Managing Money After Natural Disasters

When natural disasters strike, one of the furthest things from people’s minds is the state of their bank account. Most focus on getting out and it is not until the storm moves on and they are faced with the aftermath and damage that thoughts turn to financial matters. It is difficult to bounce back from a tragic event, and this is worsened if your home is suddenly no longer there.

Stressful times make managing money more difficult, and this can lead to bad decisions. It is best to work out a plan ahead of time, before disaster strikes, to ensure that you will be prepared no matter what may lie ahead. By taking the time to put together a game plan now, you’ll be able to easily follow it in the event that your area is hit by a natural disaster.

1. Put together an emergency fund.

Every household needs to have an emergency fund and easy access to enough cash to tide them over if a natural disaster strikes. A good emergency fund is usually three times your monthly income, but just having a little reserve is better than none. You may also want to consider keeping some cash in your home safe so that if you need it quickly, it is right there.

2. Get an insurance policy for storm damage.

Keep in mind that your general homeowner policy may not cover the damage caused by some natural disasters. Read through your policy documents to see what isn’t covered and then make strategic decisions on the type of insurance you may need. For example, if you live in a flood plain or somewhere in the path of a potential hurricane, flood insurance is vital.

3. Put together a list of trusted contractors.

In the event that your home is damaged or destroyed, it is very helpful to have a list of contractors that you can trust. Many homeowners are taken advantage of by con artists in the aftermath of a disaster and you can end up losing even more money. By taking the time to put that list together now, you’ll know exactly who to call – and trust – when disaster strikes.

4. Keep your papers safe.

Any financial records and documents that you need should be copied and placed in a safety deposit box. Just keeping them in a file in your home is not safe. You may need these documents in the future, especially if they contain an insurance policy or something that you will need to prove value of what you have lost. Keep everything in a second location where it will not be affected by a natural disaster.

By taking the time to get all of these factors figured out ahead of time, you will be able to weather any storm financially and you’ll have less to worry about if disaster does strike. No one likes to think about losing everything they own, but if you’re prepared, you’ll be in a much better position than those who are not.

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