A natural disaster can impact anyone’s financial situation and some more than others. Being prepared is the best way to lesson the financial impact. Disaster preparedness is an evolving phenomenon, especially with many of the natural disasters occurring throughout the world. Being a resident of the Gulf Coast area, in Houston, Texas, I have witnessed the effects that a natural disaster can have, especially after Hurricane Harvey. I can honestly say that being prepared helps, but nothing really prepares you for the emotional aspect of the situation you are in and for how long you might be in it. As a financial advisor, I advise people all the time about preparing for many specific events that are important to them, but I also bring to light being prepared for the unexpected. After witnessing one of the largest natural disasters of all time, I have put together a list of 10 key disaster preparedness tips that should help someone be better prepared and maintain financial confidence afterwards.
I would like to start the top of the list with what would reference life priorities and then important aspects that help being organized and help with financial confidence.
- The logistics of staying or going and who is involved is the first major consideration, if there is time. Running for cover may not be an option in some cases depending on the type of natural disaster. With Hurricane Harvey once the rain set in, it just stayed and dumped close to 50 inches of rain. Many areas were affected for days as the water took time to reseed. Who is staying or going when family members are involved should not even be a thought, ALL should stay together and it is be the best option. When Katrina hit New Orleans, some family members stayed behind and eventually had to evacuate, but they couldn’t choose where they were sent. Some family members were transported to Northern Louisiana and others to Texas. This stubbornness caused a situation where they weren’t able to be reunited for several months.
- Senior parents or family members with special needs is another consideration. Facilities that care for seniors or special needs residents could be impacted even with the most diligent planning. If pre-planning is possible does the facility have other locations or affiliations to accommodate relocating? During Hurricane Rita, the city of Houston coordinated with the city of Austin and bussed people to shelters all for free to them. They were even bussed back. Pay attention to news channels and check with city or county offices ahead of time to secure a spot.
- Don’t forget about your pets! Many hotels and even shelters now offer pet services in disaster areas. So plan to have your pet’s food or medications planned and packed just like your own. It is sad, but many pets simply get displaced because of the owners situation and might not be able to care for them due to lack of planning.
- Make sure you pack your critical issentials and have a checklist of important items. Issentials like medications and medical supplies and that you have enough supplies to last through at least two weeks. If you know there is a major weather event coming, you might see if you can fill your script prior to ensure you don’t run out. Because of natural disaster events, pharmacies might not be staffed immediately or even get supplies restocked when you need them. You wouldn’t want to be in a situation without your medications or supplies like an EpiPen. You might also consider alternative power sources in case you need to run medical equipment like a nebulizer, especially if your child has an asthma attack and its difficult to get emergency responders to your location.
- Notable fundamentals like water and perishable food items. During Hurricane Harvey, many people lost power for days or even weeks. Storage of refrigerated food is a problem when power is lost. If you bunker down and are in an effect zone, if possible have barbecue to go through your fresh foods. During Hurricane Rita, we saw many little communities sharing their food this way instead of having it wasted. It also brought a lot of people together that wouldn't normally get together. Once you have gone through the fresh foods, then you can get into the Spam and tuna cans.
- Make sure you have a full tank of gas in your vehicle and that it is in good running condition if you have to evacuate. The last situation you would want to be in is to be stranded or have to leave your vehicle behind in an unknown area. Also, don’t operate your vehicle in an area that could be dangerous. If there is high water in unfamiliar areas or descending tunnels, they say “turn around don’t drown”.
- Your documents and other important possessions. Have digital back-up’s of important documents that could be destroyed and are non-replicable, challenging to duplicate or complicated to get. Important documents like insurance policies, wills or trust documentation. You might also consider a fire & waterproof safe for pictures, receipts or other important documentation that might be easily digitized. Families and businesses lost years of information or irreplaceable items that can’t be duplicated again as water destroyed it all, from Hurricane Harvey.
- Having contact numbers and a method to communicate. This is a tough one, due to having most of our information stored on our cell phones, tablets or laptops. You might not be able to access the internet or even call someone immediately. Remember that checklist I mentioned, great place to include names and numbers.
- Know your insurance coverage and options! I wouldn’t be an advisor if I didn’t mention know you coverage option and evaluate them, even coverage that you might not have thought about in the past. Some areas have unique insurance programs to help with known risks, like earthquake insurance in California. However, if you live in an area where there is not a threat of anything major happening, why bother? With Hurricane Harvey, the catastrophic event impacted hundreds of thousands of homes in Texas and as of January 2018, fifty percent of claims under their homeowners policies were denied (Texas Department of Insurance, Harvey 2018 report). Simply, because a majority of homeowners didn’t have flood insurance. When a home isn’t in a flood zone, the coverage is generally less expensive. In some conversations I have had, some individuals that had flood insurance and weren’t required to have it, paid premiums in the range of $400 per year. Compare that to having no coverage and having to pay out of pocket to remodel or rebuild, in worse case scenarios simply sell the lot. Automobile claims faired better do to flood coverage is available under comprehensive coverage. Also, consider how and if your contents are covered whether in your home or personal vehicle. Have pictures to backup your claim on that Van Gogh. Business owners could also consider business interruption coverage or policies that cover business operations, these types of coverages keep operating expenses covered, like payroll or the lease.
- Having an emergency fund of a minimum six months of your annual income is something that can help bring peace of mind and help with financial confidence. I once felt comfortable suggesting having three months of annual income saved, as a conservative goal. I now easily suggest six months as a reasonable goal to have readily available. In a natural disaster event you might find yourself displaced for weeks even months before a something significant happens. It could take months to have an insurance claim approved or even authorize a payment for temporary lodging. You might have to buy new clothes due to leaving with the clothes on your back or what was backed. What if you job is temporarily shut down due to a natural disaster event? Service business like restaurants that were damaged physically and lost equipment, might take some time to reopen. While the business owner might care about you, they may not be able to provide you with a paycheck while you are not working and they aren’t required to pay you.
In terms of financial confidence, all of the things I mentioned should help you with what I believe is key to being efficient and resourceful and lesson the impact of a major disaster event.
Written by: Cesar de la Cerda, founder of EnvisionVest, LLC, located in Houston Texas