Personal Finance Resources: Financial Education & Literacy

Be Prepared: Protect Your Finances Now in Case of a Disaster Later

Written by PSECU | Sep 13, 2022 12:20:54 PM

September is National Preparedness Month, an important time to pause and ensure that you’re prepared for disasters that could occur in your home or community.

While it’s never fun to think about, preparing for the worst can help you safeguard your family, your property, and your finances in case the unexpected ever occurs.

Figuring out how to begin may feel tricky, so to help you get started, we chatted with Laura Burke, Executive Director of the Central Pennsylvania Chapter of the American Red Cross, and got her tips for how individuals can prepare financially for a disaster.

What is National Preparedness Month?

According to Burke, National Preparedness Month encourages and reminds Americans to be prepared for disasters or emergencies in their homes, businesses, and communities.

“The impact of climate change is being felt by families across the country as disasters grow larger and occur more often,” Burke says. “To get ready for these intense weather events, the American Red Cross is urging families to make readiness a priority each September.”

In addition to getting your family ready, Burke says that this is a good time to help your community get prepared for various disasters, as well. For example:

  • Volunteer with nonprofits that help families preparing for or impacted by disasters.
  • Donate blood.
  • Learn lifesavings skills.

How do Disasters Impact People’s Finances?

When we think about disasters, we may think more about the immediate damage done – physical or medical injuries, property damage, etc.

These outcomes of disaster, as well as many other impacts that are not immediately seen, can negatively affect people’s finances, too.

“A disaster can have major impact on an individual or household. Populations have grown in disaster-prone areas, meaning more people than ever before need help after disasters. As the human toll increases, individuals who are the poorest and most vulnerable – who are disproportionately impacted by disasters – will suffer the most,” Burke explains.

Unfortunately, the truth for many families is that they don’t have sufficient savings to cover expenses brought on by a disaster. This is where the American Red Cross often comes in. They provide free services and financial assistance at critical times to individuals and communities impacted by disaster.

How Can People Can Prepare Financially for a Disaster?

Preparing financially for a disaster is more than trying to build your savings to deal with any resulting losses or costs.

“The Red Cross suggests a few ways to reduce the economic impact of a disaster,” Burke says.

  • Know what you own. Keep a record of all your assets and possessions. “We suggest conducting a household inventory, creating a photographic record, and saving receipts and appraisals for valuable items,” Burke says.

  • Protect your property. “Some disasters will damage property regardless of how prepared you are. That is why homeowners and renters insurance are so important,” according to Burke. 
  • Consider additional insurance coverage. “Depending on where you live and your individual circumstances, you may want to consider additional insurance [on top of homeowners and renters], such as earthquake, flood, umbrella liability insurance, etcetera,” Burke says. You can use resources like your local American Red Cross or emergency management agency to determine what coverage you should consider and how to get the most out of your investment.

What Disasters are Most Likely to Catch People Off-Guard Financially?

While any disaster can cause unexpected physical or financial loss, Burke shares that, “According to the commonwealth of Pennsylvania, the top three hazards are floods, fires, and winter storms.”

What Financial Support is Available if Someone is Impacted by a Disaster?

The American Red Cross focuses on getting people the help that they need, including food, shelter, and relief supplies. They also provide emotional support, recovery planning, and other necessary assistance.

“Just as disasters do not discriminate in terms of whose lives they destroy, the Red Cross does not discriminate in whose lives we help to rebuild,” Burke says.

Do You Have Any Free Resources for People Looking to Build a Preparedness Plan?

“Everyone knows that the Red Cross helps people during emergencies. But you may not know that it’s also part of our mission to help you help yourself,” Burke says.

To fulfill this mission, there are free online resources, such as the Emergency App you can download from your phone’s app store, and preparedness classes offered to school districts, organizations, or businesses.

Create Your Emergency Plan Today

Ready to build your own preparedness plan? The American Red Cross offers a free guide, including templates and tips in English and Spanish. Get started today.