Six Financial Preparedness Tips For Natural Disasters
Financial preparedness is key for weathering any natural disaster. No matter where you live, you’re probably susceptible to some type of natural disaster, whether it be earthquake, fire, tornado, hurricane, flood, or some other event. No one wishes for these things to happen, but it’s ideal to be prepared for a worst-case scenario at all times. You may already have an emergency kit that includes water, canned food, and other supplies. In addition, you may have also discussed emergency plans and evacuation routes with your loved ones. However, have you considered your level of financial preparedness for a natural disaster?
In this article, we give you six financial preparedness tips that will help you get through a natural disaster
Keep cash on hand
Do you keep cash in the house? Financial preparedness says you absolutely must. If not, you may be putting yourself at risk in the event of a power outage. If ATMs aren’t working, or you’re not able to access the bank, then you won’t have any cash to get what you need. It’s generally a good idea to keep around $200-300 in a safe place in your home. In addition, you will want to try to keep that money in small bills. By doing this, you will be better equipped to pay for emergency items even if the seller can’t make change for you.
Create an emergency fund
We all know how things in life can happen unexpectedly. For this reason, it is crucial that you are financially prepared. There is no better way to do that than by having a stocked emergency fund. Unfortunately, so many people don’t have one. According to GOBankingRates, upwards of 45% of Americans say they don’t have any savings. l,l,Whether you are making six figures a year or well below that, you can start saving.
When you start out saving, try making $1000 your goal and build up from there. The goal is to have at least three to six months’ worth of your current expenses saved up. Just make sure you have a separate savings account that you are making automatic deposits to. If this all sounds overwhelming, take a moment to reassess how you currently spend money. Most people spend much more than they realize. If Starbucks runs, lunches out and drive thru pickups are part of your normal routine, then you definitely could use an adjustment to your spending. Eliminate this unnecessary spending by cooking at home and buying a coffee maker. You would be surprised just how much money you will be saving by doing so.
Here are a couple of other ways to help build up your emergency fund:
Short-term investments: These include money market accounts, cds, treasury securities, bond funds and municipal bonds.
Long-term funds: Takes longer to cash out but the interest rate will be higher. Index funds and stocks fall under this. If you have an emergency fund already going, this may be a good idea.
Document your belongings
This is a key step to financial preparedness when it comes to natural disasters. Just because you have good rental or homeowners insurance doesn’t mean you’ll be able to recover everything if you haven’t kept accurate documentation. Take the time now to walk through your home with your smartphone and take both photos and videos of your belongings. Then, you’ll want to upload those photos and videos to a safe place, in the event that you lose or damage your phone. You’ll also want to include notes about when you purchased each item and how much you paid. If you have receipts, scan them into the same document.
Create an emergency document kit
If something happens where you need to leave your home as soon as possible, you want to have a disaster-proof box (that’s water and fireproof) that has copies of all your important documents. These include:
- All insurance policies
- Health insurance information
- Real estate documents (including appraisals from the title company)
- Mortgage information (or lease information)
- Living wills
- Property deeds
- Any investment and account information
- Driver’s license and title information
- Birth certificate and Social Security card
- Marriage certificate
- Bank account information
- Credit card account information
- Any contracts
- Any other important documents like tax returns, divorce papers etc.
You should also electronically store copies of your important documents on a flash drive or external hard drive.
FEMA has a printable checklist of all the important documents you should be including. You should also keep your originals locked up safe somewhere offsite like the bank.
Open a safe deposit box at your local bank
As we mentioned above, storing your original copies of important documents in a disaster proof box is important to financial preparedness. We also recommend opening a safe deposit box at your bank. Items like passports, birth certificates, wills and social security cards or any other document containing sensitive information should be stored here. These items are hard to replace and you never know when you will need to provide proof of your identity. **Refer to the above list for what to store**.
Make sure you have proper insurance coverage
Have you looked at your homeowners insurance coverage lately? Probably not. You may assume it covers any and all natural disasters but chances are it doesn’t cover all the bad that can happen to you and/or your property. This can be a not so fun surprise when it comes to actually having to file a claim. So take the time to sit down and learn exactly what your insurance covers. You will thank yourself.
Financial preparedness is key to weathering a natural disaster
No one likes imagining a natural disaster, but preparing for one can save you a lot of headaches and heartache in the long run. The tips we mentioned in this article don’t take very much time to complete, but the peace of mind will last for years to come. Not to mention your finances will reap the benefits as well.