Get Financially Prepared for Life's Emergencies

August 03, 2023

If disaster strikes, are you financially ready? Whether it's a wildfire, earthquake or storm, make sure your home, car and property are adequately insured, and that you have emergency savings to draw on if you need to. Some things take longer than others to set up, so getting ready ahead of time is a smart strategy.

1. Update Your Insurance Coverage

If you have more questions than answers about what your insurance covers, make time now to call your insurer for a full review. If you live in an earthquake or flood zone, consider adding earthquake on to your existing policy and a separate flood insurance policy through the National Flood Insurance Program. And check to see if you have actual cash value (ACV) or replacement cost coverage on your homeowners or renters policy. The first fixes home damages and replaces your belongings, minus depreciation — which means it won't cover your losses at full value. Unlike ACV, replacement cost coverage will pay for all the damage. This can result in significant savings if you have to file a claim. Cars can get damaged during a catastrophe, so make sure your auto insurance has comprehensive coverage; comprehensive coverage will fix it, but liability coverage will not. Your insurer can guide you on what's right for your situation.

2. Bolster Your Emergency Fund

If you don't have much in savings, work toward having at least $1,000 in reserve, should disaster strike. The easiest way to build your fund is to set up automatic payroll transfers to a designated savings account, preferably one that is not connected to your checking account, to avoid dipping into it. With automatic transfers, you will reach your goal sooner than you think. And make sure to keep some cash on hand in a safe place, in case you can't get to an ATM.

3. Back Up Your Financial Documents

Take the time to store password-protected copies of your paperwork including insurance, credit card and other financial information on an encrypted external hard drive or reputable secure online server. You can also take photos of your household items for insurance claims purposes.

4. Set Up Web Bill Pay and Direct Deposits

Setting up online bill pay will ensure your bills are paid in a timely fashion. You can set up your accounts for automatic payments, or if you like more control over how and when you pay bills, just make sure all your accounts are added to your list of payees. Then, no matter where you are, you can pay your bills to avoid late charges and dings to your credit. Consider signing up for direct deposits of your paychecks and any other income, too.

5. Prepare Your Mobile Phone

Getting your mobile device emergency ready is important before or after disaster strikes. Consider downloading trusted apps that can help you navigate emergency situations. For instance, the Red Cross offers a free app that you can customize to your unique circumstances, with more than 35 different severe weather and emergency alerts and information to help keep you and your family safe. You can also sign up for text alerts from local or state governments and your children's schools to keep you apprised of important information. Make sure all your contacts are up-to-date and that you also create a list of emergency contacts, in case emergency personnel need to reach family or friends when you can't. In the midst of a catastrophe, networks get slammed, so use text messaging to communicate, and don't use your phone unnecessarily as that can add to the congestion. Keep a phone charger and charged batteries in your car so you can recharge your phone when you need to. If you have a landline, forward calls to your mobile device, so people can contact you.

6. Use Social Media

When you post, you can reach your network of contacts very quickly. Using Twitter or Facebook, you'll be able to tell folks where you are and that you're OK.