Mitigation, defined as the ability to take measures to be ready for a natural calamity in advance, is an important step that reduces the impact of the mishap.

How can you be financially prepared for a natural calamity
Product Partner Thursday, January 18, 2018 - 13:59

Natural disasters, be it manmade or natural, generally strike without any warning. Flash floods, droughts, earthquakes, cyclones, severe thunderstorms, landslides, and famine are some of the natural disasters that have been plaguing India for years now. While the tragic tsunami claimed more than 4,000 lives in the year 2004, in 2015, Chennai witnessed disastrous floods that led to loss of lives as well as property. This just goes to prove life’s unpredictability and the need to be prepared to handle such fatal situations. Although the ability to predict the occurrence of any natural disaster is not under our control but being prepared for it, definitely is. Especially when it comes to keeping one’s finances sorted, a little of bit of meticulous planning can go a long way.

How does advance financial planning help?

At the time of a natural disaster, one doesn't get any time to decide any financial move. Hence, it's important to prepare for the possibility of a calamity and not wait till it actually strikes. Mitigation, defined as the ability to take measures to be ready for a natural calamity in advance, is an important step that reduces the impact of the mishap. In fact, mitigation is a crucial part of disaster planning. It majorly includes financial planning. Hence, advance financial planning can help one in the following ways:

  • Protect their family's life, health, and property.
  • It makes transition of life easier and smoother.
  • It takes care of the emergency need of funds.
  • Saves one and their family from a state of helplessness.
  • One can easily recover the amount of losses incurred.

But as mentioned earlier, it is important to be meticulous while chalking out financial planning for a natural disaster. Here are a few tips that can help one to be financially secure to be able to use it as a shield during the unfortunate event of a natural calamity:

First things first, get an insurance: Perhaps the most important thing on one’s checklist of financial planning has to be insurance. However, unfortunately, sometimes one doesn't follow the most obvious path. It should be kept in mind that a natural disaster can not only lead to damage of property but its aftermath can be equally devastating. What if the calamity affects the organisation one works for and shuts down temporarily or even worse, permanently? What if one's family gets injured and they face a pressing need for money? Does one's auto insurance provide a rental car in case the insured person's car gets damaged? Does one have disability insurance in case they are unable to work after getting affected by the calamity? These are important questions that one needs to ask before getting insurance and also make sure that all the health insurance, car insurance, and two-wheeler insurance plans answer these prominent questions.

Keeping an account of one’s belongings: If one’s property gets damaged, the greater proof of ownership they have, the better. It is always advisable to go around the house and record a video of every valuable item one owns. They should also keep every documentation like warranty cards, receipt of purchase, among others, safely. It is important to keep receipts of high-end appliances. This will make it easy for the owner to claim insurance.

Keeping some cash available all the time: Natural disasters often end up affecting an entire area. Hence, once a calamity strikes, it is most likely that card machines won’t be functioning properly for some time. It is also likely that ATMs would also be out of service. This is why it is important to keep some cash stored at home. This will not only turn out to be of great financial help but it will be instrumental in restructuring one’s life. One doesn’t have to store lakhs and lakhs of rupees at home. A few thousands can help them sustain and will take care of emergency necessities at the time of a disaster.

Keep a credit card: A lot of people consider credit cards to be a financial burden. However, during the time of a calamity, a credit card can prove to be useful. One can get a credit card that doesn’t require the cardholder to pay an annual fee and still have it for such times of emergency. Before applying, one can compare credit cards that are available in India and can choose one according to their needs. The availability of a credit card will make making emergency expenditures easy and hassle-free. One doesn’t need to approach a bank for a loan to combat a crisis situation. They can use a credit card to take care of such expenses in case of a natural disaster.

Making sure that one has robust savings helps a lot: Last but not the least, one should have a robust saving. Be it in the form of mutual funds, recurring deposits, or even a fixed deposit, having a good amount of savings can see one through any natural disaster. A good saving scheme is not only one’s financial back-up but it also assures ample financial security. Good research can provide one with lots of good options of investment that will yield good returns. One’s savings is their biggest armour against any kind of a natural disaster.

Careful and well-researched financial planning can save one from facing hardship once an unfortunate event like a calamity strikes, check for more. it’s always better to be safe than sorry.

This article has been produced by TNM Marquee in association with BankBazaar.