| There is no magic silver bullet to prevent | | | | If your department receives its income from |
| hardships during a financial crisis. But there are a | | | | reliable sources of income such as taxes, local |
| few steps your fire department can take to | | | | contracts, etc., your department could probably |
| ensure you have a better chance of surviving | | | | be OK with closer to 6 months of expenses. |
| turbulent financial times. This article will help fire | | | | If your department depends highly upon less |
| departments develop a survival plan. | | | | reliable sources of income such as fundraisers, |
| First, have the right mindset about saving | | | | donations, grants, bingo, etc., your department |
| I speak to fire departments daily that think they | | | | should develop an investment plan to keep closer |
| should spend every penny of their income since | | | | to 12 months of expenses in your rainy day fund. |
| they are "not for profit". It is entirely appropriate | | | | Third, tighten down on spending |
| for a "not for profit" to invest in a "rainy day | | | | Your budget process should always identify |
| fund" each year. This will be savings that is | | | | essential expenses and non-essential expenses. |
| increased during the good times so that it can be | | | | Then, during financially difficult times, you have |
| drawn down during the hard times. Then, the | | | | clear identification of what expenses can be cut |
| cycle continues as good times return by investing | | | | without the emotion of trying to figure it out |
| in the rainy day fund to draw down during the | | | | during this difficult time. |
| next hard times. This is prudent financial | | | | Finally, examine all your debt |
| management. | | | | It's extremely hard to go bankrupt if you don't |
| It is important to treat this investment as an | | | | owe any money. But most fire departments can't |
| investment in your longevity. You will substantially | | | | often be in this position. The next best thing is to |
| improve your chances at surviving a economically | | | | examine your current loans during a financial crisis. |
| difficult time by having a financial cushion. | | | | If you have savings for a future purchase and a |
| Note: This rainy day saving is separate from the | | | | large outstanding loan, it may make sense to use |
| savings you may have for a large purchase such | | | | this money to reduce your debts and payments. |
| as a new fire truck or station. The purpose of | | | | It may even save you money as the interest |
| this savings is solely to protect yourself financially | | | | paid on a loan is usually higher than the interest |
| during a financial crisis. | | | | you earn in a savings account. |
| Second, have the correct amount of savings | | | | In summary |
| How much savings is enough? That question is | | | | Hard times are survived when you plan and |
| asked every day by fire departments across the | | | | prepare for them. You will never know when a |
| country. And everyone wants the magic number. | | | | hard time will hit, you'll just one day find yourself |
| The fact is that the correct amount of savings is | | | | in it. And the fire departments that are ready |
| a function of your annual budget. Your savings | | | | survive the hard times with less stress and a |
| should equal from 6 to 12 months of normal | | | | higher survival rate. |
| expenses. | | | | |