In case of a natural disaster or a cyber-attack, a financial emergency kit allows you to keep running your life. These documents would prepare you for the what-ifs of life. Bottom of Form
The kit starts with knowing where your vital paperwork is stored, and where are copies kept. Two suggested storage methods are: (1) a portable, fireproof, waterproof safe, and (2) digital storage with an electronic record of account numbers and sensitive information. This information can then be accessed on your phone. Also backup your data on both an external hard drive and on a cloud service.
The important documents that you should have in both a physical and digital format are:
Insurance policies, insurance contact information; prescriptions, medical records
Birth and marriage certificates; passports; driver’s license; Social Security cards
Mortgage information; car registration
Recent tax returns; employment information
Wills and deeds; stocks, bonds and other negotiable certificates
Bank, savings. Investment, and retirement account numbers
Pet medical records; pet identification tags
Recent utility bill, school registration to prove your legal place of residence
In addition to your financial documents, also plan to have these items in your emergency kit:
Water; non-perishable food; first aid kit; multi-purpose tool
Flashlight; battery-powered radio; extra batteries; cellphone, charger
Medications, medical items; sanitation, personal hygiene items
Extra cash; contact information of family and friends
Emergency blankets; maps of the area
Consider a hand-crank flashlight and radio to be able to use and charge when there’s no power.
To connect with family and others in emergency times, text instead of calling to avoid network congestion. Use apps, social media when cell networks are overloaded. Update your voicemail message to tell your location and status.
Be prepared with these simple things that require minimal money and a small-time investment.
For additional information on financial emergency kits, go to:
Have students identify situations in which this type of emergency kit would be appropriate.
Have students create a visual proposal (poster or slide presentation) to communicate the elements of an emergency kit.
What are reasons people might give for not preparing an emergency kit?
Describe methods that might be used to store financial documents for emergency situations.
While having an emergency fund is vital, putting this money in a low-yield checking account is not recommended. A certificate of deposit (CD) also may not be appropriate since your funds may be locked-up when the money is needed. For safe storage of your funds along with quick access and a better return, consider these alternatives:
High-yield savings account. These financial products are offered by banks to attract new savers. These accounts have high liquidity and are covered by federal deposit insurance; although, interest earned is taxable. Most high-yield savings accounts are available through online banks. Also be aware of fees, minimum balances, or a required minimum length of investment.
Money market fund. Usually offered by investment companies, these financial products are similar to high-yield savings accounts but do not have federal deposit insurance. However, they are protected by Securities Investor Protection Corporation (SIPC) insurance, usually covering amounts up to $1 million for investors.
Treasury bills and bonds. These debt instruments of the U.S. Treasury have a maturity ranging from 90 days to 30 years. While considered very safe, an investor may lose money if sold before it matures.
Ultra-short term bonds. For a higher yield with a bit more risk, consider ultra-short term bond exchange-traded funds (bond ETFs). These funds invest in corporate bonds, which are not guaranteed. However, it is possible to find funds that invest only in highly-rated bonds.
In each situation, be sure to consider the tax implications of earnings from these savings and investment products.
For additional information on emergency funds, click here.
Have students create a list of unexpected situations that might require accessing money from a person’s emergency fund.
Have students talk to others to determine where they keep money for emergencies.
What factors might a person consider when selecting a savings instrument for storing money for emergencies?
Describe actions a person might take to have more funds available for an emergency fund?
While you might think that saving for college, retirement, or buying home are the reasons Americans save, according to a recent survey, travel was reported as the top priority. In a study of 2,500 adult Americans representing varied demographic, geographic, economic, and social groups, 45 percent of respondents set aside money for traveling. This was especially true among younger respondents, who prefer travel experiences over savings to buy a home.
After travel, the main priorities for saving by Americans are:
for an emergency fund (37 percent)
for retirement (30 percent)
to buy a house (21 percent)
to buy a car, truck or motorcycle (20 percent)
For additional information on saving priorities, check out these two resources:
“Do you feel as if you’ll be in debt forever? You’re not alone.”
According to a CreditCards.com survey, 13 percent of Americans say they’ll never pay off all their loans, and another 8 percent say they won’t pay off what they owe until they’re 71 years old. While the results of the survey are discouraging, this Kiplinger article describes the following 10 reasons people can’t get out of debt and also provides suggestions for getting out of debt.
“Get out of debt the same way you learned to walk–one step at a time.”
This article describes Dave Ramsey’s seven steps that anyone can take to get out of debt and begin to manage their personal finances. These seven basic principles have been taught by Mr. Ramsey via radio, books, Financial Peace University, live events, and online. Listed below are the seven steps discussed in this article. Note: You can get more information about each step by clicking on the “Learn More” tab.
Begin by creating a $1,000 emergency fund.
Pay off all debt using the debt snowball .
Save 3 to 6 months of expenses in a savings account.
Invest 15 percent of household income into Roth IRAs and pre-tax retirement accounts.