How to Prepare Your Finances for a Natural Disaster

Natural Disaster

When it comes to natural disasters, we’re always told to prepare in advance; to gather enough supplies to sustain ourselves and our family for at least three days.

While our main focus may be on obtaining clean water, food, a battery-powered radio, flashlights, and/or a headlamp, first aid kits and medicines, what about your finances? What kind of financial preparedness measures should you put in place?

How to Prepare Your Finances for a Natural Disaster

1. Cash Money

In an emergency, cash is king, given that ATM’s or other electronic forms of payment may not be available during an emergency and/or for a time period following an emergency.

Make sure your emergency kit contains enough cash to pay for food, lodging, and other necessities for at least three days should you not be able to return to your home, the power is out or you are unable to get cash from a bank or ATM.

In addition to cash, it may be helpful to keep traveler’s checks and a roll or two of quarters (for pay phones or laundromat), along with your disaster supplies kit. You can keep a credit card in your emergency kit as well, but don’t plan to depend on using it.

2. Pay Off Debts

The better financial shape you are in before a natural disaster occurs, the better you’ll be able to financially rebound.

One thing you can do to financially prepare for a natural disaster is to get control over any outstanding debt you may have. If you need help with this, contact a nonprofit credit counseling like DebtWave.

Make sure to also set aside money to cover the expenses associated with a natural disaster in a specific emergency fund account. Financial experts recommend saving enough money in your emergency fund to cover your bills for three to six months.

Tip: If you have credit card debt, student loans, a mortgage, etc. when a natural disaster strikes, call your creditors and explain the situation. Some may be receptive to working out a revised payment plan.

3. Personal Identification & Documentation

Following a disaster, you’ll likely be asked to confirm your identity in order to obtain disaster relief services, file insurance claims or access your property and/or financial assets. Make sure to keep copies, extra originals, or certified copies of important documents in one, convenient location such as a fireproof safe.

Ideally, you’ll want to grab these documents (see below) before you leave your home and find a safe area while emergency teams respond to a natural disaster. However, if you’re unable to return home and collect your belongings, you’ll want to make sure to protect important documents like:

  • Passport
  • Driver’s license
  • Birth and marriage certificates
  • Adoption decrees
  • Social Security cards
  • Military records
  • Federal and state tax returns (at least three most recent returns)
  • Health insurance card
  • Doctor’s name and phone number
  • Immunization records
  • Prescriptions (including for glasses and contacts)
  • Home improvement records
  • Inventory of your possessions
  • Warranties and receipts for major purchases
  • Appraisals of jewelry, collectibles, artwork, and other valuable items
  • Credit card records
  • Retirement account records
  • Recent checking, savings, and investment account statements
  • Rental agreement/lease and/or mortgage documents
  • Recent pay stubs and employee benefits information
  • List of emergency contacts, including doctors, financial advisers, and family members
  • Safe-deposit box information (location, contents, and key)

The more information you have access to following a disaster, the more quickly you’ll likely be able to file an insurance claim in the event a natural disaster either damages or destroys your property.

Tip: Take close-up pictures of valuable and include details such as a serial number.

You can also videotape your belongings and include a narrative description of the relevant information in the video. If any of your important financial documents get damaged and an online statement version is not available, call to obtain copies as soon as possible.

4. Mitigation Projects

Before you buy a home, you should always consider the natural disasters that are most likely to occur in your neighborhood.

Just because your area may be more susceptible to a particular natural disaster doesn’t mean you can’t further prepare your home to try and mitigate the expenses you may incur in the event a natural disaster affects your area.

There is a multitude of mitigation projects you can perform on your home, each of which costs a varied amount. If you rent a property, consult with your landlord on making the following adjustments.


  • Use child-resistant latches to keep cabinet doors shut.
  • Bolt bookcases and tall furniture to wall studs.
  • Secure overhead light fixtures to beams or rafters.
  • Use straps to secure your water heater.
  • Have a professional anchor the mainframe of the home to its foundation.


  • Clear brush surrounding your home.
  • Make sure you have fire-resistant siding.
  • Replace wood-shingled roofs with less-flammable materials.

Hurricanes and Tornadoes:

  • Consider having a professional anchor the mainframe of the home to its foundation.
  • Strap the roof of your home to the mainframe.
  • Install hurricane shutters.
  • Build a tornado safe room or shelter in your home.


  • Move electrical panel boxes and the furnace from the basement or crawl space to an upper floor or attic.

Some mitigation projects, such as building a tornado shelter in your home, or anchoring the mainframe of your home to its foundation, can be costly.

If you can’t swallow the cost of these mitigation projects, focus on the less expensive mitigation projects such as moving fragile items from higher shelves to lower shelves and securing cabinets with a child lock.

It also helps to know how to shut off your utilities and to have an offline power source. If the power goes out, you’ll likely lose the ability to charge your phone, the food in your refrigerator will spoil and you may not have air condition or heating, which may present particular health dangers for some individuals.

If you invest in an off-line power source like the Tesla Powerwall 2, which can be charged with power from solar panels, you may be able to keep your phone charged for a longer time period, you may save some perishable food items and you may lessen the chance you or someone in your home suffers from a heat-related illness if the air-conditioning goes out.

Tip: Make sure to read through and understand what your insurance covers and what is required to file a claim in the event a natural disaster occurs.

Be especially aware of how your policy handles different types of disasters. For example, hurricane damage may be handled differently than a fire or flood.

Review your insurance annually. Consider if you have the right kind of insurance to cover what you own.

  • Do you have sufficient coverage for your neighborhood?
  • Have you completed major modifications to your home or other property?
  • Have those improvements been reflected in a revised insurance policy?

5. Income and Employment Impact

When preparing for the financial impacts of a natural disaster, you need to consider how a natural disaster may affect your job and income.

Given each company may have a different way to handle disasters, we recommend sitting down with your manager, the human resources department, the benefits director, or the payroll department at your specific employer to ask specific questions. A larger corporation may even have an Employee Assistance Program (EAP) that can provide information.

To help jump-start your conversation with your employer about the company’s response to a natural disaster, consider the following questions:

  • Does your organization have a disaster plan? If yes, what is it?
  • If you’re unable to work following a disaster, will you continue to be paid? If yes, for how long? Will you receive the full amount of your paycheck if you’re a salaried employee?
  • If the business shuts down temporarily, will you continue to be paid? If yes, for how long?
  • Would you be able to use sick leave pay, vacation pay or any employer-paid emergency assistance?
  • Can you collect unemployment compensation? If so, when?
  • If you’re injured in a natural disaster, what medical and disability benefits does your company provide? For how long?
  • If you’re injured on the job during a disaster, would you be covered by workers’ compensation?
  • What happens if a disaster occurs during a mandatory strike?

Tip: Unemployment compensation can be applied for at the walk-in FEMA Disaster Recovery Centers.

You can also call FEMA at 1-800-621-FEMA (3362).

How do you financially prepare for a natural disaster? Share with us in the comments below!

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