Ensuring Financial Readiness for Natural Disasters

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{My wife is terrified of storms, while I think it would be thrilling to be on the show Storm Chasers. Each year, when we hear the first tornado siren, it’s a sobering reminder of the severe weather we face. Although we’ve never experienced a tornado directly, a nearby town has. A few years ago, our area also got hit by an inland hurricane, causing significant damage.

I tend not to think about natural disasters until my wife gathers us in the basement, watching weather updates on our phones. Preparing for these events often slips my mind until the last minute. However, being ready for a natural disaster involves more than just having a safe spot in your home. Financial preparation is crucial since the aftermath can be financially devastating if you’re not prepared.

Here’s a list of six things you should do to protect yourself and your family in case of a natural disaster. Add these to your to-do list now so you’ll be ready when disaster strikes:

1. Have Cash on Hand
   Natural disasters often knock out power, meaning you’ll need cash to buy essentials. Keep $200-$300 in small bills at home. Small bills are important because stores may not have change, and you don’t want to spend $20 or $50 on something small like milk.

2. Keep Your Emergency Fund Robust
   An emergency fund is essential for covering damage to your home or car or for living expenses if you can’t work right away. This fund helps bridge the gap while you’re waiting for insurance claims. Consider using an online bank to keep your money safe from local disasters that may affect your bank branch.

3. Make Sure You Have Proper Insurance Coverage
   Don’t assume your homeowners’ insurance covers every possible scenario. Review your policy closely to ensure you have adequate coverage, especially for common issues like floods that are not typically included in basic policies. Additionally, consider disability insurance, as a significant portion of people will face disability at some point before retirement.

4. Keep Good Records
   Having insurance isn’t helpful if you can’t prove what you owned. Make a video recording of all valuable items in your home, mentioning the brand, purchase date, and price. Store these videos and other important documents digitally so that you can access them even if your physical copies are destroyed. Emailing scanned documents to yourself is a simple way to keep them secure yet accessible.

5. Open a Safe Deposit Box
   For essential documents that need to be kept as hard copies, using a safe deposit box at your bank is a safer option than a home safe. Important documents like birth certificates, property deeds, wills, insurance policies, passports, and social security cards should be stored there to survive any potential home disaster.

6. Take Advantage of Direct Deposit and Automatic Bill Pay
   After a natural disaster, you won’t want to worry about paying bills. Set up automatic transactions for your mortgage and utilities, so you can focus on recovery instead of searching for your checkbook or a working internet connection.

The Bottom Line
Getting ready for a natural disaster is crucial, even though it’s easy to overlook. Taking some time now to organize your finances and prepare will be incredibly valuable when the next big storm hits. Being prepared means peace of mind and financial stability, no matter what Mother Nature throws your way.