Financial Planning for Disasters

Written by: Thomas Kostigen

September is National Preparedness Month, and The World Meteorological Organization reports there are more severe storms causing billions of dollars in damages across the country, and around the world. Last year’s total was $99 billion, the highest number of billion-dollar damages caused from separate events in history.

“The number of weather, climate and water extremes are increasing and will become more frequent and severe in many parts of the world as a result of climate change,” says WMO Secretary-General Petteri Taalas. “That means more heatwaves, drought and forest fires such as those we have observed recently in Europe and North America. We have more water vapor in the atmosphere, which is exacerbating extreme rainfall and deadly flooding. The warming of the oceans has affected the frequency and area of existence of the most intense tropical storms.”

From the hurricanes battering the Gulf and East coasts to the wildfires in the Pacific, and the heat waves bursting in various places at various times (making last 2020 the hottest on record), you don’t have to look far for evidence of disaster.

Local, state, and federal governments are stepping up with adaptation and resiliency efforts, budgeting for serial catastrophes. These are tactics such as building seawalls and constructing heat shelters, which can keep people safe in times of trouble.

Storm damages aren’t just physical, of course, there are financial consequences to destruction. In the case of disasters, municipal finances take a hit, and so plans have been laid to budget for worst-case scenarios. Businesses, too, have backup plans. Families and individuals should have their own emergency financial plans. The Federal Emergency Management Agency (FEMA) has put together an Emergency Financial First Aid Kit (EFFAK) to help people manage their finances when disaster strikes. It’s smart planning for individuals and financial advisors who may want to use the free offering for their clients, or to customize one of their own. Storm season isn’t letting up anytime soon.

FEMA’s toolkit is online and available here. It includes a checklist of important documents and forms to compile relevant information. You should have ready important household identification, such as mortgage papers; titles, etc.; financial and legal documentation, such as brokerage statements, marriage and birth certificates, trusts, and wills; medical information, such as health records and prescription information; insurance information, such as home, auto and life insurance policies; and household contacts, such as family member phone contacts, emergency contacts (doctors/dentists).

FEMA recommends that you take steps to compile and keep your Emergency Financial First Aid Kit in order. First assess and compile: Gather your important documents and contacts. Review: Review your insurance policies and financial paperwork to be sure that they are accurate and current. Safeguard: Store paper and electronic copies of all files in safe locations. Update: Revisit and update your EFFAK often, especially when certain changes in your life occur.

Beyond the practical assistance an EFFAK affords, it also can bring peace of mind: “The Emergency Financial First Aid Kit (EFFAK) can help you be ready. If a disaster or other emergency strikes your community, you may only have seconds or minutes to react. In those critical moments, your focus will be on your family’s safety. Once the immediate danger has passed, having your homeowners, renters, or flood insurance policy, bank account information, and other household records and contacts will be essential as you begin the recovery process,” FEMA says.

It’s important to note that even if you have just experienced a disaster, it’s still not too late to gather your EFFAK for the next one. By the looks of weather and climate change forecasts, things are only going to get worse, not better. Best to be financially prepared.

Related: ESG Promises Huge Opportunity for Investors and Advisors

Thomas Kostigen is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Thomas is a best-selling author and longtime journalist who writes about environmental, social, and governance issues.