September is National Preparedness Month which promotes the importance of readiness for natural disasters and other emergencies. This year alone, natural disasters have displaced thousands of Americans and in some cases whole communities, due to fires, floods, tornadoes and more. Many of these events have been unprecedented in their impact and have occurred in regions that have not experienced events of this type, scale or magnitude in the past.
Each year, in conjunction with the Ad Council, FEMA’s Ready Campaign sponsors National Preparedness Month to educate and empower Americans to prepare for and respond to all types of emergencies. While physical readiness is an important component, such as preparing a family emergency kit, knowing the location of shelters and approved evacuation routes, financial preparedness is just as critical. That’s because access to your money and the ability to quickly make insurance claims for damaged property can be critical, especially if you are temporarily or permanently displaced.
Keep in mind, even if your property is damaged or destroyed, you’re still responsible for paying any mortgage and/or car payments due, regardless of the condition of your property. You are also responsible for paying your credit card bills. Failure to do so can negatively impact your credit at a time when you need it most. If your income is interrupted and you’re unable to pay your bills, notify your credit card issuers as soon as possible to explain your situation. Many credit card companies will work with cardholders in times of emergency to establish a repayment schedule that considers your personal situation.
It pays to plan ahead
Putting a financial preparedness plan in place can take time, so it makes sense to develop a plan as soon as possible and update it annually or as changes in your financial circumstances dictate. Below are 10 steps to help you get started to strengthen your family’s financial preparedness.
- Review your insurance policies (homeowners, auto, life insurance) and estate planning documents to ensure they are accurate and up to date.
- Gather copies your important financial documents, including wills, living wills, powers of attorney (POAs), car titles, insurance policies, etc. Store copies of documents in a waterproof “to-go” kit where they are easily accessible if you have to leave quickly.
- Document proof of any government income sources or benefits you currently receive, such as Social Security, veteran’s benefits, Medicare, grants, etc.
- Upload living wills and financial directives to your local healthcare providers, such as doctors, hospitals and medical networks.
- List contact information for all of your professional advisors, including financial, legal and tax advisors.
- Download mobile apps for access to your various financial accounts. Also include copies of bank and other financial account information in your to-go kit in the event you do not have electronic access to these accounts for days or weeks.
- Have cash on hand in the event that ATMs and cash registers are inoperable due to power outages. Also bring a checkbook with you if you are forced to evacuate.
- Print or document account information and due dates for bills or membership fees that you do not currently pay automatically. (Consider setting up automatic payment plans now to save time and stress if you are temporarily displaced due to an emergency.)
- Create a photo or video inventory of household belongings, including furniture, collectibles, etc. This will greatly facilitate any insurance claims and help to ensure you don’t forget to list certain furnishings or belongings that may have been destroyed.
- Make copies or your most recent tax returns or know where to access them online.
Regularly reviewing your insurance coverages is important for protecting your income and your assets. Insurance helps to shift risk from you to an insurance company. However, people often don’t realize that they are underinsured until an unexpected event occurs. If it’s been more than two years since you met with a financial professional to review your coverages and costs, schedule time to do so now. This is one of the most important steps you can take to protect your family’s lifestyle now and in the future.
To learn more, download our complimentary guide, How to Pick an Insurance Policy. This resource helps you identify your insurance goals, offers basic guidance on how to pick the optimal policy and outlines when to work with your professional to update your coverage.