Financial Readiness: Preparing Yourself Before Disaster Strikes
Earlier this fall, Hurricane Helene moved inland from the Gulf of Mexico as a tropical storm, from Georgia to the mountains of North Carolina. In western North Carolina, the thousand-year storm caused immense damage from flooding. Even as Floridians were catching their collective breath, Hurricane Milton swept through shortly after.
So much heartache for so many people. Even those living in areas thousands of feet in elevation and hundreds of miles from the coast were hit hard. If you or loved ones have been impacted, our hearts go out to you.
Patterns of extreme weather may be the new norm. Or not. It’s hard to say. But either way, life on Planet Earth has long been fraught with dangers. There may be new, formidable risks to manage, but the truth is, risk itself is nothing new.
For this reason, you may have noticed there are an awful lot of adages about protecting yourself when, not if, the—ahem—stuff hits the fan: Forewarned is forearmed. Measure twice, cut once. An ounce of prevention is worth a pound of cure.
In that spirit, let’s contemplate some of the tried-and-true steps to help better prepare your financial affairs for when disaster strikes. A few ounces of these preventive measures may forestall pounds of future strife.
1. Organize Your Financial Information.
Access to financial information can be critical after a disaster, helping you work with your insurance companies, apply for disaster relief or even just keep up with your everyday bills.
Store important documents in a waterproof safe, a safety deposit box, or in the cloud for easy access during a disaster. Incidentally, make sure you aren’t the only person who knows where the information is.
Ensure you have access to the following:
Tax statements, which you’ll need to apply for FEMA disaster assistance
Insurance policies
Proof of income, such as pay stubs
Housing payments
For a more detailed list, check out the financial preparedness checklists available from FEMA.
2. Have Cash on Hand for a Crisis.
If you don’t already have an emergency savings account, consider starting one you can tap in a crisis. Aim to save three to six months’ worth of expenses. But also take note that in a disaster, it may be difficult—or even impossible—to take a quick trip to the bank. So, keep a small amount of cash at home in case credit cards and local ATMs don’t work in an emergency and you need to buy food, fuel or other supplies.
3. Have the Right Insurance.
Make sure you have appropriate homeowners or renters’ insurance.
A homeowner’s policy generally covers your dwelling and other structures, personal property, personal liability and medical protection. It also typically offers loss-of-use compensation if you need to relocate temporarily. Renters insurance should provide roughly the same coverage except for protection for structures, which is a landlord’s responsibility.
If you are a business owner, make sure to have business insurance to protect your business property and employees.
Importantly, neither homeowners nor business insurance cover flooding or earthquakes. If either are a possibility in your area, considering purchasing separate policies to cover each if such policies are available. (In some particularly risky areas, earthquake and flood damage coverage may be cost-prohibitive or otherwise unavailable.)
4. Inventory Your Property
Maintain a detailed inventory of your house to help you prove the value of items you own that may be lost or damaged during a disaster. An up-to-date inventory can help you determine how much insurance to purchase, and it can speed the insurance claim process. It can also provide documentation needed to deduct losses on your tax return.
Take photos or videos to help you record your belongings and where appropriate, write down descriptions. For higher priced items, add as much detail as you can. For instance, instead of simply listing “camera,” note the specific model number and the year you bought it. Also consider having especially valuable items appraised. There are often local services that can help you create audiovisual inventories or even apps that can help keep you organized. Store your inventory and appraisal documents with your other important financial documents.
What To do After a Disaster
If disaster strikes, consider taking a bit of time to yourself before springing into action, if that’s possible. Grieving the losses you’ve endured is an important step in the recovery process, and acknowledging your emotions may take precedence over the financial harm done.
Once you’re ready, contact your insurance company to report the damage. Document and prepare a list of damaged items, and keep the items, if possible, until a claims adjuster has visited.
You’ll also want to hang on to receipts for expenses you incur, such as supplies, repairs and lodging if you can’t stay in your home. These expenses may be covered by insurance.
If you can’t stay at home, notify your utility providers and have them pause or discontinue services. You’ll still be on the hook to pay certain bills after a disaster. Prioritize paying your insurance premium and mortgage, which you must pay even if your house is damaged. If it becomes difficult to pay debts, including your credit card bill, contact your creditor who may be willing to work with you on a payment plan.
No one expects to be on the receiving end of life-changing disaster. But being prepared can help ensure you can pick up the pieces faster.
If you have any questions about putting together a disaster plan of your own, reach out and we can help!
If you want to discuss this or anything else that is on your mind, we offer a complimentary 15-minute call to discuss your concerns and share how we can help.
Stordahl Capital Management, Inc is a Registered Investment Adviser. This commentary is solely for informational purposes and reflects the personal opinions, viewpoints, and analyses of Stordahl Capital Management, Inc. and should not be regarded as a description of advisory services or performance returns of any SCM Clients. The views reflected in the commentary are subject to change at any time without notice. Nothing in this piece constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Advisory services are only offered to clients or prospective clients where Stordahl Capital Management and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Stordahl Capital Management unless a client service agreement is in place. Stordahl Capital Management, Inc provides links for your convenience to websites produced by other providers or industry-related material. Accessing websites through links directs you away from our website. Stordahl Capital Management is not responsible for errors or omissions in the material on third-party websites and does not necessarily approve of or endorse the information provided. Users who gain access to third-party websites may be subject to the copyright and other restrictions on use imposed by those providers and assume responsibility and risk from the use of those websites. Please note that trading instructions through email, fax, or voicemail will not be taken. Your identity and timely retrieval of instructions cannot be guaranteed. Stordahl Capital Management, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
Stordahl Capital Management, Inc is a Registered Investment Adviser. This presentation is solely for informational purposes and not a solicitation to invest. Advisory services are only offered to clients or prospective clients where Stordahl Capital Management, Inc and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Stordahl Capital Management, Inc unless a client service agreement is in place. Please contact a financial advisory professional before making any investment.