Just this past year, we’ve seen natural disasters in Texas, California, Florida and Puerto Rico — and looking back even further, it’s not hard to spot other traumas in virtually every part of the country. Whether it’s a tornado, hurricane, flood or wildfire, you may be at least potentially susceptible to a weather-related event that could threaten your physical — and financial — well-being. How can you protect yourself?
As far as your physical safety is concerned, you’re probably already aware of the steps you need to take to shield yourself and your family. And now that many alerts can be sent directly to your smartphone, you’ve got an even better chance to prepare for an approaching threat. But when it comes to safeguarding your financial situation, you’ll need to be ready well in advance — and the following moves can help:
· Strengthen your home. Your home is probably your biggest asset, so you’ll want to do everything you can to keep it safe. In the face of a truly calamitous event, such as hundred-mile-per-hour winds or the advance of uncontrollable fire, there may not be much you can do, but in less dire circumstances, your actions can help. Your insurance professional can offer tips on protecting your residence.
· Maintain sufficient insurance. It’s a good idea to review your existing homeowners or renters insurance periodically to make sure you are sufficiently covered for all possible hazards. Keep in mind that homeowners insurance does not typically cover flooding, so you may need to purchase flood insurance from the National Flood Insurance Program. (Depending on where you live, this coverage may be required when you get your mortgage.) Also, in conjunction with maintaining your insurance, you should document your possessions, so you may want to make a video inventory as well as a written list containing descriptions and values.
· Create an emergency fund. A natural disaster can lead to a wide array of unanticipated costs: appliance repair or replacement, hotel and restaurant bills, insurance deductibles — the list could go on and on. Consequently, you’ll help protect yourself and your family by building an emergency fund. Some of this money should go into a liquid, low-risk account, but you may also want to keep a small amount of cash at home in a safe place, as ATMs and credit cards may not work during or following a disaster, when you must purchase needed supplies.
· Protect your documents. As you go through life, you’ll accumulate a lot of documents — mortgage papers, insurance policies, financial accounts, tax statements and so on. If disaster strikes, you may need these documents. You’ll want to store paper copies in a fireproof and waterproof box or safe at home, in a bank safety deposit box or with a relative or close friend. Of course, we’re now living in a digital age, so you can store electronic copies of important documents in a password-protected format on a removable flash or external hard drive. Better yet, you might want to use a secure cloud-based service.
With luck, you can avoid being victimized by a natural disaster. But, as the old saying goes: “Hope for the best and prepare for the worst.” From a financial perspective, that’s good advice.
This article was written by Edward Jones for use by your local Edward Jones financial advisor. Karsten L. Jacobson, CFP®, is a financial advisor for Edward Jones at 2208 Sawgrass Village Drive in Ponte Vedra Beach.