Are You Prepared for a Financial Hurricane?

Brent Pittman —  08/27/2012

Do you have insurance?

It’s hurricane season.  Call me weird, but I like to track the hurricanes each year.  Maybe it is because I lived in Miami one summer or maybe its because I was on the ground days after Katrina hit volunteering.

Every few days finds me checking the National Hurricane Center site.  The 2012 prediction is for an above normal hurricane season.  Are you ready?

Are you ready for both a real hurricane or for a financial hurricane?  We will all experience shocks in life, like car accidents, natural disasters, physical ailments…etc.  The question is not IF, but WHEN.  It is recommended to have a plan if a hurricane hits.

So, do you have a financial plan? Do you have the proper life insurance (Term), health insurance, disability insurance, home owners insurance….in place?  If not, you could be asking for a hurricane.  When you see a storm approaching, you take precautions.  You might put up the storm shutters , bring in the dogs and plants, or stock up on food and water.  So why not prepare for financial emergencies.

Everyone should have at least $1K of emergency money for when something happens.  After your debt is paid off, build that emergency fund up to 3-6 months of necessities. Insurance is also a step in guarding against the financial hurricanes.  Everyone should have health insurance as medical problems are the number one reason for bankruptcy.

Next, put in place auto, homeowners/Renters, Life insurance (Term is the best), Disability, Identity Theft. Also consider flood & earthquake insurance should you live in such an area.  This takes time, but begin the process of getting insured.  Also, especially if you have children or assets, you should get a will in place. Prepare for the worst, your family will thank you should the storm hit.

Hurricane season is upon us and its time to get our ole’ financial storm shutters ready.  No matter if you’re going to stick out the storm and have a hurricane party (How to Host a Hurricane Party) or if you’re going to evacuate…it’s time to prepare.

Action: Evaluate what insurance you have and if you have the proper coverage. 

(Photo by alpoma)

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Brent Pittman

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Brent is a financial coach and writer looking for the perfect donut. He believes personal finance should be both fun and accessible to anyone willing to learn.

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  • Wait did I miss something? Are they closing the 405 again? Actually that was a great day to drive to anywhere but the valley.

  • Hey we’re neighbors! Yes, another great analogy! I felt a good one here in “the valley” a few weeks ago.

  • Well I don’t track hurricanes, but I’m sort of mentally prepared for an earthquake here in Vancouver. It’s been due for a long time so I know it will happen and that’s when I’ll be happy I got earth quake insurance for my apartment.

    • I didn’t realize Vancouver had earthquakes too! I’m in L.A. so I understand, but I honestly don’t have earthquake renters insurance…something I haven’t thought of.

  • AverageJoe

    Great piece. I often find that people don’t pay enough attention to their deductibles. When they have no reserves, they should go with a lower deductible. Once they have that emergency fund in place, they can raise the deductible and use the emergency fund as “insurance.”

    • Good advice as always! As you said in your last podcast…”It always goes back to the Emergency Fund.”.

  • I’m a huge worrier. I combat the fears with planning…. I have always prioritized a big emergency fund, insurance and considering all the options. Otherwise, I wouldn’t sleep:)

    • A good nights rest is reason enough to plan ahead. Happy ZZZZ’s.

  • I love the parallels you draw between financial storms and nature’s beast. As you know, I’ve done something similar…but in space.

    Unfortunately, most people don’t even notice the dark ominous clouds, big waves, rising water and other signs of financial storms. That’s probably the biggest difference between them.

    • Dave,
      Thanks for stopping by and commenting. I’m a sucker for analogies.

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