How can Americans prepare for disasters ? The National Endowment for Financial Education (NEFE) offers key information for financially weathering the storm.
“Disasters, whether natural or man-made, can strike quickly and with little warning,” says Ted Beck, president and CEO of the Denver-based National Endowment for Financial Education® (NEFE®). “Your safety and the safety of your family is the top priority. But it’s also important to protect your home, your assets and your financial security.”
NEFE offers the following tips to ensure that you and your family are financially prepared for a disaster.
Protect Your Health and Life
Above all, the most important thing to consider in preparing for a disaster is to protect your loved ones. Be sure to have a disaster plan in place for your family. Discuss with your family what each person’s responsibility should be in an extreme circumstance. As part of your family’s disaster plan be sure that:
- Everyone knows the safest place in the home to seek shelter, and if needed, each person knows how to shut off the supply to utilities.
- You have an evacuation drill in place, and that your family has practiced it.
- If separated, you have identified a meeting location outside the home.
- You have assembled a kit to care for your pets, including food, water and medication needs.
If you or a loved one is injured in a disaster, your medical and disability insurance can quickly become your most important assets. Be sure that you know your coverage and have all insurance paperwork available. Also, take the time to understand what procedures the insurance company requires you to follow in the event of an emergency.
Protect Your Property
Whether you’re a homeowner or a renter, it’s important to take steps to avoid damage to your property, or at the very least take proactive measures to reduce damage and the economic impact that can be caused by a disaster. Start by evaluating your current living space and take note of any potential problems.
- In areas exposed to hurricanes—and storms containing high winds—secure your roof to the foundation of your home and board windows before the storm’s landfall.
- In areas where earthquakes can cause damage, install safety latches on cabinets, bolt bookcases and large furniture to walls, and secure your water heater.
- If you live in an area that is prone to wildfires, keep your property clear of brush, and assess the exterior of your home. Consider upgrading to fire-resistant siding and other less flammable materials if needed.
Even when you take steps to protect your property, there is always the possibility that you could still experience damage. That’s why it is important for homeowners and renters alike to have an insurance policy in place. Some things to consider:
- At a minimum, buy full-replacement insurance. In this case the insurance company will pay to replace the residence up to the coverage amounts specified in the policy.
- Have your property appraised periodically to ensure that you keep adequate insurance coverage.
- Have a policy in place that will cover the replacement of your possessions.
- Depending on where you live, you may want to consider additional insurance coverage that protects in the event of earthquakes, floods, etc.
- Overall, it’s important to fully understand your insurance policy—what it will cover and what it won’t—coverage amounts and the deductible, the amount you are responsible for paying if a claim is made.
In case of evacuation, contact your insurance company to notify it of your situation. Ask if your provider will pay for temporary living expenses if you are forced away from your home. If this provision is not included with your insurance policy, contact the American Red Cross for crisis shelter locations and information.
Protect Your Records
Important documents should be protected in a safe deposit box at a financial institution—for an annual cost of about $30—or in a safe at home. These papers should be items that are difficult to replace, such as birth, death, and marriage certificates; social security cards; loan paperwork; and insurance policies.
Protect Your Job and Income
If you are unable to work because of a disaster-related injury, or if your employer is forced to temporarily close due to a crisis, how will you manage financially? Check with your employer, through a human resources representative or through an Employee Assistance Program (EAP), to learn about your company’s plan in the event of an emergency. Other questions to ask include:
- If I am unable to get to work following a disaster, will I still be paid, and if so, for how long?
- Will I be eligible for unemployment insurance?
You also may be able to take advantage of the Family and Medical Leave Act if you are unable to return to work in the near future because you are caring for an injured family member. Learn more by visiting the U.S. Department of Labor’s website at www.dol.gov.
Remember Immediate Needs
One of the first things you may need in the event of a disaster is food, shelter, etc. Be prepared with a predetermined amount of cash and keep it accessible. Also, know where and how you can access larger amounts of cash if needed as ATMs may be affected by the disaster. If you need emergency access to money, you may contact the Red Cross or the Federal Emergency Management Agency (FEMA). One of these organizations might be able to guide you to sources of emergency cash assistance. You also might contact your employer and request an advance on your next paycheck.
Another important aspect regarding your finances is that if you are already experiencing difficulty in managing debt, a disaster may compound the stress in meeting financial obligations. If disaster strikes, contact your creditors and work out a manageable repayment plan. You may also benefit from the services of a nonprofit credit counseling service. Be sure to prioritize your bills however, keeping in mind that insurance policies and mortgage or rent payments are the top priority.
For more tips on financially preparing for an impending disaster, NEFE and the American Red Cross offer Disasters and Financial Planning: A Guide for Preparedness on the Smart About Money website at: www.smartaboutmoney.org.
The National Endowment for Financial Education is a nonprofit foundation dedicated to helping all Americans acquire the knowledge and skills necessary to take control of their financial destiny. For more, visit www.nefe.org.