6 Steps to be Financially Ready for a Natural Disaster
Raging fires, floods, unusually strong winds and now a medical disaster – Coronavirus, are all introducing circumstances we have never experienced before and we have never considered to prepare for.
Unfortunately, this could be our way of life in the future, so we all need to start thinking how to prepare ourselves should this happen to us. Fires, floods can happen anywhere and anytime in Australia and anywhere in the world.
It is beautiful to see how in those difficult days people are helping, supporting and assisting each other.
It made me think: “How can I help and provide assistance and advice within my professional capacity of financial planning”?
As an answer to this question, I have prepared some recommendations that should help you and your families be prepared financially for a disaster:
Establish your own emergency account
Each time you receive your pay, contribute a portion to a separate bank account (organise automatic funds transfer). Start saving as much as you can, but as an indication, you should be putting aside 10% of your net pay, until you have the balance that will cover 3-6 months worth of your living expenses. If the disaster strikes, you might not be able to keep on drawing funds from your mortgage or your credit card to cover your daily living expenses (sadly many young families live on credit). Search for saving accounts that will pay you higher interest rates.
Make sure your personal, financial and legal documents are safe
Organise certified copies of all your financial and personal documents that are essential part of your life:
- Birth certificate, marriage certificate, wills, POA, passport, insurance policies, trust deeds, company agreements if you run a business, photographs.
- If you keep copies of documents and your photos on computer – copy all to the external hard-drive for safety.
- Purchase fire and water-proof safe (you can get them from Bunnings).
- Keep all your documents listed above together with your photographs in your new safe well placed in your home.
Check if your home and contents insurance policy is correct and current
Every time we see disaster, we hear horror stories about families financially ruined, because they had no property insurance. This is a must. Check the insurance cover for your building and your contents. Make sure that the amount of cover is sufficient to rebuild your home and repurchase your contents as brand new.
Check if your policy covers you for floods and fire. Check the PDS carefully to understand any exclusions.
Review all other insurances you have in place. If you have none – maybe you should seriously consider them
Home & contents insurance are only part of the story. You need to ensure you have your life insurance, income protection, health, pet, motor insurance in place. You need to check if all covers are correct, sufficient and will really pay out when disaster strikes. We all see insurance as a waste of money until the moment we need it.
Have your “get out fast” bag
In case of emergency, you might not have time to organise yourself and take things you really should have with you. Prepare the “get out fast” bag, or back-pack with all prepared essentials:
- Originals of all your documents (passport, driving licence, birth and marriage certificates, wills, Powers of Attorney, copies of all insurance policies, trust deeds and your company documents, if you have any) – place all in a plastic bag to keep all documents safe from water and flying around your bag.
- Cash and bank cards (or credit cards) – make sure however, that you have cash on you, as ATMs may not operate in the area of disaster such as fire or flood.
- Medication and prescriptions if you have any health issues.
Organise your “Emergency kit”
This is a great source of information, provided by the Queensland Government, but will apply to any area in Australia and in the world. Obviously, all this activity is precautionary, none of us want to be in the situation of any disaster, but as they say –
Better safe than sorry – so be responsible and be prepared and let’s all stay safe.
By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement
