Disaster advice from financial experts
That's the advice that financial planners, stock brokers
and CPAs give about handling finances during turbulent times.
Whether it's a personal disaster -- your family loses
its home to a fire or a flood -- or a national catastrophe such
as the terrorist attack on 9-11, it pays to keep cool.
Losing your head won't improve things and might make
Keep cash in accounts
There's no need to withdraw a large sum of cash as some concerned
consumers did in the wake of last year's terrorist acts.
A little bit of spare cash is fine, says Morris Armstrong
of Armstrong Financial Strategies, especially if you live in an
affected area. People are likely to find that many ATMs are not
going to be working for a day or two. "So it may make sense
to have an extra hundred dollars or so," Armstrong says. "But
don't go overboard."
Unfortunately, people place themselves at a much bigger
risk by withdrawing large sums of cash, says Dale Vetter of Vetter
and Associates, a financial planning firm in Willingboro, N.J. That
cash could disappear if a person's mugged or something else goes
"Just take enough money out to cover a day or
two so you're not short of cash," Vetter says.
Have a plan in place
The best way to weather a financial storm brought on by a disaster
of some sort is to be prepared.
Start by having your financial papers in a secure
place, says Jordan Werner, a Bozeman, Mont.-based financial consultant
with D.A. Davidson & Co. That could mean having one copy of
papers at home and another at work. Or, just having a way to reconstruct
things can suffice. For example, list phone numbers and account
numbers that you will need to regain financial documents like bank
statements or life insurance policies.
If you record your financial information in a computer
program like Quicken, be sure to back it up regularly, Vetter says.
Keep your back-ups in a fireproof box, or better yet, store it away
from your home.
Document your personal possessions. Most insurance
companies recommend taking a personal inventory but that can be
cumbersome. Instead videotape or take pictures of your house and
your possessions, says financial planner Morris Armstrong. "You'll
be more apt to do that than to sit down and write a list,"
Before a personal disaster strikes, also make sure
that you have adequate homeowners insurance. Vetter also recommends
adding liability insurance onto your total property insurance. That
will help protect you in the event that you're sued because someone
is injured on your property.
Also try to create cash reserves, an emergency fund
that you can tap when disaster strikes. Those who are in the worst
position to weather a change in financial fortunes are people who
live from paycheck to paycheck, says Karen Schaeffer,
founder and president of Schaeffer Financial in Rockville, Md..
"It can be the difference between it being unpleasant, but
survivable, or having to seek bankruptcy," the financial planner
Don't let emotion rule
Finally, Schaeffer says to remember that people who have been through
a traumatic experience, such as a death in the family, the loss
of a home due to a flood or some other calamity will not be thinking
"Please understand that the human emotion of
grief clouds decision making," Schaeffer says. "They are
in a state of shock and should seek help."
Your financial adviser, a family member not involved
with the trauma, or even a friend can help you get back on track.
So don't panic. Follow the recommendations of these
advisers and you'll find that it is possible to rebuild your financial
house when the worst does happen.
Jenny C. McCune is a contributing editor
based in Montana.
-- Updated: April 16, 2004