on February 18, 2025
Though human beings are incredibly inventive and have come up with all kinds of innovations over the centuries (or even the past ten years), they have yet to control mother nature. We might be able to predict earthquakes, but we cannot prevent them from occurring. We can see hurricanes forming, but we can’t stop them. Nor can we completely put an end to wildfires, floods, blizzards, or tornadoes. Natural disasters are a fact of life, and they will likely continue to crop up year after year.
However, many people see natural disasters as something that happens to “other people.” We tend to not worry too much about mother nature until she has a direct impact on our lives. As a financial planner, I believe it pays to be prepared, regardless of whether you believe disaster will or will not strike. If you plan for any eventuality, you can live with a greater feeling of security (one of the three pillars of the concept I’ve called Self-Wealth).
How can you prepare when you don’t have a crystal ball and can’t see what’s coming? What steps can you take to get your financial ducks in a row before a natural disaster occurs, instead of during or after it? Here are four ideas:
Organize
In the aftermath of a disaster, you may need to hand over copies of any number of documents in order to receive financial aid, file insurance claims, or access information. When you’re dealing with a disaster, the last thing you want to do is have to hunt for your house deed or copies of your home insurance policy. Instead, make sure that your essential documents are in a logical place, where you can easily find them. This could mean placing them in a sturdy, waterproof safe, storing them on the cloud, or both.
A financial advisor can help you identify which documents are crucial to have on hand, but at the very least, it’s important to have ready access to insurance policy documents, your house deed (or, if you’re a renter, a copy of your lease), and tax statements.
And don’t forget to tell another trusted family member or two where they are kept! If something were to happen to you, it is important that others are equipped with this information.
Consider Your Insurance
In the case of a natural disaster, are you properly insured? Is your home, automobile, boat, and business (if you’re a business owner) covered? Do you have life insurance? It’s also a good idea to go beyond the basics and take a deep dive into your various policies. What, exactly, does each policy cover? What DON’T they cover? What are the limitations or exceptions? In some cases, it may be worth it to review each policy with an expert and see if it makes sense to either upgrade your current policies or switch to a different insurance provider.
Hire a Home Inspector
If you live in an area that is prone to natural disasters (earthquakes, hurricanes, tornadoes), it makes sense to properly outfit your home. Should you install hurricane shutters? Does your foundation need to be repaired? Do you have a leaky basement that is vulnerable to flooding? Do you need a new roof? Keeping up with home repairs and actively seeking professional advice for preparing your house for disaster are good steps for staying as safe as possible.
Feed Your Emergency Account
I have often discussed the benefits of establishing an emergency savings account and regularly funneling money into it. The rule of thumb is to set aside enough money (liquid funds that you can easily tap into) to cover you for six months, but I often encourage my clients to prepare for an entire year. If you have enough money to see you through for six months or a year, you will not only gain some peace of mind, but you’ll also be able to cover your expenses without having to compromise, tap into your retirement, or become overly stressed.
I suggest contributing automatically to your emergency savings fund every month, so you know it is constantly growing. Many online banking and investment programs offer automatic monthly transfers, and it is usually easy to set them up.
I sincerely hope you and your loved ones will never have to deal with a natural disaster. However, it is always a good idea to be prepared, get your documents in order, feed your emergency savings account, and (generally) have a plan in place. It is relatively easy to take these steps, even if you never need to deal with a natural disaster. It’s the same reason cars are equipped with airbags—they are there just in case, but you hope you’ll never need them. In short, this preparedness is about peace of mind and strengthening your financial security.