If you live in Wisconsin, odds are you too endured a wicked winter storm as well earlier this month. I went thru quite the adventure (which included lost power, downed trees, and manual bailing of two sump pumps)!

After that experience, I took some time to sketch out action items I need to take care of immediately to better prepare myself and my home for the next storm/power outage. I won’t be caught off guard again!

That exercise made me realize there are also steps that can be done to protect our financial lives – not just our home lives – before a “storm” hits. Here are five items to review so you too can be prepared!

1.) Inventory and video all possessions – If you are a loyal reader, you will recognize this as one of my 2024 to-dos! This is a very important step to take to assist in any claims on your renters or home owners policies. Should you ever have a loss events, this documentation will make it far easier to detail what items you owned to share with your insurance company. Be sure to keep the lists and video in cloud storage so it will be protected.

2.) Share net worth statement and estate plans – Should something happen to you, it’s essential that someone you trust knows where all your assets are located, what debt you may have, and other key information (like passwords, advisory contacts, insurance policies, etc). A net worth statement (with account numbers and contacts) can be used to communicate assets and debt. A secure document of other key information can also be prepared. Once prepared, ensure that a trusted contact or advisor has this information as well as copies of your estate planning documents.

3.) Ask for a “worst case” insurance review – I’m completing this step with my insurance advisor next week, asking “what would my policies cover if ____ happened to my car/house.” There is a lot of fine print in insurance policies that can have material impacts on your ultimate recovery during a loss event. It’s best to know the answer now and ensure you can live with the coverage you have – or take action to change it. Quantifying your potential exposures at the extremes is critical.

4.) Check emergency fund balances– I’ve written about this concept in the past but it’s worth repeating as it is such a smart strategy. Take a minute to compare the cash reserves/emergency fund you have at the moment with your current level of non-discretionary expenses for 6+ months (ie: costs you couldn’t easily eliminate if you lost your income. Note the # of months can change, depending on how fast you believe you could replace your income). If you have depleted those reserves in recent months or if you are spending more or have a job that’s harder to replace, take actions to rebuild those savings now before you need them. If you feel you don’t have sufficient access to cash, you may also wish to consider adding a home equity loan as a back-up emergency line of credit. You only pay interest if you draw on the line, so there’s no harm in having it open with a zero balance. And since approval is based on income, it’s essential to put it in place when times are good. If you need access to liquidity, you will be glad you had it established!

5.) Re-evaluate life insurance – In recent months, I have worked with quite a few clients that did not have sufficient life insurance to properly cover their risks (namely the cost of raising their young child if something happened to them). The time to prepare and hedge the risks associated with the loss of your life is now.

Hopefully this list is a helpful place for you to start preparing your financial lives well ahead of the storm.

Here’s to a calm 2024 from here on out – but if a storm comes, we will all be ready!

Onward we go,