Hurricane Sandy has, to say the least, wreaked a lot of havoc. Some of us were lucky enough to be huddled in our apartments with flashlights, waiting out the storm. Some of us are dealing with far worse consequences—flooded homes, evacuation, loss. Our hearts and thoughts go out to those who are suffering because of the storm, and our thanks go out to the workers and emergency rescue teams who are out in the mess, helping us all stay safe and working to get our cities back up and running.
The severity of this occasion is a reminder of how critical it is to prepare and plan ahead. We are all subject to storms—whether it’s a massive hurricane that affects millions, or a disaster more personal in our individual lives. Do you have the savings to make it through a “rainy day”? What if that rainy day were a hurricane—could your finances still weather the storm?
The Red Cross advises us to have our emergency kits ready well in advance. For a financial emergency kit, the main ingredient is a well-rehearsed plan.
Initiate important conversations with your spouse or family and your financial advisers about your back-up plans. Talking now will save you panic later, and discussing the details today with a cool head is far more preferable than in the heat of the moment. Use these three questions to start the conversation:
- Do you have enough savings to cover living expenses for at least eight months?
- If you fell on hard times or incurred unexpected expenses, what resources could you turn to?
- Do you have assets that can be liquidated if necessary? Emergency funds?
We’d all like to think that disaster will never affect us, our families, or our loved ones. Understandably, we hate to dwell on negative ideas. But this isn’t about pessimism, it’s about practicality. These things have a way of seeming like they always happen to “someone else”…until they arrive at our own front door.
If the worst should occur, the last thing you want to do is add to the chaos. Planning while the sun is shining gives you the critical ability to stay calm in a crisis, and peace of mind in the meantime.