Disaster preparedness: Tips for keeping cash on hand

by Center for Personal Finance editors

WASHINGTON (9/20/06)--Part of disaster preparation involves planning for cash needs. Resolve before the end of September--National Preparedness Month--to take steps to make sure you can stay solvent if a natural disaster, terrorist attack, or other emergency situation forces you to evacuate your home quickly (redcross.org).

The American Red Cross offers financial tips to help during the first few days or weeks following a disaster:

Keep an accessible stash of cash at home. Use cash or traveler's checks as a backup if local ATMs or local branches are temporarily shut down. Keep the cash in small denominations for easier use.

Set up an emergency fund. This is an essential component for your overall financial health, because it also can help with other financial crises such as unemployment, major repairs or legal fees. If you haven't started an emergency fund, consider having a set amount of money--say, $25 or $50--transferred from each paycheck directly into an easily accessible account such as a share/savings or money market account.

Pay off credit cards. And keep them paid off. You might need to draw on them to tide you over if you're forced from your home for an extended period of time.

Set up direct deposit and online bill payments. Make sure your paycheck will be deposited into your account even if you've evacuated, and avoid late fees by automating payments to creditors. There's enormous peace of mind knowing that at least some of your financial obligations continue to take care of themselves during this stressful time.

For more information, read "Disaster-Proof Your Important Papers" in the Home & Family Finance Resource Center money savvy section.