As Hurricane Isaac bears down on New Orleans, my mind goes back seven years to some money lessons I learned from Hurricane Katrina.
I’ve been to New Orleans four times. My first time was a year or two before Hurricane Katrina, for the Christian Community Development Association (CCDA) annual conference.
The other times were in the months following Katrina, as our church aided in the cleanup in conjunction with World Hope International.
On those hurricane relief trips, I worked alongside a couple of homeowners to help them get rid of their rotted and moldy furnishings, walls, and floors. As we got to know the families, and heard them share their stories from the flood, I discovered a few financial lessons that could be learned from their experience.
4 Financial Lessons Learned from a Hurricane
1. Your Stuff Can Be Replaced 
– Wow, when I arrived in New Orleans two months after Katrina, I was shocked to see thousands and thousands of homes that were damaged, and unknown tons of personal belongings that had to be thrown away.
The Bible reminds us of how fleeting life is. And so it is with our stuff. It can be here today and gone tomorrow. So, we need to keep things in perspective and realize that our stuff can be replaced.
2. Make Sure You Have Enough Insurance (and the Right Kind) – It probably goes without saying, but if you live in a flood-prone area, you need to have flood insurance. But when it comes to your homeowners insurance, I recommend that you make sure your policy provides replacement value and not cash value (or actual value).
If you have a cash value – or actual value – policy, your insurance company will pay you based on what your stuff is worth today if you were to sell it. And of course, that price is based on the age and condition of the item.
A replacement value policy will pay you what it would cost to buy a new comparable item today. Often, there is little cost in premium price between the cash value and the replacement value policy, but there’s a huge difference in terms of the value you’ll receive if you choose the replacement value policy.
3. Keep Some Cash in a Safe Place – I think it is important to keep some cash on-hand in a safe, or to withdraw some money as soon as you hear of a major storm approaching.
That way you have some cash to buy food or supplies if your bank is damaged, the power goes out, or the phone lines are damaged, and you cannot use an ATM or pay with your debit or credit cards.
Of course, if you need to evacuate your home, be sure to take your cash with you!
4. Protect Important Documents & Things That Are Difficult to Replace – Buy a fireproof and waterproof safe to protect your important documents like your will, passport, financial account information, cash on hand, other valuables, etc.
Yeah, I know, safes used to be so big and expensive that only the wealthy had them. But they’re smaller, stronger, and more affordable than ever.
In fact, check out this Barbasol can safe on Amazon for under $10! And you can get better and stronger safes for $30 to $60 to $100 and up, depending on how large of a size you need.
Gratefully, I’ve never had to live through a major natural disaster like a hurricane.
Though when I was a teen, I remember a few times when we didn’t have electricity for 2-3 days – once due to a major ice storm and another because of a severe thunderstorm that knocked down hundreds of trees and electric poles.
With a little bit of foresight and planning, I believe we can minimize the financial impact of a disaster, and make it easier for us to get by after the storm, no matter what happens.
How ready are you if a natural disaster impacted your community?
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