Emergency Prep is the First Step
National Preparedness Month is a good time to take a look at how we can be ready for emergencies and develop plans for each circumstance. Being financially prepared is one of those circumstances. Having a financial plan for the unexpected will provide relief in an already stressful time. Here are 6 things you can do this month to be prepared:
1. Save for an Emergency
First and foremost, have an emergency savings fund. It should be separate from your regular savings fund and not easily accessible, except in a true emergency. What’s the difference between a savings and an emergency fund?
A savings account should be for a financial goal such as:
An emergency fund is for unexpected events such as:
Experts recommend having 3-6 months’ worth of expenses set aside for an emergency fund. You can decide how much to save additionally based on your needs, circumstances, and comfort level. Your emergency savings can even earn interest for you while you have it in savings. Look for a savings account that gives you easy access but the best interest rate available. Having cash set aside for emergencies can make a crisis feel less chaotic and keep your other savings goals on track.
2. Enroll in Direct Deposit
If there is a natural emergency like flooding or a wildfire, mail services may be unavailable for a period of time. If you receive any of your income as a physical check, see if you can set up electronic deposits going forward instead. Talk to your employer to see if they offer payroll direct deposit. If you get federal benefits, you can set up electronic payments by calling the U.S. Treasury Electronic Solution Center at (877) 874-6347 or visiting the U.S. Department of the Treasury’s direct deposit page.
3. Stay Covered
Review all your insurance policies to ensure you have proper coverage on your home, car, medical, and life insurance. You don’t want to be in a situation where you think you are covered and find out you are underinsured in an already stressful event.
4. Keep an Inventory List
In an event like a fire or flooding, you will likely file a home or renters insurance claim to help recover financially from your loss. Part of that process is providing an inventory list of your belongings to your insurance company. It might be overwhelming to rely on your memory, so creating an inventory list with pictures and receipts beforehand makes it easier and may support your claim. Save to a cloud storage or keep in a secure place outside the house.
Things to add to the list:
5. Safeguard Documents
Gather all your important documents and keep them in a safe place such as a water and fireproof safe.
Things to include are:
6. Be a Credit Union Member
We might be a bit biased on this last one, but it’s also a good idea to be a member of a credit union since they typically serve their local community and work with their members to be helpful in emergencies. You might need a credit card, personal loan, or home equity line of credit (HELOC) to recover. They may be able to offer loans that for-profit banks won’t because credit unions are not-for-profit and owned by their members rather than stockholders. If you want to learn more about becoming one of our members, visit our membership page.