Preparing Your Finances for a Natural Disaster

In recent weeks the United States has watched as Hurricane Harvey left areas of Texas and Lousiana with devastating floods and as Hurricane Irma led to severe wind damage in Florida and many Atlantic islands. These heartbreaking images remind us how powerful Mother Nature can be but also remind us how important it is to be prepared. While storms, wildfires, earthquakes, and fires can’t always be predicted, preparing yourself and your finances for such events can go a long way in helping you persevere through these unexpected hardships.

Here are three ways you can prepare your financial life for a natural disaster:

Have homeowners/renters insurance

One can only imagine what it’s like to have all of your belongings lost in a few moments’ time. Worse yet, after losing everything, some storm victims may not have the money to rebuild or replace their home and possessions. While there are federal programs and charities that can help these individuals, insurance can also help cover you in case of disaster.

A potential problem is that your homeowners or renters insurance policy may not cover the specific damage done to your property. That’s why it’s always a good idea to review your coverage regularly and ensure that you’re properly covered. For example flood insurance is typically sold as a separate product or option on top of your regular insurance.  Also note that premiums on certain insurance types can be pricey in some areas. In these cases you’ll want to carefully weigh the pros and cons of coverage and perhaps have a contingency plan in place should you decline some coverage.

Have an emergency fund

Having extra funds on hand is essential for handling anything life throws at you. This could mean a lost job or high medical bills but it could also mean a natural disaster. Even if you have all of the proper insurances in place, you may very well need to tap your savings in order to get back on your feet after disaster strikes.

Even before an incident occurs, having an emergency fund in place could help you minimize the damage. This could mean having the money necessary to purchase items that will help secure your home and/or the cash need to evacuate to a safer location. In some extreme situation, having these savings could quite literally be the difference between life and death.

Have a lock box of documents 

Something you might not think about when facing a disaster is all of the important documents you’ll want to save — some of which directly relate to your finances. This is where have a fire-proof lock box can really come in handy. In your strongbox you’ll want to keep items such as passports, social security cards, and birth certificates as well as financially relevant documents like the deed to your house, your car’s title, and perhaps any necessary tax documents. A few other items you may consider adding are photographs, and some extra cash.

Something people often forget about is backing up their computer files. Having a local external drive is a good idea for everyday use but as the recent floods point out you are still vulnerable if you don’t backup your files to the cloud. I personally use Backblaze cloud backup and recommened them to all of my friends and family.

As we’ve seen over the past month, disasters do happen. In these cases being prepared can make all the difference in the world. Likewise, maintaining insurance, an emergency fund, and a lock box with important documents can not only help you survive a natural disaster but also allow you to get back on your feet financially afterward.

Also published on Medium.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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