Worst-Case Scenario: Budgeting for a Natural Disaster

Natural disasters are not uncommon events these days. Hurricanes, tornadoes, wildfires, and floods — the most recent being in Colorado — are popping up more frequently with devastating results. In many cases people are left with nothing except the clothes on their backs and a mind full questions on the next steps to take to get back to some normalcy. What can help in these cases, especially if living in an area prone to these events, is to create a budget to cover as many natural disaster contingencies as possible.

Differing from your emergency fund, which contains three to six months of household expenses, the disaster fund should contain the cash needed to keep you safe and secure during a natural weather event. Here are a few things to consider when putting this budget together.

Supplies

Some natural disasters keep your home intact but can leave you without necessities like water or power. Your budget for these circumstances should include money for basic needs to hold you over for at least of week. Funds for dry goods and non-perishable items need inclusion into the budget as well as money for bottled water. Batteries are a big part of the find to power everything from flashlights to various electronic devices. In situations where power is a necessity to keep medicine cold or life-saving machines operating you may need to add funds to purchase generators and the fuel that keeps them going.

Accommodations and Transportation

Many weather-related incidents can leave you without a place to stay or a vehicle to drive due to evacuation, damage, or total destruction. Property and insurance companies provide money for temporary accommodations or transportation; however, those funds are finite. Your disaster budget should contain categories to add cash for lengthier times away from your residence or vehicle that the insurance companies don’t cover. Speak with your respective companies to determine what they cover before you populate your budget.

Clean Up

Weather disasters can keep your property safe but leave you with a mess to clean up. Your property or auto insurance may cover some of it, but many times situations involving acts of nature may provide limited funds, so items like tree removal and restoration of a water damaged basement may come out of your pocket. Again, consult your policy before you fill this section of your budget in, then consider the costs you could incur for clean up and repair of your property.

Spending Money

The debit or credit card have become the main way people spend money, however card swiping machines and ATMs can go offline during a weather event. In these situations you need good old cash to pay for necessities like gas and food. You can utilize money from your emergency fund to compensate, but it’s also advised to include at least two week’s worth of cash in your disaster budget for quick retrieval.