A Financial Port in Any Storm

When you’re dying of thirst, it’s too late to think about digging a well.” -Japanese Proverb

The waters are receding slowly, but the images of post-apocalyptic devastation remain in the mind’s eye.  It is too late for the victims of Hurricane Sandy, but what can we do to prepare ourselves financially for such a disaster that may strike with little notice?

Prepare for the emergency itself:  From an investment viewpoint, cash may be “trash” these days, but you need to have some handy to pay for necessities when ATMs are down and credit cards are not accepted.  Keep a few “Benjamins” or as many “Presidents’’ as you can afford to stash away in a safe, accessible place.  Choose a spot you can get to quickly when all hell breaks loose, and resist the temptation to dip into it for non-emergencies. Also store copies of documents there to prove your identity, like your social security card, birth certificate, driver’s license, and health-insurance and credit cards.

Prepare for the post-emergency scenario: So, you and your family survived the disaster with life and limb intact, but your home or business did not.  To navigate these rough waters, you need to set up an emergency fund to cover living (or operating) expenses for at least three to six months.   Include an allowance for rent should your home be rendered unlivable.  These funds will tide you over until disaster relief kicks in and you can start the rebuilding process.

Prepare for rebuilding: Need I mention insurance?  Make sure your home, car and business have adequate coverage.  If you are unable to work because of injury, you will also need disability insurance.  Now is a good time to review your policies to make sure you understand the deductibles and the extent of your coverage.  Don’t forget flood insurance, which is not covered in standard policies.

Keep an inventory of your possessions to substantiate claims.  Take photos of your big-ticket items and store them offsite, or, better yet, “in the cloud.” There are online services that will store your documents, photographs, and even your music for a minimal cost.

Prepare for the unthinkable:  Should the disaster take your life, or leave you seriously incapacitated, you owe it to your family to make sure they are secure. So plan ahead.  Draw up a will and power-of-attorney documents that identify persons who will make financial and medical decisions on your behalf.  If you have minor children, use this opportunity to identify a person who will be their guardian if neither parent is able to care for them.

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