My husband Craig and I realized we were woefully underprepared for an emergency, so we worked to pull together a comprehensive plan. And I documented all that we did. This is one of several posts that will give you the complete blueprint to create your own plan (complete with FREE checklists and kits when you sign up here for access). I hope you’ll benefit from what we’ve put together.
Before you start mapping evacuation routes or pulling together contingency plans or go-kits, the first thing you should do to prepare yourself is to make sure you have a financial emergency plan in place.
What Is A Financial Emergency Plan?
In short, you need to make sure you’re prepared financially if something catastrophic were to happen. This has several components to it. First, you need to make sure you have copies all of your important papers – and keep them in more than one place. Second, you need to document all of your property. Third, you need to do an insurance and savings audit.
Get Your House In Order
No, I don’t mean clean and organize your space – although I’m sure my husband would appreciate it if I did more of that! I mean, get your financial house in order.
If a disaster were to strike, do you know how you’d handle it financially? Do you have the right kind of insurance? And is it enough? Do you have sufficient savings to cover something catastrophic while you wait for insurance checks?
If the answer to any of these questions is “no” or “I don’t’ know” – you need to keep reading! Here is what to do to assemble your best financial emergency plan so you are prepared for any situation:
Get Your Important Financial Papers Together.
The nonprofit organization HOPE Coalition America, in partnership with the Federal Emergency Management Agency (FEMA), created a template for a financial emergency plan called the Emergency Financial First Aid Kit (EFFAK) to help individuals and families collect and organize critical financial, medical, and household contact information.
If you go to FEMA’s website, there’s some really great information on how to compile an EFFAK, including a form you can print and fill out. However, so that you don’t have to spend hours going through all of that, I’ve done it all for you. And I’ve created financial emergency planning forms that include all the recommended information, along with much more. You can get it all for FREE when you sign up to access our resource library.
In addition to your financial documents, you’ll also want to pull together identification, contacts, financial/legal documents, and medical/health information for all household members. I’ll go through all of this in my next post so that you will have just what you need.
Put Your Papers In THREE Places.
When you gather all this information together, you’re going to want to organize it and put it in three places. Three? Isn’t that excessive? NO! If you ever need any of this, you’ll be glad it’s accessible!
Keep this information in the following places:
- Store the originals in some sort of fireproof safe or file box.
- Scan copies of everything and upload it to the cloud. I like Dropbox for its ease of organizing (and I’ve got a detailed guide to set up your Dropbox files in our Resource Library), but there are other services you can use.
- Organize hard copies of your documents into a “grab and go” notebook.
Wait a minute, isn’t everything in the cloud? Why would you need hard copies? Easy – if there’s been a catastrophic event, you may not be able to get to your online files. Perhaps power or internet is out. Or perhaps you need a hard copy and can’t get to a printer. If that’s the case, you’ll be really glad to have a notebook with easy to find hard copies. Don’t worry, I’ve created a complete guide for how to create your own notebook. I’ll walk you through it in our next post!
Once you pull together all of your financial, medical, and household information, you will have centralized records whenever you need it. Even if it’s not for an emergency, you’ll be glad it’s in one place.
How often are you asked for some form of documentation only to spend hours searching your files for it? Now you’ll be able to access these records for any purpose.
Pulling together all of these documents is a great start – but it’s not the only prep work you need to do. You also need to:
Document Your Property
Can I tell you about one of the times I knew my husband was a real keeper? When we got engaged and started talking about combining households, we both agreed we should do an inventory of what we each had.
So he came over one Saturday armed with Excel and coffee (which may have turned to wine after a few hours), and we went through everything I had and decided what to keep and what to pitch. Pretty much everyone in my life will attest to the fact that I have always had a lot of “stuff,” so doing this was no small feat.
But we did it. And guess what. That laid the groundwork for having all my “stuff” documented in case we ever needed it.
What kind of property do you need to document?
