5 Ways To Be Financially Prepared For When Disaster Strikes

January 15, 2020

 

With Australia facing its worst fire emergency ever and as cyclone Blake looms off the coast of Western Australia, Ladies Finance Club has put together a checklist to help Aussie families ensure they are prepared for when the worst happens. 

  • Start an Emergency Fund (we call it an OMG Fund)

Aim towards putting $1000 into a high interest (fee free) savings account separate to your everyday banking accounts. Once you have that $1000 then aim to build up this fund with 3-6 month’s worth of living expenses (how much it costs to be you ie. rent, bills, food etc).

How? Go online or call your bank and set up an automatic transfer on payday from your bank account straight into a high interest savings account and labelled it OMG Fund. 

  • Safeguard your important documents 

Keep copies of irreplaceable financial and non-financial documents in a safe place that is protected from fire and water. If you have nowhere safe, look at hiring a safe deposit box, using an external hard drive or backing up documents to the cloud. These documents might include birth and marriage certificates, wills, financial certificates, trust agreements, photos, passports, insurance policies. 

How? Buy a fire and waterproof safe online or at Bunnings. Purchase an external hard drive and upload copies of your documents (just make sure you keep the external hard drive’s location safe). If using the cloud, double check what sort of security the platform uses to protect your data online before uploading online. If nothing else, take a photograph of them on your phone. 

  • Ensure your home is insured correctly. 

When it comes to building insurance, there are two types. Total replacement cover which covers the cost to rebuild your home to how it was before the disaster and the more popular sum-insured cover which covers your home to a set amount selected by you. Take care to make sure the amount selected is actually sufficient to rebuild your home. The Insurance Council of Australia says that more than 40% of homes are underinsured. Of course, don’t forget to insure your contents – the stuff inside your home too. When selecting a policy it will state what disasters it covers but note that flood cover isn’t generally included. Also check your policy as many insurers won’t cover your home if it is unoccupied for more than 60 days. When selecting or updating your insurance look carefully at the Product Disclosure Statement (PDS) to see what policy exclusions apply.

How? Before you choose a policy, call up or visit websites and get quotes for at least three policies (look at what would be covered, what isn’t covered and any caps or limits) before you choose one. For example, demolishing a house destroyed by fire may not be included. Also be sure that your insurance is up to date and covers any recent home renovations or improvements you have done. 

  • Review all your insurances

Check all your policies including home and contents, life, income protection, health, motor vehicle and even your pet insurance. Whether you own or rent your home, it’s vital that your insurance covers the cost of replacing or repairing your valuable household items and possessions if they are damaged in a disaster. Keep written and visual records of any valuable items including laptops, phones, jewellery, artwork etc. Again be sure to check the PDS statements to see what’s included when it comes to disasters. 

How? Take photos of valuables and note down the cost and serial number of each item and  store them in the Cloud. Get anything expensive appraised. There are free online content insurance calculators available that help you work out how much your items are worth. For the rest check online, go through a broker, superfund or seek independent advice. 

  • Grab and get out of there box 

When disaster strikes is rare to have huge amounts of time to prepare your important documents. Luckily we live in a time where we can get access to many of these via our mobile, email and the cloud. We still suggest you have any hard to replaceable documents safely stored all in one place that can be grabbed easily.   

How? Grab a plastic container and put the following in there. 

  1. Cash and card (sometimes ATMs won’t work during a disaster) 
  2. Passport, Birth and Marriage Certificates, Wills, Power of Attorney (other important documents)
  3. Inventory of your personal belongings if you don’t have copies of them on the cloud (including images and serial numbers). 
  4. Medical prescriptions
  5. Copies of all insurance cards and policies

If you’re struggling to get back on your feet there are a number of charities out there such as the Salvation Army, Red Cross as well as financial support from National Debt Helpline, Rural Financial Counselling Service and other free Financial Counselling services. The Australian Government also assists by providing financial assistance to individuals and families visit https://www.disasterassist.gov.au for more information.