I grew up in Jamaica, where one of the seasons is fondly referred to as the “rainy season,” which seemed like most of the year. Hurricanes, flash floods, earthquakes, and tropical storms are prevalent in the Caribbean. As a young child, I remember the adjustments my dad would make to our house. He would buy construction materials to batten down the windows and protected his workshop. I also can picture my mum securing essential documents such as our birth certificates, bank account information, medical information, and other necessary documentation as we brace for a storm.

Natural disasters and other emergencies are unexpected, often dangerous, and require immediate action. They come in many forms and can affect any of us. The magnitude of emergencies vary, but we can work to mitigate the severity of their effects. Therefore, developing a financial plan (in addition to all your other preparations) helps reduce the stress and anxiety that comes with these challenging and life-changing experiences.

Planning for the unexpected is not my favorite financial task. I imagine that others like myself who enjoy spontaneity and not always knowing what is around the corner may find it challenging to focus on all you need to do to prepare for an emergency. However, there is great news! Information and resources are available to make planning less hectic or mundane. 

Before
The effects of natural disasters or other emergencies can have lasting effects on your overall financial well-being. Thus, preparing for a disaster or emergency before it happens can help reduce stress and anxiety during those difficult times. Here are a few steps that can help you:

• Make a plan and spend time documenting your financial and contact information
• Make an emergency fund your priority, if you don’t already have one
  • Create a savings goal
  • Set an amount
  • Try monthly/weekly contributions depending on your employment situation
• If you can, have some cash on hand – this helps if you are in a situation where you don’t have access to your financial accounts
• Keep document safe in a fireproof or waterproof box: take inventory of belongings, gather personal documents, organize financial records, scan copies and save electronically

A Bankrate article suggests that to prepare your finances for the impact of disasters/emergencies, we consider budgeting for repairs to house and property. Make repairs and improvements gradually to strengthen your home and review your insurance policies as you make changes. Whether you anticipate flooding or need the title to your car in a crisis, having an emergency document kit or another accessibility format (i.e., scanned to the cloud or on a USB) for important documents can help ease the panic you may feel.

After
According to the Consumer Financial Protection Bureau (CFPB), people might experience several problems after a disaster. These issues include misunderstandings about loan deferment or suspension, overdraft accounts, being unaware that their accounts are in collections, have trouble with the insurance company, and face difficulties staying on top of mortgage payments and other bills. To combat these issues:

• Take care of your most urgent financial problems first – e.g., food, medical care
• Study the terms of the modification or suspension of any loans
• If you need to stop automatic payments, promptly contact your lender
• Make sure your contact information is up-to-date on all your accounts
• Review insurance policies and check for accuracy
• Check with your insurance company, mortgage lender, or servicer (the organization/company that collects debt on behalf of a lender) before making any changes, clean up, or hire contractors
• Review your income and savings account balances. Check with FEMA and other assistance programs, and contact your credit card company, lender, or servicer if you have any difficulty covering your payments

Natural disasters and other emergencies can disrupt your finances. Consider the ways you can prepare and what you would need as you recover from a financial crisis. Explore where to find local, state, and federal level information. Make sure to involve other household members in your plan. For more financial preparedness tips, think about these additional resources.

• Financial Preparedness at Ready.gov
• Emergency Fund before Disaster Strikes
• On the Family Financial Feud Podcast, we tackled this subject of planning for financial emergencies. My colleagues and I talked a little about our childhood experiences in dealing with natural disasters. To listen, visit us on SoundCloud.

Photo by Péter Kövesi