How to prep your finances during a disaster

We understand that disaster preparation is currently top of mind for many. While there are many resources available to help you physically prepare for natural disasters such as earthquakes, hurricanes, tornadoes, and wildfires, this article is about shoring up your financial self should you find yourself in the unfortunate path of one of these. (And if you’re lucky enough to avoid a disaster, this article is also a quick guide to help you feel comfortable and confident donating to others in need.)

On a normal day, your cell phone’s working just fine. The lights overhead are gleaming and the internet is zipping along. However, in a natural disaster, it’s likely that power will be out, cell towers will be down, ATMs won’t work and you’ll need to live without the modern conveniences we’ve all come to depend on.

There are some simple things you can do, online and offline, to help with your, and your family’s, financial preparedness if disaster strikes. Consider the word “Prep” itself—and build your financial go-bag accordingly:

• Plan your financial go-bag
• Record your documents
• Expand emergency savings
• Prudence during the unexpected

So, what does all this mean in practical terms?

Pretend you’re going off-the-grid for a year. What would you tell your trusted friends or family about your financial, insurance or medical information?

To get started, craft a financial intent letter. While it’s not a legal document, if you’re seriously injured, or worse, the information it contains will be very helpful to your friends and family. Include the following:

• The names and phone numbers of your legal and financial advisers and your employer.
• A financial inventory to explain what income, investments or insurance proceeds they can expect to receive (retirement plans, vacation pay, business expenses not yet reimbursed).
• A list of which expenses will come due.

Tell your trusted friends and family members that you’ve written this letter and put it in your financial go-bag. (More on the physical bag later.…)

Your phone—yes, that thing you will definitely want to try and take if a disaster strikes—can be an amazing source of documentation. 

Take a home inventory/video of every room in your house. Move around slowly, capturing everything floor to ceiling, and make one video per room so that it’s easy to email or text later on. Record footage of valuable appliances, artwork, computers and furniture. You’d be surprised at how you’ll forget the items you see and use every day!

Did you know that only 51% of Americans have an "emergency fund" in case a disaster causes all their income to suddenly stop? And only about 10% say they have $1,000 in cash available in case of an emergency.

During a disaster, bills still pile up and ATMs can lose power or run out of money, so set a goal of withdrawing $1,000 in cash when things are running normally. That should be enough money in your financial go-bag for three days’ worth of expenses (food, gas, motel, medical supplies) for your family.

1. Call your cable/TV provider and ask for the retention department. In some cases, they’ll work with you to lower your bill.
2. Call your auto and home insurance providers and check to make sure you’re getting the best deal.
3. Call your mobile service provider and ask them to review your usage levels and see if there’s a better priced plan for you.
4. Sell things around the house that you no longer need.

The very nature of a disaster is that conventional rules, normal habits and everyday conveniences are out the window. But don’t panic, take a deep breath and focus.

For the physical portion of your financial go-bag, FEMA suggests that you keep your important documents organized, in a safe place (such as a fireproof lock box or safe)where they are protected and easy to retrieve during an emergency. Such documents include insurance policies (home, flood, earthquake, auto, umbrella, life, disability, long-term care), tax documents, wills, trusts, powers of attorney for financial matters and health care and copies of passports, birth certificates, immigration documents. 

Here are some other helpful tips on dealing with a disaster:

• If you're temporarily relocated, provide change of address information to the post office so you won't miss any important mail.
• Notify your mortgage company of the disaster and provide them with your contact information, if it’s changed.
• Save all receipts for expenses incurred due to the disaster. This is important for insurance, taxes and assistance programs.

To ensure that donations get to the organizations well equipped to help, check out sites like Charity Navigator a charity watchdog organization, and keep a list of organizations responding to natural disasters. And here are some other tips for making sure you’re doing the most good with your donation:

• Send money—not clothes, food or other supplies. Delivery services may be severely impacted during a disaster, making shipment of your donated hard goods next to impossible.
• Find a charity with a proven track record.
• Be skeptical of emails suddenly appearing in your inbox from so-called disaster victims.

By using the principles of "Prep," you’ve got a financial game plan at your fingertips that can help you get through a natural disaster and get back on track once things return to normal.