Saving for a Disaster: Helpful Tips
Posted on September 16, 2014
Disaster savings accounts are an extremely valuable thing to have. In the event of a disaster you will need a financial plan as much as an emergency response plan. Financial relief, in the end, is some of the most important relief after a disaster. Saving for a disaster is not much different than saving for anything else. You could put away money each month into your personal savings account or you could open a dedicated account for disaster funds. In either case, making an effort to put away some amount each month for disaster recovery is a great way to ensure that you are in some way financially prepared for a disaster. Here are a few helpful tips.
Budget Monthly Contributions
Once you have an account set up or have determined where you are going to put the money, you should decide on the general monthly contributions to the relief fund. The more you can put away is clearly going to be better, but determine how much is reasonable for you. The easiest way to consistently save for a disaster is to set aside a small portion from each paycheck and deposit that into the dedicated disaster account. If you put the money away and leave it alone, if there comes a time when you need it, you will have a base available. Consistently feeding the account each month is ideal, but even sporadic contributions are helpful.
Create a Savings Plan
In order to optimize the process of saving money for a disaster, it is helpful to create a savings plan alongside your budget to assist you in putting funds away for a disaster. This plan can include estimated monthly contributions to the account as well as budgeting details for potential expenditures after a disaster or other emergency situation. You can also itemize these potential expenses to determine where your money will go. Knowing how to allocate the money you have saved will not be completely understood initially, but you can speculate in your plan where you may need to invest the recovery money.
Consider Insurance Coverage
If you own your home, your homeowners insurance will likely cover damages from certain disasters and calamitous events, but you should verify your coverage details and look into purchasing additional insurance, such as earthquake or flood, if necessary. These insurance costs can be budgeted into your disaster savings account. There will likely be out of pocket costs where insurance coverage has gaps, so having a personal recovery savings plan is highly beneficial. This money could also be used to invest in supplemental insurance or renter’s insurance if you do not own your home.