This post is inspired by SVB.
I’m sure you know that FDIC protection covers a quarter-million dollars per account. I sure hope you also know you can open an account at a different bank and it counts as totally separate protection.
That means $500,000 at one bank is only half guaranteed by the government, but $250,000 at two banks is fully guaranteed by the same government.
It’s kind of a silly rule, but it costs you nothing but time to make sure you’re covered. This is such a rudimentary thing to care about, and yet these fundamentals are fundamentals for a reason.
Why I Own a Hippy Water Filter
Last year, my neighborhood had a water main break. Funny enough, I had family telling me about it and that I had a boil water advisory, but no one local told me.
Because of that, I got my own water filter that “all the homeschool moms have” (real quote from a friend). Really it was for peace of mind, and I figured it couldn’t hurt.
A few months later, I end up downstream of the famous train wreck and chemical spill we all know about. While my city shut off water intakes for a few days and used reserves, I didn’t care too much because my filter was good for both chemical and biological agents.
The water main break was a gentle warning shot. I took notice of the warning.
Silicon Valley Bank is our gentle warning shot.
It mostly only affected venture capitalists and tech startups so far, but the risk of it is not over. While there is some risk of bank defaults, I don’t expect that to happen. However, I fully expect the government to print money to “fix” it, which would affect you no matter how much money you’ve got in a bank.
Simple tips I would take to prepare:
- If you have over 250k, get accounts to cover it. If I was a millionaire, I would definitely have 4 different banks, because I would be heartbroken to most of it from a single bank default.
- Dollars will be worth less as the years go on. Because of this bank issue, it could happen sooner, faster. Acquire inflation-hedging assets.
- Get practical, day-to-day backups now, AKA spare food. I’m a real minimalist so I have to remember this one. I don’t want to fight against grocery store hordes during the next panic. If you don’t have two weeks of food in your house, take steps for that now. This one might sound silly, but I’m only suggesting two weeks, not three months. So why not?
These tips are a jumping-off point. Think for yourself—where do you have a potential single point of failure in your life/finances? Mitigate that risk. Buy insurance, split it across two accounts, etc. Think about it now so you won’t have to panic later.