When a Natural Disaster Turns into a Financial Disaster

After the devastating Hurricane Sandy rocked the east coast, many people are feeling the after effects of such a horrific natural disaster.  The destruction of property and the loss of power all lead people to spend more money than initially in their budgets.  If not properly prepared for a storm or predicted disaster, this can lead a person straight on the path to future financial struggles.  With hundreds of thousands of people still without power over a week after the storm, many are feeling the financial effects of Hurricane Sandy.  

In hindsight, many people realize, that although it may be costly, being prepared for a storm pays off.  It seems sometimes it is worth the financial risk to prepare with food, water and generator in case of a natural disaster.  If not prepared, when without power and limited stores open for food, you may find yourself spending a lot of money on take-out food, bottles of water, and even hotel rooms to beat the cold, darkness and boredom of a house without power.   Because of the scarcity of these things and high demand, you may find yourself paying top dollar for simple things such as water, coffee and gasoline.  Both the pre-planning and post measures of a storm can hurt one's wallet if the person has not been preparing with an emergency fund.  An emergency fund is something I always advise my clients to save for and put into a budget.  If adequately financed, you may be able to take from this fund to not only prepare for the storm, but cover the expenses after.  

If your house or property is damaged in a storm, and was not adequately covered by insurance, you may find yourself paying out of pocket for the damages.  I advise that if possible you try to pay for these expenses out of pocket (via emergency fund) rather than put them on a high interest credit card.  Attempt to make a claim with your insurance company regardless, they may be able to help you cover some of the costs even if the accident is not completely covered.  

If you work an hourly position, you may find yourself out of work for a few days while towns restore power and order.  This may put your income below what you planned for the month.  This easily can lead someone even deeper into debt, after spending more than you planned (before and after the storm) as well as taking in less than you expected for your pay period.  

Many people avoid preparing because they think the news media is hyping up the disaster.  This can be an unwise move that can land you into spending more money than if you had prepared when the storm was first being tracked.  But many people who didn't prepare by getting gas in their cars are feeling the after effects of the frenzy with a gas shortage.  

Always remember that there are shelters and resources for people to use who have been affected by the storm.  These shelters are free and open to the public and should be utilized if you house was affected by the storm.  Going to a shelter for a few days is a much more financially responsible decision than buying hotel rooms for your family for a few days.