Handling a Disaster

Depending on where you live in the world, you may face the potential for various natural disasters.  Regardless of the type of disaster, there are some basic steps you can take to be prepared in the event that one strikes:

Establish an emergency fund 
One of the reasons financial professionals encourage people to establish an emergency fund is so that money will be readily available in the event of a disaster. So if you haven't started a savings account, do it now. 

Have a set sum deducted monthly from your checking account and automatically deposited into a savings account. Try to save enough to cover three to six months of essential expenses (and after that, keep saving, with the surplus going towards other goals).  

While most of your emergency fund should be held in an account where there are no penalties for early withdrawals (such as a passbook savings account or money market account), keep a small amount of cash in your home or car. You may not be able to get to your financial institution or an ATM machine for a while.

Emergency Kit
After you’ve gathered your most important financial items and documents, protect them as well as you can, while also ensuring you have access to them in an emergency:

• Make backup copies of important documents. You’ll want duplicates for yourself, but also consider giving copies to loved ones or at least let them know where to find your records in an emergency.
• A safe deposit box is best for protecting certain papers that could be difficult or impossible to replace but not anything you might need to access quickly. Examples include a birth certificate and originals of important contracts. What’s better left safely at home, preferably in a durable, fireproof safe? Your passport and medical-care directives come to mind because you might need these on short notice. Consult your attorney before putting an original will in a safe deposit box because a few states do not permit immediate access to a safe deposit box after a person dies, so there may be complications accessing a will.
• Seal the most important original documents in airtight and waterproof plastic bags or containers to prevent water damage. Be aware that safe deposit boxes are water resistant but not waterproof.
• Prepare emergency evacuation bags that are waterproof and easy to carry, and that is kept in a secure place at home. Most of what you’re likely to pack inside will be related to personal safety — first aid kits, prescription medications to last several days, flashlights, etc.  Also pack some essential financial items like cash, checks, copies of your credit cards and identification cards, a key to your safe deposit box, and contact information for your financial services providers. Periodically review the contents of the bag to make sure the contents are up to date. 

Electronic Banking

• Sign up for direct deposit. Having your paycheck and other payments transmitted directly into your account will give you better access to those funds by check or ATM because you won’t have to deliver the deposit to the bank or credit union or rely on mail service, which could be delayed.
• Arrange for automatic bill payment. This service enables you to make scheduled payments — such as for your phone bill, insurance premiums and loan payments— and avoid late charges or service interruptions.
• Consider signing up for Internet banking services. This also makes it possible to conduct your financial business without writing checks.
• Review your insurance coverage. Make sure you have enough insurance to cover the cost to replace or repair your home, car and other valuable property.  

Have an Evacuation Plan
In the confusion of a disaster, it is important to be able to find and contact family members.  Establish a rendezvous location and travel route to use if you have to get out of your immediate area.  Keep a list of important phone numbers handy and make sure you have some cash to pay your living expenses for a few days.

No one can prevent natural disasters or fire destroying your home.  However, having your financial and personal information safe can make the recovery much easier.