Disaster can strike with little or no warning. Early preparation is the key. Today, I want to focus on the importance of building a financial emergency kit. The time to create an financial emergency kit is today, when the skies are blue and the winds are calm.
Floods, hurricanes, wildfires, earthquakes, extreme winds, and tornadoes. They all have the potential to create treacherous conditions and cause devastation. We prepare with insurance, but it is often inadequate. It covers many natural disasters, but not all. Flooding requires flood insurance. And a standard homeowner’s policy won’t cover damages caused if the ground shakes violently.
Consider purchasing a box or safe that is fireproof and waterproof. You can’t guarantee it won’t be damaged during a disaster, but it will go a long way in safeguarding important papers. A safety deposit box is also an option.
Store electronic copies of important documents on a USB drive. Even better, upload them to a password-protected, cloud-based system. And be sure to create a strong password that is unique. Include letters (some caps, some lower case), numbers, and special characters. If two-factor authentication is an option, enable it.
Cash and keys. Make a duplicate of house keys and auto keys. You may also need cash in the immediate aftermath of a disaster. ATM cards may not work and not everyone is prepared to take a credit card. Still, it wouldn’t hurt to include a duplicate credit card.
Contacts. Who are the important people in your life–family, friends, medical, and professional. Create a list with telephone numbers, emails, or other contact information.
You may store the information electronically, with the appropriate security precautions, but it’s recommended that you place a paper copy inside your kit.
Identification. If disaster strikes, you may be asked to confirm your identity to obtain disaster relief services, file insurance claims, or get access to your property and financial assets.
Your kit should contain essential documents, including extra originals or copies of a passport, driver’s license, birth certificate, marriage certificate, adoption records, Social Security card, green card, any military records, and pet ID tags.
These will allow you to establish your identity, the identify of immediate family members, and eliminate the need to replace important ID markers.
Important records. If you are clients of Dechtman Wealth Management, we have copies of your financials, but this doesn’t preclude you from safe harboring your records.
A short list of financial documents that can fit into your kit includes mortgages, property deeds, and legal documents such as a power of attorney, estate planning, wills, and insurance policies.
Also include recent bank and credit card statements, brokerage accounts records, and statements related to investments that might be held outside a brokerage firm (such as mutual funds or 529 college savings).
If you access accounts or documents online, include a list of password hints. Also, pack recent retirement account statements and your most recent tax return.
A password-protected flash drive or file might be safer than hard copies—as long as you have a way to access the files. If you receive electronic copies of bank and brokerage statements, it is advisable to place recent copies in your kit.
What are your valuables? Create an inventory of your personal belongings. Assemble a paper, photo or video inventory, and put it into your emergency kit.
Be sure to save receipts for major items, home upgrades, or any appraisals of valuable belongings. For your household items, record what’s in each room. For major items, write down serial numbers.
While you’re at it, record the cost. Take closeup pictures of valuables, including details such as serial number tags. You can also videotape your belongings with a narrative description of the relevant information.
If the project seems overwhelming, you may start by tackling one room at a time. If it’s ever needed, it will help you maximize benefits from your insurance policies and expedite the claims process.
(Sources: Ready.gov–Financial Preparedness, Finra.org–Lock down your Financial Emergency Kit, IRS: Prepare for Natural Disasters)
A disaster will take an enormous mental toll on you. Having your financial house and records in order will remove one burden. But what about your children? Your children’s well-being will largely be dependent on you. Kids look to Mom and Dad for their security.
Here is a checklist for your kids obtained from UNICEF USA:
-Pack their essentials such as medicine and clothes.
-Pack their toys, favorite books, music, electronics, and have fresh batteries.
-Talk to your kids about what to expect at a shelter.
-Develop a system with your children that will allow them to be identified if they are separated from you.
-Learn basic first aid skills in case you are your child becomes sick and medical supplies are scarce.
Chat with your kids in ways they will understand. Be honest, reassure them, but don’t make promises that aren’t realistic. Just as important, let them know there are resources available that will assist your family.
While I sincerely hope you never experience the pain that comes with the loss of property or worse, we are here to assist. Taking proactive steps in advance can help eliminate one source of uncertainty in the event disaster strikes.
I hope you’ve found this article to be helpful. As always, please give us a call if you would like to discuss your personal financial situation.