As I sit here today watching the the excruciatingly slow approach of Hurricane Florence towards the east coast, I thought it might be apropos to talk about what we should do to prepare for a natural disaster from a financial perspective.
Of course, preparing is much more than having an evacuation route and buying a case of bottled water.
The aftermath of a natural disaster can be financially devastating, especially if you have not taken the time to prepare. That’s why I like to say that planning for the worst and hoping for the best is always a sound strategy when prepping for the wrath of Mother Nature.
Here are six things to do to ensure that you and your family will be financially ready in the event of a natural disaster.
1. Have cash in your pocket.
Natural disasters often take out power to a large swath of land, which means you’re stuck paying cash for anything that you need if stores are open in the area. It’s a good idea to have enough cash on hand to buy necessities until power is restored. $300 is a good amount and keep it in small denominations in case stores can’t make change.
2. Fully fund your emergency cash reserves.
This is the money that you have stashed in a savings or checking account that is immediately available in case of …..emergency. If you have damage to your home or car or are unable to return to work immediately after a natural disaster, you will need to live on something while you are waiting for your insurance.
Having money available that you can use while you’re cleaning up can mean the difference between feeling as though you’re getting your life back quickly and feeling stuck in no man’s land.
3. Check your property insurance for the proper coverage.
This should be an annual review for everyone to make sure they are covered for life’s curve balls. Make sure that you have the necessary coverage and the financial ability to cover the deductibles before the insurance kicks in, particularly for earthquake and wind/hail deductibles. Also, understand that your homeowners insurance will not cover water damage due to flooding. So, if you are in a flood zone, make sure that you have flood insurance (https://www.floodsmart.gov/).
4. Document your belongings in your home.
Doing a simple video by walking around your house and narrating what you have and approximate purchase date and price can help you get the proper reimbursement from your insurance company when disaster strikes.
Upload the video to your insurance company’s website and/or save it digitally, preferably in cloud storage, so your claim can be processed quickly.
5. Maintain physical and cloud storage of important documents.
For hard copies, you can use a fire and waterproof safe or you can use a safe deposit box at your bank. For cloud storage, there are several resources: Google, Apple, your email provider, your mobile phone service, etc.
6. Set up automatic bill pay for your recurring expenses.
Take advantage of direct deposit and automatic bill pay so you can focus on getting your life back together instead of paying bills. It will be one less thing to stress out about.
In summary, putting a plan in place to be prepared for a natural disaster is never on anyone’s urgent to-do list. But it’s well worth the time and effort to get everything squared away before the mandatory evacuation is announced or the tornado siren sounds.
Please let me know if you have any questions.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