In short, everything you’ve got of any value that you’d want to replace if your house burned to the ground. Your grandmother’s silver might seem irreplaceable, but take photos of it all the same. If the pattern still exists, you’ll be able to assign value to it and replace it if you need to.
You’ll want to document your furniture, artwork, papers, and clothing. Cars, bedding, generators. Wallpaper samples and paint colors. And don’t forget all the stuff in your kitchen. Yes, this is a lot. But trust me – if you ever need all this information, you’ll be really glad you spent the time on it.
Also, don’t forget to document your home and its condition. If you need to replace anything after a storm, you may not remember what kind of roofing tile you had and the condition of the roof may mean you can’t figure it out. Photos will really help in recovery.
How should you document everything?
A couple of ways. Start with a spreadsheet that lists everything out by the room. Then make sure you’ve got good photos of everything you’re documenting.
You should also walk through your house room by room and take a video of each room. You should also do this with the outside of the house.
Set up a file in the cloud (Craig and I share folders on Dropbox) and store the photo and video files there. And the more organized you can keep those digital files, the easier it will be if you ever need them.
If you go to our Resource Library, I’ve included all the steps you need to get everything documented and recorded. I’ve also included a guide to organizing it in the cloud. To get the password to the library and access all this, click here.
Insurance And Savings Audit
This step is one of the most crucial to putting together a good financial emergency plan. If something were to happen, you need to make sure you have the funds to recover.
How long have you had your insurance policies? If you’re like me, the money gets auto-deducted from your bank account each month and you don’t think much about it. You’re just pretty sure you’re mostly covered if something were to happen. Probabaly.
But be honest – when was the last time you took a look at your coverage? You really should conduct an audit every couple of years. So:
- Review your policies. Are they current? Are they still accurate for your needs?
- Will your homeowners and auto insurance be enough to take care of you in an emergency?
- If you’re a renter, does your lease reflect your current rent and is your renter’s insurance up to date?
- Do you have flood insurance? Do you need it? How about hurricane insurance?
- Do you live in an older home? If so, it could cost 25-50% more to rebuild – make sure your insurance policy will cover that.
- Have you acquired any other items of value (art, jewelry, furs, etc.)? Your insurance may require a separate policy or rider to cover these.
- Keep physical and electronic copies of your policies. Store physical copies with your other important documents and keep electronic copies in the cloud – I’ve mentioned we like Dropbox, but there are numerous services you can use.
I’m guessing you’ve already thought about your savings in the context of working towards retirement. But what about an unforeseen expense? Without solid preparation, that could wipe out everything you’ve got.
A good rule of thumb is to have six months of expenses in reserve in case you lose your job – or in this case, something more devastating were to happen.
That being said, there’s not necessarily a “right” answer to what to have in reserve. Especially when you’re living paycheck to paycheck struggling to put anything away. Some people feel just fine having a couple of months of income in reserve. Some feel better having a full year set aside. Whatever your number is – make it a priority to build up enough that you could survive while you wait for insurance to kick in if something catastrophic were to happen.
And while we’re on the subject, if you are occasionally living beyond your paycheck, a better savings goal is to set aside funds to cover a number of months of expenses rather than just reserving a few months of your income. You know, just in case. But savings and budget strategies are probably topics for another post.
- For more information and tips on homeowners and renters insurance, check out www.usa.gov/property-insurance.
- FEMA also has some great resources on how to make sure you have documented your belongings and are properly insured.
Getting together a financial emergency plan together is just one step in making sure you’re prepared for a catastrophe.
You also need to put together a “go-book” of all important documents, identification, and contacts – financial and otherwise. You’ll want to put together a family emergency plan and make sure every family member understands it. And you’ll want to gather emergency supplies in one place. Supplies that will enable you to shelter in place or to evacuate.
In the next couple of posts, we’ll tackle all of this. We’ve done the work to make it easy for you to get your emergency plan together. You can get access to all the checklists and guides in our resource library FOR FREE here.
I’d love your thoughts. Do you have any good tips or tricks for making sure you have the resources to survive a disaster? Comment below!