Money Talk: Financial planning for disasters and emergencies
News stories about floods, earthquakes and other calamities may make you wonder if you are prepared to keep your home and family physically safe. But here’s another question to consider. What about your financial safety? Advance planning can offer peace of mind, so use this checklist to help you sleep better.
Build up cash and credit reserves. Banks and ATMs may shut down after a disaster, so secure some cash or traveler’s checks at home for emergency needs. Keep your credit card balances low or paid off in case you need the borrowing cushion. Better yet, save up three to six months of living expenses in a money market account. That could make all the difference if you had to relocate or if a storm destroyed your workplace and you couldn’t draw a paycheck.
Understand your insurance coverage. Is your homeowner’s policy based on the highest replacement value for your neighborhood? What about flood insurance? Does your insurance cover temporary relocation and car replacement? Understanding the answers to these questions is essential so you know what to expect if a disaster strikes.
Inventory your possessions. Documentation is crucial for insurance claims, so record the value of each item and keep photographs or video recordings. Your inventory should include detailed descriptions, noting model and serial numbers where available.
Collect receipts and get appraisals for valuables such as jewelry, heirlooms, antiques and artwork.
Also note any renovations to your property, such as a remodeled kitchen, and be sure your homeowner’s insurance reflects the value of these improvements. Record items outside the house, too—vehicles, sporting goods, and improvements such as a new fence or deck. Once your inventory is complete, store one copy in a safe deposit box, one at home, and one with a distant friend or relative.
Rent a safe deposit box for your home inventory, home and vehicle deeds, birth certificates/naturalization papers, passports, insurance policies, investment certificates, marriage certificates and powers of attorney. Add a copy of your will, but keep the original at your attorney’s office or registrar of wills. Consider a safe deposit box in a distant bank, away from any local disaster.
Assemble an “evacuation box” of important documents. It should be strong and lockable, with self-sealing, waterproof plastic bags. Keep it indoors near an emergency exit and include:
• Key to the safe deposit box
• Cash/traveler’s checks
• Phone numbers for yourself, family, friends, insurance agents, attorneys, financial advisors and doctors
• Account numbers for banks, credit cards and investments
• Social Security and driver’s license numbers for all family members
• Copies of your safe deposit box contents
• Copies of your last three tax returns
• Current backup of your computer files, including precious photos
• Medical prescriptions
Get everyone on the same page. Develop a “what-if” list of scenarios that could jeopardize your family, your home or your income. Talk with your family and make a plan for how you will react—where you will meet and what you will bring with you. Make sure everyone understands the basic plan in the event of an emergency.
– By Erin Eddins
A resident of Edmonds, Erin Eddins is a Certified Financial Planner® professional and Chartered Financial Consultant® with an emphasis on investment and retirement planning. She specializes in pre- and post-retirement planning strategies, Social Security maximization, and investment management.