Being Financially Prepared for the Next Storm

The devastation caused by Hurricane Sandy along parts of the East Coast serves as yet another reminder of how important it is to have an emergency plan not only for your family's safety but for its finances, as well. Some in the storm's path were left without enough cash to buy food because of widespread power outages that rendered some ATMs and credit card machines useless. Property owners throughout the region, surveying storm-related damages, suddenly found their insurance policy numbers to be of crucial importance.

It's far too easy to put off preparing for emergencies in the course of our everyday lives, which is a shame because that's really the best time to prepare for them: when things are relatively calm and a crisis isn't staring us in the face. This article lists steps you can take today to financially prepare for disasters, and this past week we asked Morningstar.com users to share their own ideas and experiences on the topic. You can read all the comments here and a sample of them below.

Keeping a Photographic Record
For richendric, Sandy was a wake-up call about the importance of planning ahead. "Having just lived through Hurricane Sandy here in southern New Jersey, we are now paying a lot closer attention to all our financial and personal records," he wrote. "We will now be taking photos of our records and putting them on CDs for safe storage."

Taking photos and videos of property and backing up records electronically were on the minds of many who posted. "Just this weekend I took over 200 photos to document assets in our home, garage, and storage shed. This includes items in drawers and cabinets," Rossby wrote. "The photos are stored on two duplicate CDs, one at home and one in the credit union safe deposit box."

"We moved from the mid-Atlantic to coastal South Carolina several years ago and have had a few storm scares since then," said carman. "We made photographic inventories of all of our property and scanned in all of our important legal and financial documents, storing them on our PC. We made monthly backups of these files on thumb drives and kept one at home and one in our safe deposit box. But these local and semi-local backups could still be at risk, so we replaced our older tower PC with a pair of laptops last year. We still make our monthly backups, but now we can easily take our laptops and backup media on the road if an evacuation is ordered."

A 'Bug-Out' Box for Financial Documents
Bubbygator carries her electronic records with her on a USB key and shared a creative idea for keeping hard-copy documents safe. "I have prepared a 'bug-out' box for the paper stuff in my fire safe," she wrote. "It's a waterproof, metal, ammo-box (available at any Army/Navy store) which I have painted white with a red cross on the sides--to assure its easy visibility. If a flood carries it away, someone will eventually find it."

Some posters mentioned that, thanks to the Internet, important financial documents and information was already stored online. Bnorthrop wrote, "We were under pre-evacuation orders for several days during the Colorado wildfires this spring. We didn't do anything specifically related to financial preparations because everything important is online. Our house and possessions may burn up, but not access to our account at Vanguard or our insurance coverage with Ameriprise, for example."

Cash Is King in an Emergency
Stories of ATMs not working or running out of money following Sandy proved the importance of keeping extra cash at home, just in case.

Dziuniek recalled what happened in the aftermath of last year's winter storm Alfred. "During Alfred, cash on hand came in handy," dziuniek wrote. "In Connecticut some people were out of power for 10-11 days. When the delivery trucks with generators arrived, some were only available for a cash purchase. Some cash under the mattress isn't a bad idea."

"I don't trust banks or ATMs to be functioning in an emergency situation," wrote walkingman, "but having a good-sized stack of twenties (in a fire- and water-proof safe) can make all the difference in your and your family's comfort. One of the nice things about our low, low-interest environment is the opportunity cost of having even a good-sized stack of twenties is negligible."

JHAsheville mentioned having cash accounts at different banks--one regional and one national--"just in case we're somewhere away from home if an emergency happens." 

Some users also mentioned nonfinancial disaster preparedness tips, such as storing extra food, water, and gasoline, and keeping a generator for power backup.

Understand Where You Live
Of course, where you live should provide a good sense of the type of disaster you may encounter.

Nittwitt offered the following common-sense advice: "Consider what natural disaster will most likely hit the area where you chose to live. Make sure your home is built to hold up to the problem. Don't build in a flood plain! If you are in Tornado Alley, make sure you have a shelter in your home or no more than five minutes away. If you live in Florida, don't buy a stick frame house! Concrete block with a double roof (terracotta) is the way to go. Always think natural disaster before you buy!"

Many of us will have to deal with a disaster of one sort or another at some point. So learn from the lessons and tips readers have shared here. The prep work you put in today could pay huge dividends when you really need it.