Most of us take steps to help prevent or reduce the chance of emergencies, but what about the times when an emergency just can’t be stopped? One aspect of preparedness that is often forgotten is financial preparedness. Do you have an emergency fund if a disaster would strike tomorrow? If you don’t, you’re not alone. 40 percent of Americans don’t have $400 in savings according to the Federal Reserve. This means in an emergency, they would have to put charges on a credit card, borrow from a friend or family member, or might just be unable to pay altogether.
In an emergency, especially one that damages your home, there are many expenses you might face. Here are some ideas of common emergency expenses:
- Lodging, food, and gas expenses if you are evacuated or your home is severely damaged
- Regular monthly bills that will still be required even after a disaster
- Repairs for damaged property and possibly replacement personal items
- Repairs for, or replacement of, a damaged vehicle
- Medical bills if you or a family member are injured in an emergency
- Food and care for family pets
Gathering Your Financial Documents
Having your financial, identification and medical documents collected in an easy-to-access, protected place is an essential part of financial preparedness when an emergency strikes. Also having copies of these documents in a secondary, secure location or in a secure digital format allows you to access them even if you are unable to get to your home safely to retrieve the documents. You can use a secure mobile app to help you store all the info you need or use the Emergency Financial First Aid Kid (EFFAK), a free checklist from FEMA, to help guide you in gathering documents that can then be stored in a safety deposit box, external drive, or securely on the cloud.
The information that you gather in your EFFAK contains a great deal of sensitive information, so be sure to keep it protected. If you think your EEFAK is stolen, report it to your bank and credit card immediately. The information in your EEFAK should be updated regularly. You don’t always know when an emergency is going to occur, but as a part of financial preparedness you want to have your documentation ready and up-to-date when you need it.
Saving for Emergencies
Having a savings account for an emergency is great in theory, but can be hard to work into your everyday life when facing other expenses. Here are some saving strategies you can utilize to grow your emergency account and increase your financial preparedness.
It’s also helpful to keep a small amount of cash somewhere secure in your home. Depending on the emergency, ATMs and credit cards may not work or the power may have failed. Having a small stash of cash can help you take care of your immediate needs.
As a part of your financial preparedness, check up on your insurance coverage. Make sure you have homeowners or renters insurance, flood insurance and life insurance so that your family can be reimbursed after an emergency. Check-up on your policies and coverage yearly to make sure they will offer sufficient help after an emergency.
Learn more about Insurance and Home Safety.