Preparing Financially for a Natural Disaster An ounce of prevention is better than a pound of cure, as the old adage goes. Preparing your finances for a natural disaster is key to overcoming it when it does happen. Without any countermeasures set in place, a natural disaster can wipe out any savings and financially cripple
Preparing Financially for a Natural Disaster
An ounce of prevention is better than a pound of cure, as the old adage goes. Preparing your finances for a natural disaster is key to overcoming it when it does happen. Without any countermeasures set in place, a natural disaster can wipe out any savings and financially cripple you for months if not years. Whether it’s a snowstorm that destroys your lawn and backyard or a fire that incinerates your home’s walls and ceiling, you need to make sure you have the savings to make repairs and replace anything that’s been destroyed. Here are seven things that can help you financially prepare for any sort of natural disaster:
Have an Emergency Savings Account
Open an emergency funds account that will only be used during a financial crisis. Whether the crisis was brought upon by natural disaster or not is irrelevant. Any time you get an influx of cash, such as from a work bonus or pay raise, put a portion of it on the account. Better yet, you should allocate a small percentage of your weekly or bi-weekly paychecks into the emergency funds account. If your current situation doesn’t afford you the option to open an account, such as your bank charging a hefty monthly fee to open and manage it, you can tuck in some money in a safe place inside the house. If possible, save money in small bills. ATM dispensers and credit cards may be rendered useless in the event of a natural disaster, so you might need the small bills to buy essentials, like food and medicine.
List Your Assets
Go one room after another and draft a detailed inventory of all your personal belongings, from furniture to electronics. Do this for your outdoor furniture, landscaping, and vehicles as well. Upload the list on a cloud storage so you don’t lose it in the event of a natural disaster that wrecks through your documents and paper records. Make sure to update the list at least once every year. To make it easier to claim for losses, take photos or videos of your belongings.
Insurance sounds useless, with stories of insurance companies raising homeowners’ rates when calamity strikes. Nonetheless, insurance is a great tool for minimizing the financial impact of natural disasters. Review your current insurance policy to see the extent of your coverage, whether you have homeowner’s or renter’s. Eliminate any unneeded coverage for natural disasters that are highly unlikely to happen within your area or home. This requires you to have a better understanding of your neighborhood. Research to see which natural events are more common in your area, whether it’s earthquakes, floods, or hail storms. According to reports by FEMA, floods are the more common natural disaster to sweep the country, with certain areas getting flooded twice a year in the past two decades.
Keep Your Credit Score High
Nothing hurts more than getting taken advantage of by lenders after you incur substantial financial damages from a natural disaster. Getting slapped with high interest rates on your personal loans or credit cards may come from a depressingly low credit score. Keep your score by paying your outstanding debt. Use debt consolidation to help you manage multiple loans and to lower the interest rates on these said loans. If you do have bad credit, you always have the option to use a fast online car title loan for short-term financial assistance.
Adopt Good Financial Management Practices
Knowing how to manage your personal finances comes in handy when natural disasters and other unexpected calamities hit you. Managing your personal finances through timely payments of debt, investing in the right assets, and saving a portion of your income into liquid cash reserves can help cushion the blow on your personal finances in such unfortunate events.
Invest in Damage-Reducing Equipment
For flooding, equipment, such as flood barriers and floodlights, can help minimize the damage brought by the water. For earthquakes, you need to amass the necessary survival supplies to last you for several weeks or months in the event that your home is rendered inaccessible to help and rescue. First aid supplies, such as tissue paper, bar soap, thermometer, safety pins, bandage strips, rolled gauze, and hydrogen peroxide can all come in handy in the event of an earthquake.
Move Everything to the Cloud
A natural disaster can interrupt with regular mail service. If you rely on Social Security benefits or 401(k) payouts, make sure you can still receive them even after a natural disaster. Getting the payments wired to your bank account helps eliminate the risk of the checks not reaching you on time. Moreover, it removes the possibility of your checks getting stolen amidst all the chaos and bad weather. To receive federal benefits, the US Department of Treasury also advises you to set up a direct deposit to your bank account.
Work From Home
Your work is your main source of income, whether you’re a dotcom entrepreneur or a full-time employee at a large corporation. In the event of a natural disaster, however, you might get stuck at home, with public transportation shutting down temporarily or the roads becoming unsafe to travel on. Make sure you have the tools to work from home in this situation by investing in a good ISP, computer, and accessories.
Financial preparedness maybe the last thing on your mind in an earthquake or flood, but it’s definitely one of the key factors for determining how long before you can get back up your feet.