Most people understand the importance of having some emergency funds, but unfortunately not many people consider it in their financial planning.

If you think this is important, following are some simple tips to help you to be prepared financially for an emergency.

Make a Household Inventory

Create a household inventory for items that have significant value and locate all the important financial and family documents. Store the original documents in waterproof bags in a safe deposit box or durable “evacuation box” and photocopies in a safe place. Use a CD to back up key documents on your computer. If you have relatives who live outside the area, ask if you could store the copies with them.

Understand Your Insurance Policies

Understand what types of losses your renters or homeowners insurance covers. Ask your insurance agent or financial planner about additional coverage for floods, earthquakes, home offices and big-ticket items. Keep copies of your policies in a safe place along with your other important papers. Do the same with your health or life insurance if you have any.

Keep an Emergency Savings Account

This account should be separate from any other account and contain enough money to cover at least three months of living expenses. Do your best to save $100 to $300 each month in this account without fail.

Keep Some Cash Accessible

Keep at least $300 in cash at home in a place where you can get to it quickly in case of a sudden evacuation. The money should be in small denominations for easier use.

Create and Maintain a List of Emergency Contacts

Keep a list of important emergency contacts, including direct family members, doctors, medical facilities, numbers for your bank, insurance agent and company, lawyer and financial planner/advisor. Credit card 1-800 numbers can help you retrieve your account information quickly.

Follow the tips above to make sure that you and your loved ones are protected financially. From the aftermath of recent natural disasters, we have learned that not many Americans are financially prepared for an emergency. So, start considering this important aspect in your personal finance plan.

Hope you find the tips useful.

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This entry was posted on Tuesday, November 4th, 2008 at 11:33 am and is filed under Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.