Financial Preparedness Tips

Americans at all income levels have experienced the challenges of rebuilding their lives after a disaster or other emergency. In these stressful times, having access to personal financial, insurance, medical and other records is crucial for starting the recovery process quickly and efficiently.

  1. Watch this video on financial preparedness.

  2. Document & insure your household.

  3. Gather financial and critical personal, household and medical information.

  4. Consider saving money in an emergency savings account (emergency fund) that could be used in any crisis. Keep a small amount of cash at home in a safe place. It is important to have small bills on hand because ATMs and credit cards may not work during a disaster when you need to purchase necessary supplies, fuel or food.

  5. Obtain property (homeowners or renters), health and life insurance if you do not have them. Not all insurance policies are the same. Review your policy to make sure the amount and types of coverage you have meets the requirements for all possible hazards. Homeowners insurance does not typically cover flooding, so you may need to purchase flood insurance from the National Flood Insurance Program.

  6. For more helpful financial preparedness tips, download the Emergency Financial First Aid Kit (EFFAK) to get started planning today.

 

Start an Emergency Fund

We never know what the future holds for us, so it's always best to be prepared. Having an emergency fund is extremely important so you're always prepared to deal with what life brings—good or bad. 

It's a good idea to make an emergency fund one of your highest savings priorities. Put $10 to 20 a week in an emergency fund and your account will grow to over $500 to $1,000 in just one year. That's often enough to cover a repair bill or emergency travel. An emergency fund can also shield you from the high cost of borrowing, and keep you from hydroplaning into debt.

Follow these five tips to help you set goals and take steps toward starting an emergency fund.

  1. Chart your monthly income and expenses. If you've already read through track your spending, just refer back to your worksheet to see what your monthly expenses are. If not, you can use the Track Your Spending worksheet or get a piece of paper and write down how much money comes in and everything you spend money on every month. Be sure to include recurring expenses such as your rent or mortgage, utility bills and childcare, and estimates of other out-of-pocket expenses for things you might buy such as movie tickets, dinner out and clothing.
     

  2. Set your emergency savings goal. An emergency fund should cover three to six months' worth of realistic living expenses. If you feel your income is stable or have access to home equity or other forms of credit to use if needed, then you may be able to plan for the lower figure. If your credit is near its limit and your income outlook is less secure, you might want to save more.
     

  3. Develop a plan to start saving. Setting a goal and developing a plan to achieve those goals go hand-in-hand. Part of your plan may include specific and measurable targets to work toward. For example, one specific goal may be to save an extra $300 over the next six months to put into an emergency fund.
     

  4. Put your emergency fund in an accessible place. The best place for your emergency fund is in a liquid account (accounts where your cash is easily accessible). A liquid account might be a regular savings account at a bank or credit union that provides some return on your deposit and from which your funds can be withdrawn at any time without penalty. If you consider other options, like a certificate of deposit, money market fund or mutual fund, be sure to figure out how accessible your money will be in an emergency.
     

  5. Stick to your plan. Once you've created your plan, make sure you stick to it. This can sometimes be the hardest part of saving for an emergency fund or any financial goal in general. If your goals are realistic and attainable, sticking to the plan will be much easier. A good way to stay on track is to save automatically. Set up a systematic transfer from your regular checking or savings account at your bank or credit union, or arrange an allotment from military pay. Be sure to keep your rainy day funds separate from your other accounts, and label it "for emergency use only." Just writing down an account's purpose can keep you from spending the money for any other reason.

Starting an emergency fund is a necessary building block for long term financial stability. Anyone can do it; you just need the right goals and a plan. 

Emergency Financial First Aid Kit

The Emergency Financial First Aid Kit (EFFAK), a joint publication from Operation Hope and FEMA, can help you prepare financially and provides tips to reduce the financial impact of disasters on you and your family.

For more information on the EFFAK watch the following videos: 

For Organizations 

Encourage people throughout your organization or workplace to prepare financially. Here are some ideas to promote financial preparedness in your organization:

  • Hold a brown bag (lunch) meeting.

  • Make a presentation at an existing staff meeting using Safeguard Critical Documents and Valuables to support your discussion.

  • Include financial preparedness information in the staff monthly newsletter.

At Home

Store important documents either in a safety deposit box, an external drive or on the cloud to make it easy to access during a disaster. 

Take time now to safeguard these critical documents. Be cautious about sharing personal financial information, such as your bank account number, social security number, or credit card number.

Household Identification
  • Photo ID (to prove identity of household members)

  • Birth certificate (to maintain or re-establish contact with family members)

  • Social Security card (to apply for FEMA disaster assistance)

  • Military service

  • Pet ID tags

Financial and Legal Documentation
  • Housing payments (to identify financial records and obligations)

    • Some individuals and households may experience financial difficulty because of the pandemic. If you do not think you can pay your loan payments on time, immediately contact your bank and discuss your options before skipping any payments or taking any other actions contrary to the terms of your loans.

  • Insurance policies (to re-establish financial accounts)

    • Review your travel insurance and health insurance to see how your policies handle pandemics and infectious disease outbreaks like coronavirus disease 2019 (COVID-19).

  • Sources of income (to maintain payments and credit)

  • Tax statements (to provide contact information for financial and legal providers and to apply for FEMA disaster assistance)

 

Medical Information
  • Physician information (in case medical care is needed)

  • Copies of health insurance information (to make sure existing care continues uninterrupted)

  • Immunization records

  • Medications

Insurance Information

Having insurance for your home or business property is the best way to make sure you will have the necessary financial resources to help you repair, rebuild or replace whatever is damaged. Document and insure your property now.

Household Contact Information
  • Banking institutions

  • Insurance agents

  • Health professionals

  • Service providers       

  • Place of worship

 

Get Your Benefits Electronically

A disaster can disrupt mail service for days or weeks. If you depend on Social Security or other regular benefits, switching to electronic payments is a simple, significant way to protect yourself financially before disaster strikes. It also eliminates the risk of stolen checks. The U.S. Department of the Treasury recommends two safer ways to get federal benefits:

  • Direct deposit to a checking or savings account. If you get federal benefits you can sign up by calling 800-333-1795 or sign up online.

  • The Direct Express® prepaid debit card is designed as a safe and easy alternative to paper.