Hurricanes, floods, wildfires and tornadoes have dramatized the destruction that can come upon us from unexpected events with little or no warning. You can’t predict the next disaster that will affect your life, but the right preparation can help you mitigate the impact and help you rebuild and move forward. Below you will find 5 key steps you can take now to protect your family and finances.
1. Put Together an Effective Disaster Plan
A sound plan, tailored to your unique circumstances including the most likely emergencies in your area, your home layout, and your family members (including pets) can help you face the next disaster with a good road map rather than scramble and panic. Pull together everything you might need in the wake of a disaster to create a supply kit. The general recommendation is to include supplies for at least three days and up to two weeks.
Put together an emergency communication for your family. Who will be the designated contact to share important information? If you have children, who is the backup contact if you’re unreachable? How will you communicate that information?
Know your evacuation routes and designate a meet-up location. If you’re away from home when disaster strikes and phones are down, where will your family regroup? Always listen to warnings from emergency response teams. Do not attempt to access roads or buildings that have been deemed unsafe.
2. Be Financially Prepared
Unexpected events, ranging from natural disasters to accidents or illnesses to car breakdowns, can quickly bring on substantial costs you’ll have to manage. The best way to make sure you have the cash you need in a crisis is to set up an emergency fund.
An emergency fund is money you keep in a bank or money market account that is reserved exclusively for unexpected events that will require more cash than you usually have on hand. The idea is to allow you to cover your big expenses in a crisis so that you don’t have to raid your retirement funds or other long-term investments or pile up debt with a large credit card balance or by taking out a high-interest loan.
A good choice is a savings or money market account, that way you can get the money when you need it and earn interest. If possible, keep this account separate from your regular checking and savings so that you’re not tempted to dip into it for daily needs or splurges.
3. Review Your Insurance Policies
Insurance coverage can help you recover and rebuild from the severe losses that can come from disasters and other unexpected events. Insurance can also protect your family’s financial future from lost earnings resulting from disability or even loss of life arising from disaster, accident or illness. If you’re prepared with a current view of what you need to protect, a qualified insurance agent can help you make sure you have the right coverage.
Start by looking over your current insurance policies – homeowner’s, renter’s and auto insurance. Since your risks change over time – for example, your home may have increased in value – it pays to periodically review your situation to make sure your policies have kept up.
Take an inventory of what you have. You’ll want to be sure your insurance will help you rebuild or replace the items that are important to you. In addition to the structure of your home, this includes the improvements you’ve made, contents such as carpeting and furniture, appliances, and personal items such as clothing, electronics, jewelry and hobbies or collectibles.
4. Protect Important Financial Documents
Inability to locate or delays in locating key documents like personal identification papers, property deeds, bank account and credit card information, wills or powers of attorney can add to the stress of coping with a disaster and the difficulty of recovering and rebuilding. There are some documents you will need right away after a disaster or tragedy strikes, and others that you may not need right away but will be very difficult to replace if they are lost or destroyed.
Some of the most important documents to protect are identification records, inventory of your personal possessions, insurance policies, car titles and registrations, property deeds and mortgage/lease documents, military records and wills and trusts.
These documents could be kept in a safe deposit box or a home safe that is capable of withstanding fire and water damage. Password protected Online “Cloud” storage may be a good option for copies of important documents. To get document copies into the cloud, you can scan them or even use your phone. Be sure to use a trusted, secure provider.
5. Make an Estate Plan
Sadly, the devastation from a disaster like a pandemic, earthquake, hurricane, fire or flood, or an accident or illness, can result in severe injury or loss of life, and financial disarray can add to the stress and heartache of the survivors.
An estate plan can include documents including a living trust/will, durable power of attorney, health care proxy, living will and beneficiary documents – life insurance, retirement accounts and other types of investments.
Engage a professional team to make sure that your actions and intentions are aligned. It’s a good idea to hire a lawyer who is thoroughly experienced with estate planning methods and techniques to assist you. If you don’t have money to pay a lawyer, call a legal aid clinic or a law school and ask if they can help you for a reduced rate or for free. You may also have any legal benefits through your EAP at work. Having a well-articulated financial plan prior to engaging an estate planning attorney will be key in the implementation of a plan that is consistent with your family’s wishes.