Financial Disaster Preparedness: Four Steps
September 28, 2017 by Arthur Orzame, CPA
Natural and manmade disasters occur all-too-often and while we cannot always anticipate the where and when, we can prepare for the possibility in our own city, town or home.
Having a plan is key to being prepared for a disaster. First and foremost is personal safety — that of you and your family. Second is ensuring the survival of your records. Losing your family records including taxes, financial planning, banking, and other important archived documents in a fire, flood or other disaster can make recovery much more difficult. But it’s easy to take steps now to safeguard your valuable documents and records and make life after a disaster a lot easier.
Listed below are four essential tips for individuals to consider when preparing for a disaster. Business preparation varies, and we encourage you to contact Gordon Advisors for more information on how to prepare your business for a disaster.
1) Create and update an emergency plan
Every individual and family should have an emergency plan. If you need help creating one, Make A Plan has everything you need to consider and provides several helpful templates you can use to create your own documents to share with family members. Don’t forget to review your plan at least annually or when your living circumstance change. Among the many aspects of an emergency plan are how to best receive severe weather information, preferred evacuation routes, and special considerations for kids, commuters and pets.
2) Digital recordkeeping
Keeping your records safe is key to a quick recovery following a disaster. Take advantage of paperless recordkeeping for financial and tax records. Many people receive bank statements and documents by email. This method is an outstanding way to secure financial records. Important tax records such as W-2s, tax returns and other paper documents should be scanned electronically and saved on a flash drive or jump drive. These drives should be stored in a place that is waterproof and fireproof, like a document safe or safety deposit box. Don’t forget to periodically scan and save newer documents to ensure your electronic records are up to date.
3) Document valuables
Creating an inventory of your possessions is another important thing you should do to make disaster recovery easier. The IRS has disaster loss workbooks for individuals that can help you compile a room-by-room list of your belongings and valuables. Another option is to photograph or videotape the contents of your home, especially items of greater value. You should store the photos in a safe place away from the geographic area at risk. This will help you recall and prove the market value of items for insurance loss claims.
4) Contact your accountant
If you have been impacted by a federally declared disaster, you may also order copies or transcripts of previously filed tax returns free of charge from the IRS. Another great website for people with immediate disaster-related needs is DisasterAssistance.gov, which provides fast and simple resources for getting assistance during and after an active federal disaster. Ultimately, when disaster strikes, your trusted financial advisor will be your greatest resource with valuable information you can request if your records are destroyed.