Last updated on August 14th, 2024 at 01:34 pm
Discover essential strategies for navigating your finances after disaster. As a global financial services company, Remitly is committed to helping the financial well-being of families in good times, bad times, and even during disasters.
We’ve put together this guide to help you learn effective ways to manage your finances and secure your future after a disaster, with expert tips and insights from the Consumer Financial Protection Bureau.
How to Prepare Before Disaster Strikes
Disasters are something we rarely expect; in fact, many of us often fail to prepare for them. Though experiencing emergency events like floods and hurricanes may be difficult to imagine, the best step to protecting your finances when disaster strikes is to plan ahead.
Collect, Copy, and Store Your Financial Records
In the case of an emergency, having your financial records ready and at hand could be the difference between a smooth recovery or a financial setback. Storing important personal and financial records in a water-tight container, fire safe, and/or a bank safe is the best way to ensure their security as well as easy portability.
If possible, making copies of these documents or storing them on your computer or a flash drive can be a good way to safeguard your information. However, it is essential to remember, if your personal and financial documents are kept on a computer, routinely back up your data.
But what documents should you keep track of?
A few to start would be:
- Social Security cards
- Birth certificates
- Insurance policies
- Investment records
- Income tax information
If you’re still feeling unsure about which documents are important, a good resource to identify exactly what information you should store is the Disaster Checklist compiled by the Consumer Finance Protection Bureau.
You May Also Like: A Financial Glossary for Everyone
Save, Save, Save!
An unplanned disaster may bring on unplanned debt. Turning to credit cards or loans to cover unforeseen expenses may seem like an easy solution, but these options often carry fees and collect interest.
To avoid taking on more debt, opening an emergency savings fund could be another safety measure you take to set yourself up for financial security.
How Do You Protect Your Finances After Disaster Has Struck?
Though early preparation is the key to preventing a financial disaster during emergency events, it is impossible to plan for everything.
Below, we outline three ways you can protect your finances even after a disaster has happened.
Be Mindful of Scams
While we hope that people have the best intentions when extending help after a disaster, the unfortunate truth is these times often draw increased activity in scams and fraud. The best ways to avoid falling for a scam are to:
- Ask questions!
- Ask for identification and contractor licenses.
- Don’t give out any personal information.
- Monitor scams happening in your area using the rumor control page on FEMA’s website.
Some common signs that someone is trying to scam you are:
- Individuals requiring payment of up-front fees for their services.
- Contractors traveling door-to-door offering repair services.
- Limited time offers for services.
Keeping these items in mind may help you navigate who to reach out to for support and which help is genuine.
Check Your Credit
A common issue many people face after a natural disaster: accuracy of and access to credit reports and scores. Payment arrangements for loans and credit cards may not be correct on your credit report, particularly if the event also impacted the company.
In the United States, consumers are guaranteed access to a free credit report every 12 months from the following companies:
Using these reports, you can monitor your credit and ensure any inaccuracies can be corrected.
Manage Your Insurance
Renters insurance is not required by law, but it’s available to protect your personal belongings. Policies vary, so review yours to gauge which items are covered and if you can file a claim.
Another perk sometimes offered with renters’ insurance is that it may cover the cost of living in another area should your home become inhabitable.
Managing your car insurance is also important. In the event of a disaster, your vehicle may be damaged. Check with both your insurance provider and auto loan lender on what your policy offers, as well as what you owe.
Usually, if your damage amounts to more than the cost of the car, your insurance may compensate you with the market value of the car.
However, if you owe more on the car than what your insurance has paid, you may be responsible for paying the difference to your auto loan lender.
You can check here if your guaranteed auto protection insurance will assist you in covering the difference.
Receiving Help
Financial service companies often become flooded with demands and requests for help from worried customers. Though it can sometimes feel difficult to ask for help, know that these companies are there to ensure that you have access to the services you need.
Some good questions to ask might include:
- Are there opportunities for adjustments on repayment of loans?
- Are there offerings for reduced fees and waived charges to those affected by the disaster?
- Will extensions be offered on paperwork required for loans if these documents prove difficult to locate due to the emergency event?
How to Manage Your Bills After a Disaster
It can be difficult to recover financially from a disaster, especially if your bills seem to be piling up. Here, we outline a few ways you can catch up on any outstanding bills and avoid incurring new ones.
Emergency Relief Programs
More often than not, assistance is available for those impacted by disaster events. We recommend looking for any local assistance programs to help meet any urgent needs.
If the area you live in has been presidentially declared as a disaster, you may be entitled to federal assistance.
Manage Rent or Mortgage Payments
If you have any doubts about your ability to make rental or mortgage payments, the best practice would be to reach out to your landlord or loan servicer as soon as possible.
In a rental home, you may be able to negotiate a payment plan with your landlord that considers your financial situation. If your home has been damaged, you have the option of requesting a rent reduction as well.
If you own your home, ask your loan servicer about your loss mitigation options. You can prompt a discussion on how to make your mortgage payments more affordable while also exploring other options such as forbearance or loan adjustment.
Credit Card and Bank Account Payments
After a disaster event, review your income as well as any savings you have available. If you don’t have the funds to make your credit card payments, contact your credit card provider and discuss your options. You may want to ask if they can offer a more affordable payment plan.
Similarly, if your bank account has been set for automatic payments and you no longer have the funds, it is important to communicate that to your bank, so you avoid overdraft fees.
Key Takeaways
In the face of disaster events, maintaining control over your finances is crucial to resilience and recovery. By implementing the strategies outlined in this guide, you’ll be better equipped to weather the storm and safeguard your financial well-being. Remember, preparation and informed decision-making are powerful tools that can help you navigate through even the toughest times.
