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Planning for disasters: Your finances are key

No one expects a devastating event, and we can never be fully prepared for everything. But building a solid savings, creating a preparedness plan and reading up on available resources can help protect your financial wellbeing. It will also give you  peace of mind, knowing you’ve done your part to prepare for whatever comes your way.

Studies show approximately 40 percent of Americans have no plan for handling an emergency. Without warning, a flood, fire or other disaster could leave you with a severely damaged home, destroyed belongings and repair costs sure to deplete your wallet.

Many people think of disaster preparedness as having a stockpile of water, canned food and flashlights, but people also need to consider the state of their finances. The key to financial emergency preparedness is proper planning by taking stock of your income streams and budget appropriately so your portfolio can survive an unexpected crisis.

Periodically review your insurance coverage

You should have enough insurance to cover the cost of replacing or repairing your home, car and other valuable property, as well as temporary housing if you are displaced. Those who do not own a home should have renters insurance, which most complexes require. Also, make sure that you have the right kind of coverage for the types of disasters likely to occur in your area. For example, homeowner’s insurance does not typically cover events such as flooding or earthquakes, so you may want to consider whether you need additional coverage. 

Build, maintain an emergency savings fund

While your personal hazard insurance should cover most or all damages to your home and property, an emergency savings fund deposited in an insured financial institution can provide for immediate expenses and help fill the gaps. The most important thing to consider is that emergency funds should be easily accessible. Consider a high-yield savings account for better interest rates and easy transferability to your checking account.

Compile physical copies of important documents

We live in a digital age, and it’s all too easy to store your important financial documents online. Back up tax returns, insurance information, receipts and more via a cloud storage system so you can access them from any device — but make sure you have physical copies, too. In the event of a natural disaster that causes you to lose power or internet access, you’ll need paper versions of your documents kept safe in a fire-proof, water-proof container.

No one expects a devastating event, and we can never be fully prepared for everything. But building a solid savings, creating a preparedness plan and reading up on available resources can help protect your financial wellbeing. It will also give you  peace of mind, knowing you’ve done your part to prepare for whatever comes your way.

Kim Dees is senior vice president, southern Arizona division manager at WaFd Bank.