“Unfortunately, most people tend to do nothing until they hear a warning about an approaching storm,” Ken Strauss, a certified public accountant who specializes in personal finance told the Associated Press in regard to financial planning for disasters.
“Being prepared means you’ve got everything in hand while everyone else is running around in a panic.”
Strauss, who works with the firm Berkowitz, Dick, Pollack & Brant in Fort Lauderdale, Fla., bases his tips on preparation for hurricanes, but Midwest families should always be preapred in case of tornado, fire, flood or a long-shot major earthquake.
First, he says families should consider setting aside enough cash to cover several days of basic expenses.
“If the power goes out, you can’t get money out of the ATMs. And you’ll want small denominations, like 20s, because it can be hard to get change for large bills.”
It’s also important for families to gather copies of key financial documents, he said.
A new publication “Disasters and Financial Planning – A Guide for Preparedness” prepared by the American Institute of Certified Public Accountants, the AICPA Foundation, the National Endowment for Financial Education and the American Red Cross includes a list of documents best stored in a safe deposit box and a list of others a family should include with its disaster kit. The booklet is available at www.redcross.org/financialplanning or can be obtained from local Red Cross chapters.
According to the guide, documents to leave in safe deposit boxes include birth, marriage and death certificates; divorce and child custody papers; military records; passports; mortgages and property deeds; car titles; stock and bond certificates; and copies of wills and powers of attorney.
Among the documents a family should keep handy if it needs to evacuate include:
— Copies of recent tax returns
— Copies of important medical information, including health insurance card and prescriptions
— An inventory of the family’s possessions
— Home improvement records
— Recent checking, savings and investment account statements
— Retirement account statements
— Credit card records
— A list of emergency contacts, including doctors and family members
— Safe deposit box information, including location, list of contents and key
“Think about it this way: If right now, right this moment, we had a disaster, who are you responsible for the next 10 minutes, the next hour, the next day, week, month?” said Michael Emmerman, a money manager at Neuberger Berman in New York. “Figure that out, and you’ll know how to prepare.”
For important financial papers, Emmerman, who has been a volunteer with the American Red Cross for nearly 30 years, recommends families create what he calls a “red file.”
Your red file – the color is to make it distinctive n “should include everything that defines your financial life” from insurance documents and a home inventory to extra checks from your checkbook and copies of your credit cards, he said.
The red file is something the family can grab if it’s forced to evacuate.