War, Sanctions, Currency Collapse: How Should Ordinary People Prepare Financially?

A few years ago, if someone told you to plan for currency collapse scenarios, you might have dismissed it as doomsaying. But Turkey’s rapid lira devaluation and Ukraine’s capital controls in the early days of the war have made it harder to say “that only happens in other countries.”

This episode explores what ordinary people — not financial professionals, not the ultra-wealthy — can actually do to prepare.

TL;DR

Financial resilience isn’t built through one dramatic move. It’s accumulated through a series of small decisions: adequate emergency reserves, moderate diversification, and reduced dependence on any single system. When extreme scenarios arrive, you don’t need to respond perfectly — you just need to be able to hold on a bit longer than most.

First: This Isn’t “If” But “How Much”

Geopolitical risk, currency depreciation, financial system stress — these aren’t binary. It’s not “everything is fine” or “total collapse.” It’s a spectrum of degree.

The honest question isn’t whether your financial life is exposed to these risks. It’s how exposed it currently is.

Practical Ways to Build Financial Resilience

1. Emergency reserves: start with three months

In any extreme scenario, the most vulnerable people are those whose cash flow disruption immediately triggers crisis. Emergency reserves don’t give you peace of mind — they give you time. Time to assess, to think clearly, rather than being forced to act immediately under pressure.

Target: three to six months of living expenses in a liquid account (savings account or money market fund).

2. Diversification: broader than stocks vs. bonds

When most people hear “diversification” they think about asset allocation between stocks and bonds. In the context of financial resilience, it means something broader:

• Currency diversification: holding some assets denominated in foreign currencies (USD-denominated ETFs, foreign currency savings accounts) reduces dependence on any single currency
• Geographic diversification: if circumstances allow, understanding legal options for holding assets outside your home country
• Real assets: not gold in the prepper sense, but understanding the role that real estate or physical commodities play during inflation or currency devaluation

3. Reduce single-point dependencies

This is the most overlooked piece. If all your funds are in one bank, all your income comes from one employer, all your investments are in one market — when that system is stressed, you have no buffer.

Using at least two different banks, building multiple income streams, understanding what your insurance actually covers: these are practical ways to reduce single-point exposure.

4. Understand that capital controls are possible

In severe financial crises or wartime scenarios, governments may restrict cross-border transfers, foreign currency exchange, or even withdrawal amounts. This is not unprecedented historically.

Knowing this isn’t about hiding money under your mattress. It’s about building liquidity and diversification during normal times — not starting to think about it only when a crisis is already underway.

One Thing You Don’t Need to Do: Panic Actions

The biggest risk in these conversations is that they prompt extreme reactions — “convert everything to gold immediately” or “move all assets overseas right now.”

These extreme actions usually do more harm than good. Building financial resilience is a process, not a single move. If you don’t yet have adequate emergency reserves, start there. Everything else can be developed gradually.

Takeaway

War and currency collapse sound distant, but financial vulnerability is actually quite close to home. Real financial preparation isn’t about predicting disasters — it’s about ensuring that whatever happens, you have a little more time and space to make rational decisions.

References

• EP672 Adult’s Small Talk