How Do You Prepare for Financial Emergencies?

When unforeseen events such as natural disasters or technology outages occur, being financially prepared can greatly reduce stress and uncertainty. Understanding how to manage your finances during these times is more important than ever. Here at IMCU, we’re outlining practical steps to ensure you’re financially prepared for the unexpected—after all, it’s not a matter of “if” an emergency will happen but rather “when.” 

What Is Financial Preparedness?

Financial preparedness refers to the proactive steps that individuals or businesses take to manage their money and ensure they have sufficient resources during unexpected situations—like natural disasters, economic downturns, or technological failures. The core of financial preparedness is developing a comprehensive plan that includes easy access to funds, minimizing financial disruptions, and maintaining financial stability during emergencies.

How Do You Prepare for an Emergency Situation?

Three important financial steps when preparing for an emergency situation are: 

  1. Set Up An Emergency Fund

An emergency fund acts as a financial buffer to help you manage without needing to take on debt if your income is disrupted or unexpected expenses come up. Financial experts often recommend saving enough money to cover three to six months of living expenses. You can find tools online like an emergency fund calculator to help you determine how much money you should save for your emergency fund.

It’s a good idea to keep your emergency fund separate from your other accounts. It’s recommended that you have several options to fall back on:

  • With IMCU’s Membership Savings account, you’ll have an easy way to build your emergency fund and quick access to your money when you need it. With a $5 initial deposit and minimum balance, no monthly fee, earned dividends, you’ll have all the features you need for your emergency savings. 
  1. Diversify Your Payment Methods

Another aspect of financial preparedness for emergencies is to maintain multiple forms of payment such as cash, checks, debit, and credit cards. For example, if a widespread power outage disables electronic payment systems, having cash on hand can be invaluable. Or, as we saw with the COVID-19 pandemic, concerns about the virus living on surfaces led to many businesses refusing cash and only accepting electronic payments. 

  • Open a separate checking account. With the IMCU checking account and free affinity debit card, providing easy access to your funds if/when needed.
  • Add a credit card in addition to a debit card, even if you only use it for emergencies. IMCU offers a variety of credit card options including a Jumpstart credit card for young adults, intended for those interested in a low-limit, as well as credit cards that offer rewards.
  1. Secure Adequate Insurance Coverage

Insurance also plays a critical role in financial preparedness. Adequate coverage on property, health, and life insurance can mitigate the financial impact of disasters. It’s important to regularly review and adjust your insurance policies to make sure your coverage is aligned with your current needs and asset values. 

Financial preparation for an emergency situation should begin well before the crisis. By taking some simple steps now, you can equip yourself to handle unexpected events without compromising your financial health. 

How Do You Prepare for Disasters and Emergencies?

Financial preparedness for disasters should include: 

  1. Check your emergency fund and make sure that you’re on-track with your savings goals.
  2. Prepare a mixture of payment methods with cash on-hand and credit cards with a sufficient credit limit to cover necessary expenses,
  3. Review and update your insurance policies to cover any potential damages from natural disasters.
  4. Secure your financial documents in a waterproof and fireproof safe so you can quickly reach them when needed, aiding in faster recovery and claims processing. 

 

How Much Cash Should You Carry for an Emergency?

The amount of cash you should carry for an emergency depends on your daily expenses and the specific risks in your area. As a general guideline, it’s advisable to have enough cash to cover essential expenses for at least three to seven days. This typically ranges from $100 to $500. Consider including smaller denominations to make transactions easier if electronic payment systems are down.

Your cash reserve should be part of your broader emergency preparedness plan that includes accessible funds in your bank accounts and the ability to withdraw cash from ATMs when needed. Being part of a reliable financial institution like IMCU, which is connected to extensive ATM networks like Alliance One and Allpoint, provides peace of mind and convenience. These networks allow you to withdraw cash from many locations, ensuring that you’re never without access to your funds. Allpoint ATMs are located in retailers like Target, CVS Pharmacy, Walgreens and Speedway. Alliance One ATMs are available through participating credit unions.

Build a Strong Financial Foundation With IMCU

Preparing for financial emergencies is a proactive step that we can help you take. Here at IMCU, we’re dedicated to helping our members build a strong financial foundation for any situation. You can stay financially savvy and ready—no matter what challenges come your way. 

Next Steps: 

Visit our website to learn more about how we can help. 

Contact us to learn more about our services and resources. 

Join Indiana Members Credit Union today to secure your financial future.