How to Budget for a Natural Disaster

I can’t even imagine what it feels like for people who have spent their whole lives living in New Orleans to first go through Hurricane Katrina, and now Hurricane Ida. It’s heartbreaking, and I encourage anyone who is feeling that heartache to do something to help. If your spending plan is tight and you can’t donate money, you can still help; there are many different ways that you can get involved without opening your wallet. People in New Orleans need trucks, clothes, food, services, counsel, and volunteers. If you’re interested in helping people who have been affected by Hurricane Ida, click here.

These natural disasters will likely only get worse, and more frequent, as we feel the effects of climate change. I know that’s the last thing that you want to hear. Trust me, I never want to spend my day thinking about worst case scenarios. I wish the financial world was just butterflies and rainbows and free money all the time, but it isn’t – and it’s my job to tell it like it is, so you can tackle any challenge thrown your way. To make sure you’re protected, here are five things you should do today:

Ask Yourself: Does Your Insurance Have Your Back?

If you are a homeowner, it is extremely likely that your current homeowners insurance plan doesn’t cover you for the full range of natural disasters the world will see in the next ten, even five, years. Typically, homeowner’s insurance plans don’t cover flooding or earthquakes. If you’re in an area that is at risk of a particular type of natural disaster, make sure you have the proper coverage. If you don’t, you need to switch your policy. There is no other solution.

I know it’s a headache to switch insurance providers, but I promise you that the inconvenience of switching an insurance plan is magnitudes better than the stomach-dropping realization that your insurance plan won’t help you when you need it the most.

Get Your Emergency Funds in Check

With each day the headlines broadcast doom and gloom, I consider making another deposit into my emergency fund. I typically recommend that you keep at least six months of your bare bones budget on-hand for an emergency. If you do not have that saved, you need to make that financial priority number one. Seriously: before you contribute to retirement, before you Index Funds and Chill, you need to get your emergency fund in good shape.

Make Sure You Know How to Freeze Your Utilities

This is a great suggestion from RBC Wealth Management. If you think that your electric company will stop service for you automatically if your house collapses, think again. It’s possible that your utilities companies will keep charging you until you make the call to end the service. Not only is this an important step to stop more bills from rolling in, but active utilities could also make damage in a natural disaster much, much worse. I don’t want to be alarmist, but just think about it. If a gas line is still running during a wildfire, a gas leak can be catastrophic.

Do A Personal Inventory

If god forbid something happens to your belongings and you need to file an insurance claim, you’ll need to have records of everything you own and how much it costs. It’s time for one of my favorite activities: making a super organized, mega-spreadsheet. This is a Sunday afternoon activity that your future self will thank you for. In this spreadsheet, at the very least you should include pictures of your things, but you get bonus points if you can include the receipts and serial numbers. To hold you over until you have time to go full Lapin-organization mode, take a video of yourself walking through your house and take some verbal notes about how much the pricier items are worth. You’ll feel a little weird talking to yourself about your belongings— like you’re leading a museum tour through your life— but it’s a start to get the proof you’ll need to have any productive conversation with an insurance company.

Get Your Documents in Order

If you lose your home in a natural disaster, you can apply for aid through organizations like the Federal Emergency Management Agency (FEMA). However, in order to do that, you’ll need to fill out some paperwork and confirm your identity many, many times. Also, if you’re evacuated out of a high-risk area, you’ll also need your documents for travel, like your ID, drivers license, maybe even your passport. Are you starting to get the picture? After a disaster, you’ll need a lot of docs, and if those are lost in the damage… well, that’s disaster #2. Keep back-ups of all of your important pieces of paperwork in a fireproof safe box, and in digital records. At the very least you’ll need extra copies of your passport, drivers license, birth certificates, social security cards, health insurance card, the title and registration for your car and the aforementioned inventory of your household items.

By planning for the worst now, you’ll be three steps ahead in case anything happens. Click To Tweet

By planning for the worst now, you’ll be three steps ahead in case anything happens. Hopefully you will never need to use your emergency plan, but when it comes to your home, it is better to be safe than sorry.

A version of this article was originally published on Forbes.


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