Financial Prepping: How to Protect Yourself Before, During, and After a Disaster

Often people equate prepping with physical survival scenarios — collecting the supplies and learning the skills to remain safe and secure during anything from a natural disaster to an end-of-the-world emergency. But prepping is about more than just surviving the moments of intense physical danger that take place when disaster strikes. Ideally, preppers should be setting themselves up both to survive an emergency and to be able to resume life afterward with as few setbacks as possible.

In order to do that, it’s essential to include financial preparedness in any plan you create for your future. Using your physical survival skills to get through a disastrous hurricane or earthquake won’t be nearly enough if you lose your home in the process and aren’t prepared financially for what happens next. 

Here, we’ve summarized the highlights of this financial preparedness guide to help you assemble a comprehensive plan to get your finances ready for an emergency.

Before the Emergency

Financial Basics

Since preppers prioritize being ready for the unexpected, you likely already have a few of these basics taken care of. However, you should still review the items below to ensure your bases are covered.

  • Maintain an emergency fund. If you don’t have an emergency fund currently, it’s time to start one — immediately. Ideally you should have six months of expenses set aside for unexpected emergencies, and this fund should be separate from your retirement accounts or other savings. 
  • Set up direct deposit. While digital and analog both have their drawbacks, it’s unwise to rely on mailed checks for your income since mail is more likely to be disrupted by a disaster than direct deposit. 
  • Register all of your online accounts. Often banks and credit cards require you to complete an activation process before you can access your accounts online, and this process may include phone verification or a few-day waiting period. Make sure you have online and mobile access to all of your accounts so you can access your funds in an emergency.

The most important thing is to ensure that you have an emergency fund and that you can access it at a moment’s notice. Your emergency fund shouldn’t be tied up in a retirement account, bonds, CDs, or any other account that isn’t immediately available. Consider a high-yield savings account for better interest rates without sacrificing accessibility.

Insurance

Next, review your insurance policies and ensure you’ll have comprehensive coverage in an emergency. You should also review each insurance company’s process for filing a claim, so you’re familiar with the process and aren’t trying to learn a new system while coping with the aftermath of a disaster.

Ideally, you should have coverage in the form of:

  • Health insurance
  • Homeowner’s or renter’s insurance (don’t assume you’re covered by your landlord’s policy)
  • Auto insurance
  • Life insurance

If you live in an area that’s particularly prone to natural disasters, you may also want to consider flood or fire insurance for your home as well.

Important Documents

There are a host of essential documents to make sure you have on hand in an easily-accessible format in case of emergency. You should assemble an accordion file to hold all of these important documents in one place, so you can grab it immediately and head out the door in an emergency. 

Additionally, you should keep digital copies of all important documents in case your physical copy is lost or destroyed. Be sure you store these digital copies on the cloud, so you can access them even if you don’t have access to your hard drive or computer.

During the Emergency

When disaster strikes, you’re going to be flooded with adrenaline, which will affect your decision-making ability. For this reason, it’s important to have a detailed action plan you can follow without much thought.

Contact Your Creditors

Reach out to your creditors as soon as you begin to realize a disaster is going to impact your ability to afford things like rent, utilities, credit card bills, and any other regular payments. Many (if not most) companies have forgiveness policies for emergencies that may include approving delayed payments, increasing credit limits, or constructing an adjusted payment plan. However, these policies may not be available retroactively, so it’s important to get them set up as early as possible.

Don’t Forget Your Bills

Even if a disaster doesn’t impact your ability to afford your monthly payments, it may cause you to forget to actually send them. This is where your online and mobile accounts will be especially useful; you can make payments instantly or log on and schedule them ahead of time to avoid forgetting to make a day-of payment.

Be Wary of Psychology

Disasters can cause us to panic, which can lead to poor decisions that only exacerbate the emergency. This is especially true when it comes to investments. If you have money in the stock market, be careful about making any decisions during a disaster — according to the Center for Retirement Research at Boston College, investors who make frequent adjustments to their portfolio based on new information tend to do worse than those who take a passive approach to their investments.

After the Emergency

In addition to having an action plan for the duration of the disaster, you should prepare for the disaster’s aftermath as well. In the same way that adrenaline can lead to unwise decisions, exhaustion also depletes humans’ ability to think clearly. Having a recovery plan in place will be much easier than trying to figure out next steps in the moment.

File Insurance Claims

It’s important to do this immediately after the disaster no matter the situation, but especially in emergencies that affect a widespread group since your insurance company is likely to be flooded with claims quickly. Document all relevant damage and call your insurer straightaway to determine what’s covered. You may need to get an estimate from an appraiser or professional, so you should get those appointments booked quickly as well.

Research Disaster Assistance

In addition to your own personal insurance, you may be eligible for disaster assistance through government programs like FEMA or private organizations like Habitat for Humanity. For example, the Disaster Assistance and Emergency Relief Program extends taxpayers’ return deadlines, the Transitional Shelter Assistance Program offers temporary housing to disaster refugees, and there’s a special version of the “food stamp” program called the Disaster Supplemental Nutrition Assistance Program that can help low-income households afford food after being impacted by an emergency.

Prepare for Future Emergencies

Though future disasters are the last thing you want to think about after surviving a recent one, you’ll be glad you did should you find yourself in a worst case scenario before you’re ready for it. If you deplete or drain your emergency fund, start rebuilding it again as soon as possible. You should also inspect your home closely to ensure it hasn’t sustained any new vulnerabilities — for instance, if the wiring in your home is exposed to water during a flood, it may become a fire hazard after the fact.

Being financially prepared for a disaster can not only keep you safe during the emergency, but it can also prevent serious problems down the line. Financial problems caused by disasters tend to snowball, and can result in significant damage to your credit score and even, in a worst case scenario, bankruptcy and foreclosure. By prepping your finances for unexpected scenarios, you can ensure a disaster’s impact is finite and minimal, so you and your family can get back to business as usual as soon as possible.

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