By Claudia Mollerup-Madsen, VP/ Financial AdvisorMorgan Stanley Wealth Management
With many in Houston still recovering from last year’s effects of Hurricane Harvey, it is important to ensure you are prepared for this year’s upcoming hurricane season. Though stocking up on canned goods, bottled water and batteries is essential to help weather a storm, being financially prepared is just as crucial. Here are a few things to consider as the 2018 hurricane season begins.
Insurance
While you may know you have insurance, do you really know what your policies cover? Now is an excellent time to read your policies over, ask your agent any questions you have and add any coverage necessary to make sure you are insured in the event of hurricane-related damage. Check that all your insurance is up to date, including homeowners, auto, life and health insurance. After the devastating flooding from Harvey, you may also consider purchasing separate flood insurance. Please note that, in some cases, it can take up to 30 days from the purchase date for flood insurance to become active. Take pictures and video of your property and home in case you need to file a claim. Additionally, have updated contact information for your insurance company and agent.
Get Organized
Gather all relevant documents such as insurance policies, birth certificates, financial information, social security cards, passports and immunization records into a fireproof, waterproof safe. These items are hard to replace and are often needed during the recovery process, especially if you need to enroll your children in a new school. Be sure they are easy to grab in the event of an emergency. Another helpful tip is to put copies of documents, policies, and bills in an organized binder. Additionally, create a password-protected spreadsheet of accounts and passwords. In the aftermath of a devastating storm, the last thing you may remember is all of your passwords.
Emergency Savings
Even if you have sufficient insurance coverage, it is important to have liquid emergency funds available immediately after a storm. You may need to pay for expenses such as a hotel, food, repairs, or a rental car, and it will take time before your insurance company can reimburse you. Additionally, ATMs may not be in working order if power is out or if there is flooding. Plan to withdraw at least 3-5 days’ worth of spending money. If you do not have an emergency fund, it’s important that you start saving for one as soon as possible. Getting started can seem intimidating, especially if you’re currently applying any extra money you have to debt, or if you’re living paycheck to paycheck. While it’s important to be paying off debt, it is also important to build your emergency savings fund. Consider using part of the money you’re directing toward paying off debt to start building the foundation of your emergency fund. Once you feel more comfortable with the foundation you’ve laid, you can reconsider your savings focus and decide if you’d like to reallocate back to applying more towards debt. You should also consider tracking your spending and reworking your budget to eliminate any unnecessary spending. Allocate the money that was previously going to your daily coffee runs and online shopping to go towards your emergency fund. As with all major changes to your money matters, ensure you are consulting a financial advisor who can continue to help you meet your lifetime goals. As southeast Texans know well, hurricanes can be devastating and leave long-lasting effects in a community. By planning and getting organized in advance, you can concentrate on the most important thing when facing a hurricane: your safety and the safety of your loved ones. For more information, you can reach Claudia at: claudia.madsen@morganstanley.com
