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How to Prepare Financially for an Unexpected Disaster

  April 16

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Today we have a post from Chonce, a new blogger working her way out of $30,000 of debt. Chonce is also one of my lovely coaching students. Enjoy!

203807706_37b4b38978_zAre you fully prepared financially for the unexpected? Preparing your finances for an unexpected disaster may start with a solid emergency fund, but there is so much more to consider.

While property damages, sickness, and sudden accidents can cause plenty of damage, natural disasters are usually the most unexpected since no one tends to believe a hurricane, tornado, or earthquake would ever hit their town.

Editor’s note: Since I’m from Louisiana, I have some personal experience with this thanks to Hurricane Katrina.

Just last week, eight tornadoes spread across Northern and Central Illinois with the most powerful one hitting a small town about 30 minutes from my home. Most of the residents were evacuated in time, but the storm damaged several homes and left many people without a home to even return to. Surrounding communities have organized fundraisers and other disaster relief efforts to help the families in their time of need, but unless you’re in that specific situation it’s extremely hard to imagine losing everything in a matter of minutes.

When disaster strikes, it’s important to focus on your safety and well being primarily, then you will have to cope with the aftermath and that is where financial preparedness comes in. Here are 5 ways to help financially prepare yourself and your family for an unexpected disaster.

Anticipate What Could Go Wrong

I know it sounds negative to anticipate the worst, but being realistic and preparing properly can end up saving you not only thousands of dollars but your life in some cases. For example, if you live in an area that is prone to floods, you may need to take extra precautions by upgrading your insurance and preparing your basement to withhold a flood. In addition, you might want to avoid putting extremely valuable items in the basement to avoid any extra flood damages.

Get Insured

While obtaining the proper insurance should be a no brainer, obvious solutions like this one can sometimes slip our minds as we often fail to assess our coverage benefits. While renters or homeowners insurance is a must, you should also review your health insurance policy and look into flood insurance, disability insurance, life insurance and a quality auto insurance policy depending on your situation. Talk to your insurance agent about the best options for you.

Have Money that is Accessible

Having 3-6 months’ worth of expenses saved up in your emergency fund is great, but if you can’t access the money quickly in the event of a true emergency you will be out of luck. If you can’t return to your home or job after an unexpected disaster, you’ll need some money to live on while you wait for your insurance to get sorted out.

But having your savings and investments tied up in the market or an online bank is common when you’re trying to earn a return on your money. Carrying some cash is a good option but you can also set up a checking account opposite your savings account. I house my emergency fund in Capital One 360 and I also opened a checking account with them as well so if I ever needed some money fast I don’t have to wait several business days to transfer my savings to my bank. I can simply transfer some money from my emergency fund to my checking account with Capital One 360 to access the money instantly.

Make Extra Copies of Important Documents

Important personal documents can be expensive to recover if they ever get lost or destroyed and the process to regain your documents can be quite tedious as well. Make digital copies of your bank information, insurance policies, property deeds, contracts etc. and don’t just store them on your computer. Email the documents to yourself using a private email address that only you have access to.

For documents that need to be saved as a hard copy like birth certificates, social security cards, passports, etc., store them in a secured safe deposit box at your local bank so they will be easy to recover if any paper documents get damaged in your home. You should also write up a will and make copies if you haven’t already. It’s not a fun topic, but it’s important to draw up financial and medical powers of attorney and instructions for your estate before a disaster.

Where is Your ‘Go Bag’ ?

Being financially prepared involves being very organized. In the event of a disaster there won’t be time to stop and gather money, food, and important documents that you need. That’s when your ‘go bag’ will come in handy.

I got the name and the concept from the popular television show, Doomsday Preppers. While I wouldn’t recommend that anyone spaz out about the world ending in some bizarre way like the people on the show do, I believe that it is important that you organize and pack up essentials should you ever have to leave your home temporarily on short notice. Include copies of your important and private documents, emergency cash, a first aid kit and medicine, water, and a non-perishable food item in your go bag so you can easily just grab it and go if it when necessary.

Properly preparing for the unexpected will give you the peace of mind and financial reassurance needed to recover from any event life throws at you.

How do you prepare for the unexpected?

