How to prep your finances for a natural disaster

A natural disaster can wipe out everything it touches. It's important to have a plan in place for you, your loved ones and your finances. JJ Montanaro, a CERTIFIED FINANCIAL PLANNER™ with USAA, offers five steps you can take now to help you be more prepared when a disaster strikes.

Build an emergency fund.

Everyone should have an emergency fund. It's especially critical after a natural disaster. Save at least three to six months of your expenses in a secure place that you can access easily, such as a savings account. Pay yourself first and build up your savings and emergency funds.

The last thing you need when a disaster strikes is to lose access to your cash. If a natural disaster heads your way, withdraw cash to prepare. Remember to save your receipts for any disaster-related cash purchases, because your insurance company may reimburse some of your expenses.

Review your insurance policy coverage.

Evaluate your policies regularly and note their dollar limits, what they cover and what you must pay if you file a claim. You should insure your home for at least the minimum estimated replacement cost recommended by your insurance company.

Check for insurance gaps.

The worst time to learn you don't have enough insurance is after a disaster strikes. For example, most homeowners insurance doesn't cover flood damage or lost belongings. It may have limits on certain valuable property that could leave you at risk. Because your homeowners insurance may not cover all your needs, consider buying additional protection:

• Earthquake insurance
• Flood insurance
• Valuable Personal Property insurance
• Umbrella insurance

Your insurance company may help assess your property risks and build a plan that fits your needs.

If you rent an apartment or home, renters insurance will help replace personal belongings damaged or lost in a disaster. It may provide temporary housing while you wait for repairs.

Take inventory of your belongings.

Most people would struggle to come up with an accurate list of everything they own from memory. This makes the insurance claim process difficult. Start with a written inventory and make a video tour of your home. Store the inventory away from your house. You may use a safe-deposit box at a local bank or a home inventory app. Update the inventory at least once a year or whenever you make a major purchase.

Use online money-management tools.

Use a savings account that offers automatic payment plans to pay bills. Get direct deposit of your paycheck and any other income to keep the cash flowing. Use budgeting and other tools to keep track of your finances, so you don't rack up late fees on missed payments or damage your credit score.