Many companies spend a considerable amount of time planning for catastrophe. They stock up on insurance coverage, back up their technology, budget emergency funds and plan for employee evacuations. Disaster planning is not just for businesses anymore.
As an individual, you have as much — if not more — to lose from a calamity than a company does. After all, even if a business goes under because of a fire or flood, its owners and staff presumably still have homes to which they can return. Here are some general guidelines to consider when putting together or reinforcing your personal disaster plan.
Insurance policies are your first line of defense. Assess your homeowners and life coverage regularly, and consider disability and long-term care insurance as well. Ask your financial adviser for help determining precisely which policies you really need.
Next, take stock and document all of your financial and physical assets. Your insurer may require you to do this anyway, but it is a good step to take either way.
Create a list of your bank accounts, titles, deeds, mortgages, home equity loans, investments and tax records. Inventory physical assets not only in writing (including brand names and model and serial numbers), but also by photographing them.
BACK IT UP
It is smart to back up your financial data and make duplicates of important documents and store them somewhere other than your home. Secure, offsite locations include a safe deposit box at your bank or at the distant home of a trusted friend or relative.In this day and age, you probably also have important computerized documents and information. For this data, consider “cloud computing” — storing your files on a secure Web-based storage provider so you can access them anywhere. You can also back up files on portable hard drives or flash drives and put them in your safety deposit box.
When a disaster strikes, government relief funds may be made available — depending on the severity of the incident — but those funds typically are distributed later rather than sooner. Having a cash reserve readily available is a key component of a financial recovery plan.
A good rule of thumb is to set aside three to six months’ worth of living expenses in a savings or money market account. You can draw from this cash reserve to pay for a hotel room or purchase supplies until any relief funds are distributed.
You can take this one step further and keep a cash reserve in your home in case of an event where you are unable to access your bank accounts. Consider having at least $75 per family member in small bills. For an added level of protection, stash this cash in a durable, fireproof safe so you will be able to use it even in the event of most disasters.
Of course, if a disaster occurs, your physical security is paramount. Establish a personal or family emergency plan, prepare a supply kit and secure a means to stay informed.
Your plan should include a detailed evacuation route, as well as instructions should the disaster require you to stay in your home. Stock your supply kit with provisions such as:
- Several gallons of water,
- Nonperishable food,
- Flashlights and a supply of batteries, and
- A first aid kit
Finally, to stay informed of the latest developments, consider buying a battery-powered — or better yet, hand-cranked — radio in case phone and data lines and wireless networks are down.
Presently, there are many disaster planning websites available to help you with your personal disaster plan. Perhaps the ideal place to start is the federal government’s ready.gov. Your state and local municipality may also have Web pages dedicated to preparedness with information specific to your location and its risks.
SPEND SOME TIME
No one likes to think about the many potential catastrophes that could bring chaos to you and your family. Yet spending just a little time each week building up your personal disaster plan could pay huge dividends should a calamity strike.