Chonce is a personal finance blogger and writer who enjoys sharing debt stories and talking about saving, budgeting, conscious spending, and improving your financial house. In her spare time she enjoys working out, playing sports with her son, cooking, and thrifting. You can learn more about her writing services on her blog My Debt Epiphany and connect with her on Twitter.

Are you fully prepared financially for the unexpected? Preparing your finances for an unexpected disaster may start with a solid emergency fund, but there is so much more to consider.

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17 responses to “How to Prepare Financially for an Unexpected Disaster

    1. That’s really scary, sorry to hear that. Renters insurance is definitely a must because while you may be able to control your own actions, you can’t predict what the people living right next to you are going to do.

  1. A few years ago we had a tornado hit our area and while we were blessed to not be directly hit, our power was out for nearly a week. Fortunately we had a generator for electricity and extra gas to power it. Now we have a whole house generator tied into the natural gas lines, so unless that is disrupted, we are set for power We also keep a cash stash in house in case we need to bug out when the banks are closed.

    1. That’s a smart move on your part. Personally, it’s a struggle for me to keep cash on hand in such a digital society that we live in but it’s very important.

  2. Being from Louisiana, too, we definitely all know to have our “stuff” ready, batteries, water, documents, “go bag,” a few precious keepsakes. Hurricane preparedness season is a thing! But people often forget to get their finances hurricane-ready. Great post!

    1. Thanks Chela, and I agree the finances part should be big for everyone. Once you find out that you’re alright and healthy, your next concern should involve recovering from the disaster and supporting yourself and your loved ones.

  3. Renters insurance is something I’ve slacked on but considering the technology mishaps I’ve had in the last couple weeks, I literally just got done typing out my info to get a renter’s insurance quote. I have an emergency first aid type bag I ordered from the red cross years ago, but I must admit that I’m pretty slack when it comes to things if shit really hits the fan, like a major earthquake. Whenever I feel a tiny jolt, I always fill up a bunch of water bottles just in case. lol! But still I’d be SOL when it comes to food.

    1. Glad to hear you’re working on the renters insurance. It’s pretty affordable especially if you get it added to your auto insurance policy.

  4. Bush fires tend to be the natural disaster of choice in my area so I keep an emergency kit in the car that’s like your go bag plus a little gas cooker, some tinned food and utensils. The other thing to consider is your pets. They need a go bag, too: carriers, food, water, etc…

    Oh, and make sure your cash is in small denominations. Most businesses are geared to electronic payment now so they might not have much in the way of change, especially if your ‘disaster’ has knocked out the power.

    Thanks Chonce, this has reminded me to go check my emergency kit and maybe swap a few things out to keep it fresh.

    1. I agree, finding a solution for your pets is important as well because they can’t fend for themselves in the event of a disaster. Glad you enjoyed the post Diane!

  5. We dealt with a really crappy unexpected disaster when our basement flooded the first Spring we were in our home. The city’s storm drain system was overwhelmed and the water pushed out to smaller drains (like the one between our house and our neighbors). We also dealt with a sewer drain out that was messed up and required digging up and fixing. Both of these ended up being fixed by the city at no cost to us. It took a lot of time, energy, effort, and research to get the city to pay for it. One contractor for the drain out would have charged us $7k for the repair but another one would have only charged $2.6k….and he’s the one who went to the city on our behalf and got them to pay for it all.

    Bottom line is this: you can prepare all you want, but it’s all about how you respond to a disaster. Be resourceful with what you have and you should come out of it stronger and better prepared for the next inevitable disaster.

    1. I love how you responded in that situation and did your research. That’s an extra $3,000 or so that you didn’t have to spend. I agree that these types of situations heavily depend on your response but if you aren’t properly prepared you may respond irrationally and not take the time out to get to the bottom of the situation and minimize your costs.

    1. Same here. Even though I’m in full blown debt repayment mode I’m so happy I decided to build up my EF first. Renters insurance is a must for me.

  6. I definitely need to be thinking putting an emergency bag and supplies together. Thank you for the reminder. Right now, I am hustling to build up my 3-6 month emergency fund, but it would be good to have some cash stashed at home too.

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