5 Ways To Disaster Proof Your Finances

by Ron Haynes

tornado(2) Earthquakes, floods, and forest fires know no season. Spring tornado season is just around the corner and soon thereafter, we enter hurricane season. If you were thrown a curveball and had go through a hurricane, tornado, earthquake, flash flood or forest fire – would you be financially prepared to weather the storm?

Natural disasters serve as reminders that we all need to be prepared, no matter the source of the disaster. What to do?

1. Take a home inventory.

Go room by room and record a visual inventory of your possessions on a video camera or still camera. Describe the item in your own voice, recording its cost and when you bought it as well as any serial numbers or model numbers. Photograph your landscaping, patio, outdoor furniture, fencing, and sprinkler system and include automobiles, boats, or RVs. Review your inventory every two to three years to keep it up-to-date and augment the video or photographs with a written record. List each item and its value as well as any identifying numbers where appropriate. Put your inventory records in a safe place such as a safe-deposit box.

2. Keep copies of all financial records in a very safe place.

Scan your financial documents (mortgages, life insurance policies, other insurance policies, copies of your drivers license, passport, credit cards, everything) and burn them onto a CD in pdf format, then keep this CD in a safe deposit box. An alternative strategy is to use something like Mozy Online Backup which offers up to 2 GB of free storage or unlimited storage for only $4.95/month. All you have to do then is remember to scan and save to your hard drive.

3. Update your homeowners insurance.

It may seem obvious to you and me, but believe it or not, most people are either not insured at all or severely under-insured on their homeowners insurance. According to the Federal Emergency Management Agency, only 25 percent of the 10 million American homes that lie within high flood-risk zones carry flood insurance, despite the fact that homes are four times more likely to be damaged by flood than by fire.

4. Be sure you have the right kind of insurance coverage.

Your first line of defense is your homeowners insurance so make sure you’ve examined your insurance coverage before disaster strikes. What you don’t know CAN hurt you in the long run. For example, there’s a big difference between replacement and reimbursement cost. If your 3-year-old flat screen television is destroyed in a flood, does your coverage pay to replace it or only pay you based on it’s current, depreciated value (much less)? Some policies only cover the structure so make certain you cover the contents of your home, as well as the structure. If you’re a renter, buy renter’s insurance because the landlord’s insurance won’t cover damage to your possessions.

5. Beef up your emergency fund.

If you find yourself going through a disaster, having a three to six month emergency fund will be a lifesaver. Don’t delay in starting your fund as soon as possible. Use my Sneaky Savings Strategies to help you pump cash into your fund and don’t be afraid to get creative in your own savings ideas.

We all hope we never have to weather such a storm, but by taking a few smart precautions, a punch in the face by Mother Nature won’t knock you out.

Note: This article was included in the Carnival of Personal Finance – Blogthority.com Relaunch Edition! Make More Money Blogging edition! Thanks Mike!

Photo by smiteme

About the author

Ron Haynes has written 1001 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.

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all great tips. one i would add is to always have some cash on you. atms may not be available in a storm situation.

Sid Savara

Hey Ron,

I think the emergency fund is key. I’ve always tried to been really budget conscious and saved, and I think that really affects my emergency fund positively in two ways

1) it helps build the emergency fund by putting cash aside for it
2) it helps me know when my fund it big enough, so I’m not just shooting in the dark – I have a real estimate of what some of my expenses area

One thing to note is that in an emergency, some new expenses pop up. Biggest example is CORBA for health insurance – losing a job that has provided you and your family with health insurance and now having to purchase it, even at a discounted rate, is a new expense that you need to budget for. This is a little tough to know exactly how much it is, though I do know my approximate costs from the paperwork I received from the jobs I left offering me CORBA. So I tack that on to my monthly expenses when calculating my 6-12 month emergency fund runway.

Credit Girl

The home inventory is a great idea. Not only is it good for natural disasters but also if something in your house gets stolen, then you will have proof for the insurance claims.


Good list, pretty covered all…just keep a little extra cash and hide somewhere you’ll always remember just in case something really happens. ATM’s may not work during those times…it happened to me before, it’s not a disaster though, it was New Year’s eve, knowing I have an ATM I didn’t withdraw beforehand. That day, I don’t really have cash, it made me feel real bad because I can’t even share anything for the celebration.


Oh that’s a great idea! Wish I had included it on the list — thanks for adding to the conversation.

The Biz of Life

Good advice overall. For #1 many people recommend using your video camera to create a visual record of your belongings. Of course, you have to store that disk or tape somewhere other than the house. These days you also have to worry about getting sued for what other people do on your property so an umbrella liability policy provides some protection from being wiped out financially by a lawsuit.


Great points. You can keep your recording online or in a safe deposit box. Since I already have a safe deposit box at my bank, that was what I opted for.

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