as we've seen during the COVID-19 pandemic, job loss, food and toilet paper shortages, and the disruption of international supply chains are all too possible.


I think there are additional ways we should prepare ourselves to deal with the difficulties life can bring.  Even during a record snowfall or an unexpected injury, we need more resources in hand than food, water, and blankets.





6 hedges against tough times

1.  An emergency fund.

Life without an emergency fund is risky.  If your car breaks down or your furnace quits, you need money fast.  If you don't have an emergency fund, you're forced to borrow or use credit.  You'll gain so much peace of mind if you have $1,000 or so saved in case your refrigerator needs repair or your child damages a tooth playing basketball.

2.  Zero debt.

Debt is the enemy of peace.  It requires you to use money you earn today to pay for things you bought last month, last year, or even longer ago than that.  Once you're out of debt (except for your home loan), you'll be amazed at your feelings of freedom and hope for the future.  Suddenly you, and not your creditors, control your money.  You can save, invest, give more, or work less.

3.  An understanding of needs vs. wants.

You need food, but you can live on rice, beans, and veggies.  You need shelter, but you don't need major upgrades or renovations.  You need clothing, but you probably already own plenty.  You need transportation, but you don't need foreign travel.  You need to communicate, but you don't need the latest iPhone or multiple streaming services.  In hard times, it helps to know what you need in order to survive, and what you can live without.

4.  Strong relationships.

Even in an era of social distancing, we still need connections.  We need relationships that offer unconditional support.  Build those relationships with your time and attention, your kindness, your generosity, and your listening ear.  Family, friends, neighbors, your church or synagogue, and other clubs and organizations to which you belong and contribute are going to be your lifelines when a crisis hits.

5.  Resilience and resourcefulness.

Resilience allows us to bounce back when things don't go the way we planned.  It helps us learn and adapt rather than giving up under stress.  Resourcefulness allows us to use our skills and strengths to cope with and overcome our problems.

6.  An attitude of hope.

It's normal in times of hardship and uncertainty to feel worried.  It takes self-control to choose to be positive, but it's so much more rewarding than sinking under your fears.


How can you strengthen hope?

• Arm yourself with facts about your situation, not gossip, conjecture, or fear-mongering.
• Don't waste energy looking for someone to blame.
• Control what you can control, rather than fighting the things you can't.
• Encourage yourself.  Speak to yourself as you would to a friend.
• Do something to help someone else.  Being generous will remind you that you are not without resources.
• Intentionally look for and focus on things that are going right, no matter how small.  Write them down in a journal so you can reread them and remind yourself of your blessings.

We can't always prevent bad things from happening, but we can decide how to meet those circumstances.  If you don't already have these hedges in place, you can start now to develop them.

Updated March 2023