Being prepared for a rainy day, natural disaster, or other emergency is more than just having food storage or a drinkable water supply. It’s also about financial preparedness. Here are three steps you should take to ensure you are financially prepared. And keep in mind that these principles apply to everyday living, and not just the worst-case-scenarios.


1. Build emergency funds, both short-term and long-term.


A big part of being prepared is having the resources to cover expenses in uncertain times. The first thing you should do is establish a rainy-day fund. Start where you can, and try to put away as much into savings as possible in 90 days. Shoot for at least $500.


The important thing is not to use this money for anything other than a real emergency. This doesn’t mean it has to be an all-out, apocalyptic natural disaster. It could be for emergency car repairs or a medical bill. Just don’t use it to buy something you want, but don’t need. The point is to have enough of a short-term reserve to get you through a rough patch without having to incur debt.


From there, work on developing financial reserves that can get you through a three- to six-month period. This will be a lifesaver if you or your spouse lose a job and need time to get back on track.


2. Evaluate your insurance needs.


There may not be a better financial lifeline than having the right insurance coverage. And there may be nothing more disheartening than thinking you are covered when you actually aren’t. Take the time to sit down and study your auto, home life, dental, and medical insurance plans. If you notice a gap in coverage and can reasonably fill that gap, then update your coverage as needed. Then, if and when disaster or accidents occur, you’ll know you are covered. Great insurance equals great peace of mind.


3. Keep important documents safely secured.


Jumping through administrative hoops and cutting through red tape is a lot easier when the important documents you need are right at your fingertips. And that doesn’t just go for emergency situations. Have you ever tried to open a bank account for a child or applied for certain benefits and found that you needed but didn’t have handy passports, birth certificates, etc.? Keep originals in a safe, waterproof, fireproof box at home. Or consider a safety deposit box. Then have copies handy on a computer file or filing cabinet where you can easily retrieve them. Essential documents to include are:


• Social Security Cards

• Passports and green cards

• Birth certificates

• Adoption records

• Marriage certificates

• Immunization records

• Leases and deeds

• Insurance cards/policies

• Tax records

• Loan records

• Vehicle registrations/titles

• Pay stubs

Source: TIAA Cref

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