4 ways to financially prepare for the unexpected

Don’t let your financial footing be uprooted

If coronvavirus and Colorado’s recent wildfire season have taught us anything: it’s to expect the unexpected. It’s time to focus on a plan of action for when disaster strikes. Preparation is a way of life here in Colorado, and no detail is too small when planning for catastrophe–whether that’s a blizzard, flood, or a major wildfire.

What many tend to overlook are the financial preparation steps to take, which are among the most important. Checking these four tasks off your preparedness list will help ensure that you and your loved ones are better equipped for a post-disaster environment. After all, as yet another wildfire season tells us, it’s not if – but when.

  1. Keep Insurance Up to Date

Just recently, 2020 became Colorado’s worse fire season on record. Two of the fires that burned this season – the Cameron Peak Fire and the Pine Gulch Fire – are the largest wildfires recorded in the state of Colorado. In addition, the East Troublesome fire moved so rabidly that residents had little time to evacuate.

Without insurance, damage mitigation will either put a serious hole in your savings account – or put you in a financial hole. According to FEMA, consult with your insurance professional to be sure your policy is right for you and to ensure your home and family are protected. Most insurance companies also offer specialized options like flood and earthquake policies.

  1. Keep Cash on Hand

Even as society becomes increasingly cashless, when the power and phone lines go out, charge and credit card terminals likely won’t work. FEMA also recommends having cash on hand as part of your preparedness kit to purchase basic needs like gas, water and food. The amount you have on hand should reflect and be sufficient to accommodate the needs of your family based on size. If possible, get rolls of quarters or change and try to keep bills below $50. You’ll want the lower denomination currency to ensure you don’t overpay if a merchant can’t make change.

  1. Maintain an Emergency Fund

One of the most important ways to be prepared is to set aside an emergency nest egg to remain untouched until absolutely necessary. When disaster strikes it often ends up costing a lot out of pocket, even with insurance coverage. Experts recommend having three months’ worth of living expenses set aside. Setting up an emergency fund can seem daunting, and it can be hard to know where to start. However, resources like Bank of America’s free Better Money Habits platform can help make the beginning of this process approachable and simple.

  1. Back Up Important Documents

There are plenty of ways to keep important documents intact and accessible. Ready.gov suggests storing important documents in a safety deposit box, on an external drive or on the cloud to make it easy to access during a disaster. If you’re active on a laptop or desktop, you can schedule a recurring back up of your documents or use a hard drive or a flash drive to store documents. Hard copy documents and physical drives should be kept in a fire and waterproof safe, which can be found at affordable prices. FEMA and Ready.Gov offer an Emergency Financial First Aid Kit where you can compile all important and necessary info in one place.

It’s not pleasant to ruminate on disaster, but having these conversations now are necessary for post-disaster success and stress reduction. It’s often easier to stockpile and to check off the small tasks for disaster prep, such as buying and storing food, water, and go-bags. While these are essential, there is more to safeguarding you and your loved ones. Making sure your family is properly insured, funded, and protected may be the best way to prepare for the unexpected.

Barb Mahnen Barb Mahnen is the Bank of America Better Money Habits Expert and Denver Market Human Resources Leader.

Categories: Business Insights, Finance