Financial Lessons From Hurricane Sandy

One year ago, the East Coast was being ravaged by the impact of Hurricane Sandy. For those of us in New Jersey and New York, the impact was somewhere between profound and complete devastation. We witnessed the best in human traits and the worst; from those who selflessly helped others to those who, ignoring the warnings, put others needlessly at risk. We witnessed those who were well prepared for the terrible onslaught and those who did nothing but become victims.

As a financial planner, I see these traits in many people as it relates to their willingness and ability to consider their needs and plan for their futures. Some have turned thought into action and are well on their way to living their preferred futures, while others have done nothing but put themselves deeper and deeper into a hole of despair and failure.

The pictures of flooded streets, demolished homes and ravaged neighborhoods remind us of what we endured last year. For those of us who were safely in our homes but without electricity, these are new and stirring images. Most importantly, we need to take a moment to remember the ordeal that many live through and those who perished, and celebrate the many acts of courage and generosity extended to others in need.

Our financial lives can be just as fragile as our infrastructure was a year ago, unless we take active steps to prepare for potential problems and mitigate risks wherever possible. In preparation of the impending storm, people bought generators, stocked supplies, and created contingency plans. These same steps are necessary and important in considering what we need to live a financially responsible and appropriate lives. Have you reviewed or considered some of the following:

1. Do you have an emergency fund appropriate to cover your needs in case of loss of income?
2. Have you reviewed your insurance policies for appropriate amounts of coverage, deductibles and policy limits?
3. Are you saving systematically each pay period?
4. Do you have a written financial plan?
5. Do you have a Will and other appropriate estate planning documents, including powers of attorney?
6. Have you discussed tax savings opportunities with your CPA?
7. Does your portfolio reflect your current ability to withstand risk?

Just like the impact of a hurricane, our financial lives can be reduced to rubble without proper planning and consideration of our needs and goals within our given financial constraints. But with attention, thought and action, we are better able to withstand the onslaught of unexpected disasters. The aftermath of Hurricane Sandy is a great lesson in resilience—a necessary character trait for us all.