How I Plan Financially for War

I find myself discussing very existential topics in my job as a financial mentor. That is because of my own nature and because I believe finding purpose for our money typically comes with asking ourselves fundamental questions of what we want and need today, and what we may want and need tomorrow.

One such topic has been, how to plan financially in case of war? It is not a fun topic to discuss compared to saving up for a dream vacation or investing for a comfortable retirement (which is already questionable in the territory of fun topics), but it has been a topic for some of us since we live in a place having war breathing in our necks for the past 3 years and that is historically of high significance to the people here.

So while I do not pretend to predict outcomes on the current situation, I want to share how I would practically go about war reaching our home.

In emergency situations, we want to be prepared and have a minimum sense of control where we can. There are many aspects to consider but I am trying to keep it as simple as I can. 

Staying in place vs migration

There is a scenario where war hits your territory and you need to plan so you and your family manage while it takes place: for that you focus on buying food supplies, water, candles, having a radio, and you follow your local government guidance of self-preservation.

Then there’s the scenario where you make plans to migrate. As a migrant and child of migrants this is the scenario that more naturally comes to mind. My thinking is: if I had to leave my current home, how could I get a head start on a new destination? Regardless of the specifics, it has to be a place definitely far from immediate danger. There I will need to be able to pay for a place to sleep, food and find a new way to make a living or, in case possible continuing with my existing job from there.

Financial consideration when migrating 

In the scenario where I decide to leave my current home, I need some money that I can access in the place of destination. The assumption here is I cannot access my savings in my current home country or the access is limited. Why? Because war comes with consequences that impact the logistics of moving money, supplies and, overall, of going about our lives as usual.

The first aspect of my solution, therefore, is opening a foreign bank account. 

When choosing a platform for it, I think of one outside the traditional banking system which is the first to be directly affected if protective measures are enforced. What do I mean by that? It is not that because a war is coming, now they will take over the central bank and you will lose your money because nowadays data -like our money in the bank which is just a bunch of digits in computers- tends to be very digitized and decentralized. That said, and even if you are not the aggressor, to avoid assets from escaping the country in large amounts in a short period of time, governments and banks can impose limits to how much and how frequently you can take out money. 

As an alternative, therefore, I think of a platform such as Wise because of its multi currency account solution with presence in 160 countries and with 40 currencies. 

The second aspect to my solution is choosing a currency.

If a country is at war there may be economical consequences reflected in the strength of its currency. Euro in my case means that a lot of things have to go bad in all of the eurozone for the whole thing to crash which is not the same as being temporarily weaker. In any case, I am a very cautious creature so I plan to have 2 different currencies aside from euros. 

Now it’s time to stress test my solution

I ask myself: Is there a scenario where I would have issues accessing these funds in this backup plan? Potentially, because there could be restrictions applied at international levels to the residents of a country in conflict even if this is not the aggressor. Companies, in this case Wise, may also apply restrictions to residents from a particular place with the same purpose as the country: to avoid a sudden flight of capital. 

Admittedly, this aspect of my plan starts to feel overly paranoid so I decide to forgo this step and keep it down to steps 1 and 2: picking a foreign platform, and picking a foreign currency. 

There is a third aspect to my solution that is still essential though: how much money to keep in that account?

There are 2 things to consider to answer this question: 

The destination: We are very likely to go to places where we have friends or family that can support us. The distance and accessibility to get there. That means the cost of living in that place will be the indicator of how much to keep in that account. To this we then apply the typical recommendation of having 3-6 months of savings in our “peace-of-mind” fund.

The second consideration is ramp up time, meaning, how quickly will you be able to start with work and generate income again. Are you able to get any additional support? Are there any legal blockers you might face in the place of destination?

This again can seem overly perfectionist and the reality is there is more we cannot control than what we can, so I would stick to the destination costs of living per month times 3.

Proof of identity

One aspect of migration that truly sucks is the endless need to prove you are who you say you are to have the rights to live a dignified life. So depending on where you are from and where you end up landing, this might be easier or harder. In any case, being able to access your assets and move them between places might come with that need to show the proper documentation in the new place. For that I would keep a copy of my identification documents in digital format as a backup as well.

In the end…

There are many aspects of life that remain out of our control and it is healthy to practice accepting that fact, lest we overload our nervous system in vane.

Conversely, there are things that when we plan help us feel more empowered than if we let them fully to destiny.

While I enjoy the process of planning, including for these odd scenarios, I try to remind myself that there is a healthy balance between designing for the future and living in the present.

Think of it as another ratio to live by. The ratio of 70:20:10. That is, 70% of our energy should be dedicated to living in the present,  20% invested in tomorrow and 10% reminiscing about the past and where we come from. Go live your life today, let tomorrow come when it comes and be thankful for where you’ve been before.