Natural disasters such as hurricanes, wildfires, floods, tornadoes, and earthquakes can paralyze your finances when they strike. Unfortunately, many people fail to prepare financially and are caught unaware when natural disasters hit.

Here are two ways to prepare financially in the event of a natural disaster.

1. Create an Emergency Fund

A Federal Reserve survey shows that about 40% of American adults cannot fund a $400 emergency by savings, cash, or credit card charge.

One way to prepare for a natural disaster is by having an emergency fund account. You'll be set to deal with the financial impact of a future natural disaster if you can save up a year's value of expenditure in your emergency fund account. A good strategy is to put some money in your emergency account immediately after receiving your paycheck, lest you spend it all on other expenses.

Some disasters disrupt power and getting cash from your bank or ATM becomes impossible. It's a good idea to secure some cash in an emergency kit to cover necessities, such as food and housing.

2. Ensure You Have Comprehensive Insurance Coverage

It is wise to insure your home and physical assets to prepare for potential calamity. Good insurance coverage will help you bounce back to your everyday life after a disaster.

Make sure that your insurance coverage is up to date and that you are adequately insured. Primary home or rental insurance doesn't guarantee you receiving compensation for all damages caused by natural disasters. Some calamities, like floods and earthquakes, require you to get additional coverage.

Natural disasters are unavoidable, but how we prepare for them matters. It's best to financially prepare to be in a position to recover quickly after a natural disaster.

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