This article was first published in the Economic Times, April 30, 2026
Periods of geopolitical tension have a way of reminding us how little control we really have. The ongoing conflict in the Middle East, involving Iran, the United States and Israel, is not just a distant headline. It has implications for oil prices, inflation, interest rates and financial markets across the world. For households, these shifts translate into something far more immediate: uncertainty in income, expenses and financial security.
In such moments, one principle becomes particularly relevant. Just as nations and institutions prepare for shocks, households must do the same.
Think Like Institutions: Build a War Chest- In my work with family offices, one idea I emphasise consistently is the importance of maintaining a “war chest”, a portion of wealth set aside in safe and liquid assets. This is not capital meant for growth or return optimisation. It is capital meant for survival, stability and optionality. It ensures that when disruption hits, decisions are not driven by panic.
The same logic applies, perhaps even more urgently, at the level of individual households. Financial resilience is not built in the middle of a crisis. It is built before one.
Your Emergency Fund Is Your First Line of Defence- At the level of the household, the equivalent of a war chest is an emergency fund. Its role is simple but critical. It protects your life when your income cannot.
It absorbs the shock, allows you to maintain continuity, meet obligations, and most importantly, think clearly about your next steps. The triggers may vary, a macroeconomic slowdown, job loss, health emergency, or a broader systemic event such as a pandemic or financial crisis. What unites these is their unpredictability and their ability to disrupt cash flows.
How Much Is Enough Depends on Your Reality- There is no single number that works for everyone, but there is a guiding principle. At a minimum, three to six months of essential expenses such as rent, food, utilities, healthcare and loan repayments should be non-negotiable. For those in volatile industries, with variable income streams, or with significant dependents, a longer buffer of twelve to twenty-four months is prudent.
This is where risk is often underestimated. Income is treated as stable until it is not. Entire sectors can slow down simultaneously. Hiring freezes, delayed payments and business contractions tend to cluster in times of stress.
The real question is simple: how long can you sustain yourself if your income stops tomorrow?
Safety and Liquidity Matter More Than Returns- Equally important is where this fund is held. An emergency fund is not an investment strategy. It is a protection strategy. The purpose of this capital is not to grow, but to be available when needed, without loss of value. In periods of stress, liquidity becomes more valuable than return.
Funds locked in real estate, equities, or long-term instruments defeat this purpose. Instead, this reserve should be held in low-risk, highly liquid options such as savings accounts, liquid mutual funds, or short-duration deposits.
There is also a behavioural dimension. Without a buffer, households are forced into unfavourable choices, selling long-term investments at the wrong time, taking on expensive debt, or cutting back on essential spending. With a buffer, decisions become measured rather than reactive. Time, in a crisis, is an asset. Liquidity buys that time.
Conclusion
The current global environment is a reminder that volatility is not an exception. It is a recurring feature of economic life. While we cannot control geopolitical events or macroeconomic cycles, we can control how prepared we are for them.
A war chest does not eliminate uncertainty. But it ensures that uncertainty does not dictate your choices. Because when disruption arrives, as it inevitably will, the difference is not in the event itself. It is in how prepared you are to face it.
