How to financially prepare for a natural disaster in Birmingham
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Through our friends with the American Red Cross, we’ve learned tons of ways to prepare for the unexpected—from getting your family ready for a home fire to creating an Emergency Preparedness Kit. But what happens after a natural disaster has occurred?
In order to learn more about financially preparing for a disaster, we spoke with Michael Ford, a Financial Advisor at Jackson, Evans and Associates, a financial advisory practice of Ameriprise Financial Services, LLC. Keep reading to see how you can utilize these tips!
What Happens After Disaster Strikes?
When disaster strikes, the American Red Cross is on-site and ready to provide food, clothing, shelter and other life-saving supplies to people in need. However, disaster services is not the only facet of the American Red Cross’ mission. In addition to serving those in need, the American Red Cross is dedicated to helping families prepare themselves for these natural disasters.
One essential step to disaster planning and recovery is creating a financial plan for you and your family’s well-being. Although each disaster scenario is unique, the American Red Cross has developed a guide to financial preparedness in the face of a natural disaster with information and recommendations about protecting:
- Property, including having adequate insurance and implementing mitigation efforts.
- Health and life, including understanding what is and is not covered by health, disability and life insurance policies.
- Loved ones, including estate planning and creating a living will.
- Income, including managing debt and understanding government benefits after a disaster.
- Records, including what to keep and how to store it.
How to Financially Prepare for a Natural Disaster
While developing a financial plan, the American Red Cross recommends utilizing the expertise of a family attorney or financial advisor. In our case, we sat down with Michael Ford, a financial advisor with Jackson, Evans and Associates & Chair of the Board of Directors with the American Red Cross’ West Alabama Chapter. Michael Ford has worked in the financial services industry for 17 years, and spent the last nine years working as a financial advisor.
Have you seen clients financially affected by natural disasters?
Michael: “Fortunately, I have only had one client who was affected negatively from a financial perspective as a result of a natural disaster. The others affected had adequate insurance coverage and other financial resources to get them through those challenging times. Their ‘success’ came from having a financial plan in place.”
What financial documents do people need to keep on-hand in case of a disaster? How do you keep those documents safe?
Michael: “I would advise keeping copies of any financial or other important documents in a secure cloud environment and originals in a safe deposit box at your local bank or credit union. By doing so, you eliminate the risk of losing these in a disaster. You can use a safe at home, but I personally think these other locations are better. Some financial institutions offer a secure site to store financial and other important documents digitally for their clients. I would utilize this value-added service. Financial and other important documents include, but are not limited to, tax returns, W-2 forms, bank and investment account statements, credit card statements, insurance policies, mortgage documents, titles, deeds, birth certificates, marriage certificates, passports, wills, living wills, and powers of attorney.”
What are the common expenses that people need to prepare for in case of a disaster? What resources are available?
Michael: “I recommend people establish an emergency or “rainy day” fund of at least three-to-six months of living expenses. In the case of a disaster, there would be money available to cover the basic expenses like food, shelter, and clothing. The American Red Cross may be able to meet the immediate disaster-caused needs of individuals, families, and communities and can help individuals and families recover and address lingering community needs after the emergency phase has been completed. Even so, I would still recommend the emergency fund, if at all possible.”
How do you make sure your property is properly insured?
Michael: “It is important to have an appraisal or place a value on all property – real estate and personal. Make sure you consider the replacement cost for your house, not just the market value. Take photos of all valuables and store these digitally in a secure cloud environment or physically in a safe deposit box at a local bank or credit union so that you will be able to access these if you need to file an insurance claim. Establish riders on homeowner’s or renter’s insurance policies for each item of personal property that is of particular value (e.g. collectibles, jewelry). Review your insurance policies annually with your insurance agent and your financial advisor to make sure all of your property is properly insured.”
Do you have any additional tips for families developing a financial plan for a natural disaster?
Michael: “Yes. The best time to plan for the potential of a natural disaster is during blue skies. Experiencing one is very traumatic, which can make it difficult to think logically and clearly when your emotions are running high. By having a financial plan in place that identifies your resources available, where to go, and to whom to turn, you can greatly reduce much of the guesswork and enhance your chances of avoiding a financial disaster.”
Prepare for Disaster with the American Red Cross
To make sure you and your family are prepared for a natural disaster (both physically & financially), read up on the many guides developed by the American Red Cross, including:
- Disasters and Financial Planning
- Prepare for Emergencies
- Disaster Preparedness Plan
- Emergency Preparedness Checklist
Have you developed a financial plan for your family in the event of a natural disaster? Tag @bhamnow with any tips you’d like to share!
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