Financial management before and after a natural disaster
In the last few centuries, I think it is safe to say that humanity has gone through an incredibly fast evolutionary period, where advancements in all fields started picking up speed at an impressive rate. For example, in 40 years we have gone from phones stuck in a power socket to mini-computers that can fit into our pockets, which are better than the one who sent Apollo 11 to the moon. It is flabbergasting just thinking about it.
With this said, this rapid advancement didn’t come without its price, and it is a very heavy one to pay. Factories, cars, forever-growing cities, lifestyle changes, they have all contributed to pollution and climate change. Because of this, natural disasters such as floods, hurricanes, tornadoes, wildfires have increased in frequency over the last few years. Because of these changes happening in the time of a person’s lifespan, people need to readjust their approach towards natural disasters and know how to prepare and how to react in the case of such events.
2017 has been an especially rough year, with disasters claiming the lives of hundreds of people and costing billions of dollars in property damage. Two of the most damaging disasters recorded last year have been Hurricane Irma and the California wildfires. Many people were affected, both emotionally and financially, by them, so in this article I talked to some experts and gathered some tips on how to prepare your finances in case a natural disaster hits, and what to do after it.
Before a natural disaster Get adequate insurance
Although this step may seem obvious, many people do not take the time to thoroughly think through their insurance plan. It is suggested that everyone should look up if their area is known to be affected often by a type of natural disaster, be it flooding, hurricanes or earthquakes. If so, look over your insurance plan and see if the most probable damages are covered. Talk to financial advisors or to experienced lawyers to see what extra steps you should take. For example, most homeowner insurances do not cover damages done by flooding. If you live in areas that are prone to these disasters, such as Florida, for example, it is recommended to take out a flood insurance.
Prepare an emergency fund
If you know that you live in an area that is at risk of natural disasters, you should talk with your family about opening an emergency fund. Each month you should save a little bit of money just in case the unthinkable happens. Maybe, in the event of a tornado, someone from your family was injured, or the place in which you worked was destroyed and you won’t have a steady income anymore. Having a financial safety net can make a huge difference in these types of scenarios.
Save all important documents virtually
This is a very important piece of advice that many people do not seem to think about. In the event of a natural disaster, it is quite common that important documents, such as home ownership documents, documents from your bank, insurance papers, can get lost or destroyed. Losing many of these papers could put a massive dent in your financial stability. John M. O’Brien, an attorney practicing personal injury in Elk Grove, California, had this to say: “By losing such important documents in the event of a natural disaster, you will see that many perks will become unavailable to you. My advice is for people to take every important document, contract, file, whatever is necessary for your financial stability, scan them into your computer and then upload them into the cloud. Not only will you be the only one who can access them, but in case something were to happen to the physical copies, you will have them as a backup. Because of this, chances of your finances suffering or being denied certain payments decrease.”
After a natural disaster Manage your finances
Although it may be a very emotional period, there is no time to lose and it is very important to act as quickly as possible. See what damage your assets have suffered. Think about the costs that come with repairing your property. Hurricane Irma devastated Florida, causing hundreds of millions of dollars in property damage. Many people were left homeless and they had no means to cover the costs. Attorneys at the Law Offices of Sean M. Cleary had this advice for the readers: “It is paramount that you micromanage your finances. I’m not only talking about speaking with your creditors and the insurance companies, but you also need to take everything into account. Try and call your employer, see where you are currently standing with your job. If you are subscribed to any services, such as newspapers, TV cable, internet, cancel them! Every dollar saved will get you closer to getting back on your feet.”
Pay attention to scammers
During times of crisis, there are a lot of people who try to take advantage of the misfortune of others. If you get loan offers that seem to be too good to be true in times like these, they probably are. Never get into deals that require you to pay money to get money or to give your credit card details. If you need loans, talk only with trusted officials.
Talk with your creditors and insurers
2017 has been the most destructive wildfire year in the entire history of California. The total estimated costs are believed to be approximately $180 billion, thousands of homes and businesses were destroyed and 43 people have died because of the fires. Smoke filled the air and spread for miles, making it hard to breathe and injuring hundreds of civilians and firefighters alike. This natural disaster massively affected people’s lives in many ways, either through injury, relocation or property damage. As a lawyer handling complex financial issues, Kevin S. Neiman, says: “The costs of this disaster were colossal. Victims and insurance companies alike struggled to keep up with them. In cases like these, there are a lot of chances that you may not be able to stay afloat financially. You may be forced to file for bankruptcy, to postpone your credit payments or you may need to take out a loan. It is very important that you talk to your creditors and insurers and explain the situation to them. If you can’t pay them, try to suspend your payments for a while so you can gather your finances together. If you are eligible, apply for a Small Business Administration disaster loan. Talk to all insurers about what you have covered and, after you find out where you stand economically, make a plan on how to proceed next.”