Shielding Your Finances from Disaster

financial crisis disaster

Whenever catastrophes happen, they provide us with a strong reminder. In a matter of minutes, our communities and livelihoods can change forever.

The aftermath of a disaster can leave many victims with a financial struggle to get back on their feet.

There is no way to completely prevent a natural disaster. But you can take steps to financially protect yourself and your family if you have to evacuate your home in an emergency.

Keep a “Disaster Evacuation Box”

Gather and make copies of all your key financial and personal documents, including:

  • Passports and birth certificates
  • Marriage licenses
  • Wills and other legal documents
  • Property deeds
  • Insurance policies
  • Mortgage records
  • Car titles
  • Any physical stock or bond certificates

Make copies of the front and back of all credit cards and driver licenses. Then make a list of all your account and credit card numbers, as well as a written and photographic inventory of all your valuables.

Keep these documents in an airtight, waterproof, and fireproof safe. You want one that can be easily taken with you in case of an evacuation. Inform family members or trusted friends of the box’s location in case you are unable to retrieve it.

Maintain Some Liquidity

Be sure to have enough cash or travelers checks to last your family about three days. This will help in cases where electricity goes out and credit cards do not work.

Also, avoid tying up all your assets in real estate or investments that cannot be tapped without paying penalties.

A few other suggestions:

  • Keep three to six months’ income in a savings or money market account.
  • Consider having a credit card with a high credit line. Or you could arrange in advance a line of credit for an emergency.
  • If you have a 401(k) account with your employer, find out whether your plan allows you to take a loan out against your savings.

Check Your Insurance

Your homeowners policy also provides protection for the contents of your home. Review your coverage each year and look for the following things:

  • Limitations on items such as money, jewelry, furs, silverware, artwork, and securities. In some cases, you can buy extra coverage.
  • Coverage for the actual replacement cost of the home and contents. Talk with your agent to ensure your coverage will pay for the full cost of rebuilding. This is especially important if the value of your home has risen significantly or if you have made improvements to the property.
  • Limits on damage due to specific causes, such as flooding. Look into state or Federal coverage if you cannot get coverage through private companies.
 

Don’t wait until disaster strikes – the time to prepare is now!

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