The four seasons are taught at a young age; however the one season our education neglected to teach us about is the season on how to prepare for ‘financial disaster’. This season is filled with hurricanes, tornados and mudslides, and other natural disasters that not only destroy our properties, but our finances too.
Even though the natural disaster season is known when to occur, tragedies strike fast and unexpectedly, taking only a split second to wash away our land (and our savings). Before you know it your beautiful home is taken away by a super storm and you’re left with the scraps from your insurance provider.
Think it won’t happen to you? Well, that’s exactly what happened to a couple in Pine Beach, N.J. last October. According to a CNN report, the husband and wife have spent approximately $70,000 of their own money fixing up their property. Yes, they had insurance, but not enough. Their coverage for wind damage provided the couple with $3,500 and with FEMA adding another $31,000 in grants, still not enough to build back their beautiful home. Considering the total amount received from insurance doesn’t even come close to the average cost of a home in Pine Beach, NJ, $357,424, this couple is in their own natural disaster.
Emergency funds are strongly encouraged for situations like this, with experts suggesting we save three to six months cash for natural disasters or other financial emergencies. A savings account for emergency funds can easily be opened; the only hard part is using that money for real emergencies. Therefore your dates on Friday night will have to be paid for by another income source because once again this money is protected for catastrophic situations only.
Your money will be safe in this account, but it’s suggested to store cash at home for situations needing immediate money with no time or access to withdrawal from a bank. Keep this cash, along with important documents like passports, social security cards, wills and financial documents, in a fireproof box. Also, keep a record of your personal property for insurance reasons. These photos and videos should also be stored in that safe box.
Finally, make sure your home is properly insured for a natural disaster. If you’re just starting out buying a home, then you should be shopping for homeowners insurance as well. However if you already own property then go back and check all the options available with your insurance provider. Verify that your home is covered under flood insurance, earthquake insurance, wind insurance or any other insurance appropriate for your property. Remember to dot your I’s and cross your T’s on all possible insurance options, covering your property as you prepare for the season of a natural disaster.
photo credit: DFID – UK Department for International Development via photopin cc
