Every year, the Atlantic hurricane season wreaks havoc in the lives of millions of people.
As you brace for hurricane season, whether it’s your first time facing this challenge or whether you’re an old hand at this, here are a few tips that can help prepare your finances for hurricane — or another natural disaster.
Increase your emergency fund
One of the most important things you can do is to make sure your emergency fund is built up as much as possible.
Lance Cothern, CPA, a personal finance expert and founder of financial education website Money Manifesto, was living in Panama City Beach, Florida, when hurricane Michael hit in 2018. He points out that an emergency fund goes a long way toward helping you manage your expenses during a hurricane, as well as in the aftermath.
“One of the biggest things is that an emergency fund offers you a way to pay the costs, including to buy gas and pay for hotel stays, associated with evacuation,” Cothern says. “We knew people who couldn’t evacuate because they didn’t have the funds.”
On top of that, your insurance policy likely has a deductible: Being able to pay for that expense out of your pocket — or to pay for services upfront and then get reimbursed later — can help you take care of damage and other issues quicker without the need to rely heavily on debt.
Don’t forget to withdraw cash from your account before a storm hits. Teresa Mears, president and CEO of the frugality website Living on the Cheap, has lived in Florida for more than 40 years and seen her fair share of hurricanes.
“Try to have cash available,” Mears says. “You don’t know if ATMs will be operating near you.”
In fact, if a hurricane knocks out power, you probably won’t be able use an ATM to get cash, and banks are likely to be closed. Mears suggests having plenty of cash on hand to help with the cleanup afterward as well.
“If you have a tree blown down and need to pay someone to remove it, they might not be able to take [your] credit card because of electricity and cell towers being down,” Mears says. “Cash is always good and can move things along.”
Make sure you’re enrolled in digital banking
Another important thing to do as you work on how to prepare your finances for a hurricane is to make sure you have digital banking services. That way, you can access your account from anywhere without the need to go into a branch.
Cothern, though, takes it a step further. “If cell phone service is knocked out, you won’t be able to manage your account from your phone,” he says. “Consider enrolling in automatic bill pay or scheduling your payments ahead of time. That way, it’s taken care of even if you can’t access your account.”
Gather important documents in a “go bag”
If you have to evacuate, it makes sense to have important documents ready to go. Andrew Kerr is a real estate investor and founder of the educational website FIbyREI. He also spent five years specializing in disaster response with All Hands and Hearts.
“While a physical go bag with things like blankets, water and food is important, you also need a financial go bag,” Kerr says. “That financial go bag should have important, original documents that you need with you.”
In your go financial bag, Kerr suggests keeping documents like:
- insurance policies
- titles and deeds
- birth certificates
- Social Security cards
Also include any other documents you know you’ll need to prove ownership of assets in your go bag. This can be helpful, no matter what type of natural disaster you face.
Kerr and his wife keep these documents in a small fire-resistant and waterproof bag that’s in turn kept in a waterproof and fireproof safe. Should they evacuate, they can quickly grab the small financial go bag and take it with them.
Digitize your documents
In addition to having your originals in a go bag, it can also make sense to digitize your important papers so that you can see copies of them online. Additionally, if something does happen to the hard copies, you have the information in the cloud.
“It’s easy to create a secure and encrypted folder and keep it in the cloud,” Mears says. “My lawyer has digital copies of these documents.”
By setting up redundancies, you reduce the chance that this important information will be lost forever during a natural disaster.
Check your insurance coverage
Don’t forget to review your insurance coverage. Make sure you’re appropriately covered for the situation, and understand that hurricane insurance and flooding insurance are both separate policies — and they usually have to be added on to your coverage.
“Hurricane coverage usually only applies to damage directly caused by the storm,” Mears says. “It doesn’t usually cover flooding that happens later. You need separate flood insurance for that.”
Cothern also recommends filing a claim as quickly as possible to get your name at the top of the list. The longer it takes for an insurance representative to check your home and arrange for the damage to be taken care of, the bigger the impact later.
Protect your property
The damage a hurricane can do to your property — and the costs that come with that damage — can be reduced if you plan ahead and take steps to protect your property.
Kerr suggests making sure your windows are shut and locked, and that the storm shutters are engaged or windows are boarded up. This will reduce the chances of water getting in the home.
“Check the storm drain and clean branches out of your gutters,” Kerr says. “If you can reduce the chance that water will get backed up, you reduce the water damage to your home.”
Once the storm is over, check the damage as quickly as possible. You might need to set up tarps to temporarily protect your property and take other steps to reduce subsequent damage while you wait for cleanup and repair.
Going through a hurricane isn’t a fun experience, but it’s something you might need to prepare for. If you take steps to learn how to prepare your finances for a hurricane, and you’re ready to spend appropriately, you’re more likely to get through the ordeal with your budget still intact.