Emergency planning has come to the front burner of conversation lately as we continue to witness devastating natural disasters across the country. Wildfires, hurricanes, mudslides, tornadoes, flooding, draught and yes even snow in Florida have all happened within the last six months of this writing. While some were forecasted, some were not, and millions of people suffered in some capacity due to situations beyond their control.
Now, I’m not getting pollical on you here (you reserve the right to come to your own conclusion on how these natural disasters happen), but I’d like to take this opportunity to talk about a financial emergency toolbox of sorts. We all have seen the list saying to have a 3-day supply of non-perishable food, drinking water, prescription medicines, flashlights, eyeglasses and a battery-powered radio. But when was the last time you saw a list of what financial resources you should have ready in the case of an emergency situation?
Many people are familiar with the concept of having an emergency fund in case of loss of employment. The golden rule is to have three months of your income in a liquid savings or money market account to help maintain your lifestyle should you lose your job. But what about when a hurricane rolls through town? Or if the electric grid is down and you no longer have access to your phone to use mobile payment apps? Let’s explore that side of the emergency conversation, so here is my humble, yet professional, list of ideas of how to be prepared with your finances in the event of a natural disaster emergency:
Cash: Have enough on hand that will cover your in-person essentials for a few weeks, but not enough that if lost in a disaster it would become a financial burden. While the coffee mug in the kitchen is convenient, and buried in the backyard is paranoid, a quality fire-proof safe is recommended. While we are at it, let’s treat paper savings bonds, paper stock certificates and your crypto cold storage drive as cash and those can also live in the fire-proof safe…along with precious metals, gemstones, coins and other valuables that have the ability to be converted to cash quickly. Quickly being the key word, here. Put the safe in the part of your home that you feel could withstand your part of the country’s worst natural disaster…only you know that that means for you.
Checkbook: A convenient way to access your checking account when you cannot access an ATM and the guy standing in front of you doesn’t take Venmo. For many people under the age of 40, you may never have had a checkbook and instead grew up using technology to seamlessly move money between humans…all the time snickering at us Boomers and our old-fashioned checkbooks. But in the event of a financial emergency, needing only a pen to initiate a money transfer could be the most effective game in town.
Automated payments: When you are able, have monthly payments automated for items such as your mortgage, utilities, car payment and other essential expenses. Your mail may not be delivered for several weeks, yet the credit card payment (which may have become your lifeline) will still be due. Now, most financial institutions have policies in place to offer a grace period when their customers are affected by natural disasters so be proactive and ask for help when you need it.
Electronic statements: For your banking, brokerage, treasury bonds, stocks, and IRA accounts having statements online can be a real time saver when you may need access to the information quickly during an emergency. If someone have an internet connection, you have your statements. Think about applying for a loan to help rebuild your home after a natural disaster to then realize that over 20 years of tax returns are no longer accessible to you in the basement (you only needed to keep the last eight, by the way… but I digress). You can have online access to most any financial account you have, yes even your “account” with the IRS. As a bonus, many financial institutions now offer client driven cloud storage for important documents such as your legal documents, judgement of divorce, birth certificate, copies of your passport….anything you may find helpful to start re-building your life.
Financial Application Passwords: How many financial apps do you have on your phone or computer and have no idea what the password is? If your phone is swept out to sea or your laptop literally melts, the cloud can bring you some recovery but you’ll have to log back into each of your apps. And that requires either the password or the patience of Jobe as you do password re-sets for everything. And I mean everything. And for the love of finance, put those passwords in the fire-proof box with your cash…and not in your notes app on your phone. The cloud isn’t perfect, even though we think it is.
While this list isn’t perfect, or complete, it is comprehensive and covers a lot of the natural disaster planning I’ve done with clients over the years. Most families would say their finances are not top of mind as they are making emergency decisions in the moment when seconds count, but when the dust settles your finances do become a big part of the recovery process.
I’ll leave you with this: best practices are not to go “all in” one way or another but to have a good balance should you suddenly need to make your virtual world now physical and your physical world now virtual.
Kimberly Enders CFP® CWS® CERTIFIED FINANCIAL PLANNER™
Enders Wealth Management
38700 Van Dyke Ave, Suite 125
Sterling Heights MI 48312
www.enderswm.com
#kimenderscfp
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