Floods, tornadoes, hurricanes, wildfires—natural disasters seem to be in the news every week. Every region faces its own environmental threats, so every homeowner should be ready for their worst-case scenario. Unfortunately, many Americans struggle to keep emergency funds on hand. According to a recent survey, only 56% of Americans could cover an unexpected $1,000 bill with their savings. The rest would need to rely on credit cards, loans, or help from friends and family. Before disaster strikes, let's help you prepare with these six tips for financial preparedness in the wake of a natural disaster.
1. Fill Up Your Emergency Fund
First things first: if you don't have an emergency fund, it's time to start one. And if you've been dipping into it for non-emergencies, focus on replenishing it. While your insurance may cover damage from a disaster, it might take a while to receive any payouts. In the meantime, you could be paying for hotel stays, meals, gas, medical bills, and other expenses. Depending on the disaster, your workplace might also be affected, potentially leaving you without income for a period.
2. Prepare for Unexpected Expenses
Natural disasters often bring unexpected and costly expenses. For example, if a hurricane is approaching, hotels inland might hike their prices. The same goes for gas, food, and water. Increased demand can lead to price surges. Additionally, insurance claims can come with high deductibles, and power surges might damage appliances. These extra costs can add up quickly.
3. Keep Cash on Hand
It's always a good idea to have some cash on hand, but it's especially important when preparing for a natural disaster. Whether it's a blizzard, hurricane, or tornado, your area could be without power for days or weeks. This means local merchants might only accept cash. Keeping smaller bills on hand can help you purchase essentials like food, water, and shelter.
4. Assess Your Insurance Policies
Do you know exactly what your insurance policies cover? If not, now is the time to find out. Trying to make a claim after a disaster is not the time to discover gaps in your coverage. Discuss with your partner and insurance provider what your homeowners or other insurance policies protect. Consider any additional coverage that might be necessary to keep you and your belongings safe.
5. Keep Records of What You Own
Once you're sure your insurance policy has you covered, be ready to make a claim at any time. Keep accurate records of what you own, what you paid, and how much it's worth. Use a spreadsheet, photos, or videos to document your valuables. Store digital copies outside your home, such as in the cloud or a safety deposit box, in case your home or files are destroyed.
6. Set Up Autopay
We've talked about the extra expenses you might face after a natural disaster, but one thing you shouldn't worry about is late fees. Setting up autopay for your credit card, car payment, cable bill, mortgage, or other ongoing expenses can help you avoid missed payments. When a disaster strikes, the last thing on your mind should be paying the cable bill. Autopay can simplify your life and reduce stress during chaotic times.
No matter where you live, you never know when disaster may strike. As you deal with the emotional turmoil of rebuilding your life, it's crucial to be financially prepared. Following these six tips before a natural disaster occurs will help keep you and your family financially secure. Stay safe and stay prepared!