How to Protect Your Finances from Emergency Situations

The Philippines is a country that’s no stranger to disasters. In fact, it even ranked third in the

The Philippines is a country that’s no stranger to disasters. In fact, it even ranked third in the 2018 World Risk Index’s list of the most disaster-prone countries. With its location within the Pacific Ring of Fire and typhoon belt, the Philippines is often faced with calamities such as earthquakes, typhoons, and floods. On top of these natural events, Filipinos also have to worry about more personal disasters such as death, job loss, and health emergencies.

But despite these vulnerabilities, the Filipino people are known for weathering storms with admirable resiliency. Despite overwhelming challenges, Filipinos find ways to regain a sense of normalcy. However, in times of economic uncertainty and an unpredictable post-pandemic outlook, resiliency is the bare minimum. Being proactive about securing their finances is one way for Filipinos to be prepared for emergencies. Choosing to do so will help establish a sturdy financial foundation not just for individuals and their families, but for the whole nation on a collective level.

How Financially Prepared Are Filipinos for Disasters?

Filipinos must work to secure their financial reserves in times of disaster. According to a study from the Harvard Humanitarian Initiative (HHI), 74 percent of Filipinos reported that they were unable to invest in personal disaster preparedness efforts. In addition, only 17 percent said they are “sufficiently insured” against the impacts of natural disasters. These statistics can be alarming if we think about how frequently the country encounters uncontrollable events that lead to significant property damage and displacement.

But even in the face of seemingly insurmountable disasters, there are steps that one can take to ensure financial security. These precautions are necessary to prevent depleted life savings that lead to disrupted plans in the aftermath of an emergency.

Five Ways to Protect Your Finances

Regardless of how much they earn, everyone should have the ability to protect their finances. In this section, we’ll discuss some of the ways you can ensure financial protection when faced with unexpected circumstances that have potential lifelong impacts.

Determine the Risks You Might Face

Planning your financial protection starts with knowing your risks. Take a look at various aspects that comprise your life right now: your economic situation, assets, dependents, place of residence, and medical history. These all play into determining financial risks to your health, properties, and everyday life.

  • Health Risks

Do you have health conditions, live with an immunocompromised person, or have a family history of critical diseases? If you believe that you or your loved ones are more vulnerable to health risks, getting insured can give you the peace of mind you need. During calamities, people with health vulnerabilities might require more medical care, thus necessitating sufficient insurance protection.

Death and medical episodes such as strokes, heart attacks, and severe allergic reactions also count as disasters, albeit more personal. If you and your family frequently encounter health-related risks, you should expect future expenses such as funeral costs and ongoing medical care. Getting health and life insurance with adequate coverage can keep you financially protected during times of disaster⁠—natural or otherwise.

You can also potentially save on high medical expenses by opting for a healthier lifestyle. For instance, you can avoid unhealthy habits like smoking and drinking and commit to getting regular check-ups. In doing so, you can save money that would have otherwise taken a large chunk of your emergency savings and used up your insurance plan.

  • Property Risks

If you live in an area that’s prone to calamities such as flooding, you should consider the property damage and losses you might incur. Homes and cars are highly valuable and are considered lifetime investments. Often, people need to take out loans to secure these investments. Getting these properties insured helps you protect your investments and avoid the pile-up of expenses such as loan repayments and recovery costs. Opting for homeowner, renter, or auto insurance plans that cover disaster-driven losses and damages will ease the burden of recuperation and help you avoid debt when recovery expenses become too large.

Just as you can manage your health risks, you can also take steps to fortify your properties to prevent large expenses. For example, you can take on home improvement projects to fix existing damage such as holes, cracks, leaks, and faulty wiring.

  • General Everyday Risks

Even if you’re young and not yet saddled with familial responsibilities, you’re still vulnerable to the curveballs that can leave huge dents in your wallet. As such, it would be a good idea to sign up for an easy-to-manage insurance plan that doubles as a savings fund. Robinsons Bank’s IPONsurance savings product, for instance, gives you free life insurance coverage for a minimum deposit. It pays to be prepared, even if disasters are not on the horizon.

Build a Robust Emergency Fund

Having an always-ready pool of funds is a fundamental rule that one should follow to stay financially prepared for emergencies. Consider depositing regularly into a savings account that allows you to easily access your funds and transact via cashless and physical methods. It’s advisable to keep your emergency funds separate from your main bank accounts to diversify your savings and dispel the temptation of spending your emergency funds.

Financial experts generally recommend that your emergency fund be worth 3 to 6 times your monthly income. Having this much in your fund will help you with long-term disaster recovery expenses that standard government-mandated benefits may not be able to cover.  Having a fund that equates to half a year’s worth of salary may seem like a lot to an average earner, but consistent depositing is the key. Every pay cutoff, make it a point to deposit an amount you’re comfortable with into your rainy-day fund. You may be surprised at how much you’ve been able to save in just a few months.

If you’re having trouble determining how much to funnel into your emergency savings account, think about how much you spend on a weekly and monthly basis. This includes expenses for groceries, medicine, rent, loans, and bills, which must be partially (if not completely) covered by your emergency fund.

Build Your Credit Line

Contrary to popular belief, credit cards are not just for shopping. Credit Cards Philippines-based households often associate with shopping sprees can also be lifesavers when cash is not immediately available. In the event of a disaster such as widespread flooding or fire, you’re likely to lose valuable items such as your phone. It’s also possible for banks to be unavailable, leaving you with no way to immediately access your money. Having a credit card will come in handy when you need to address short-term needs such as food, medical supplies, and clothing. A credit card can also help you pay instantly for minor post-disaster repairs in case you still need to wait for your insurance claim.

Additionally, credit cards can help you make ongoing payments for bills and other recurring expenses, including insurance premiums. Paying your premiums via credit card allows you to keep up with your payments and maintain your insurance plans. Co-branded cards such as Robinsons Bank’s Pru Life UK Credit Card simplify the enrollment and payment process for insurance, helping you stay twice as protected from financial emergencies.

Keep Your Financial Records Secure

Personal and financial records serve as your proof of identity, which is crucial for passing background checks and accessing your savings, government benefits, and insurance reimbursements. Use a waterproof or plastic envelope to keep vital documents and other pertinent information sealed and protected. Keep the folder in a secure place that’s accessible during an emergency. Documents that should be in your folder include:

  • Deeds of ownership or lease contracts
  • Insurance policies
  • Medical information
  • Last will and testament
  • Bank statements and other bank information
  • IDs and personal documents (i.e., birth certificates, adoption papers, marriage contracts, and passports)

Aside from having the original copies, you should also keep physical and digital copies of your documents. To secure additional backup copies, keep the digital copies on a flash drive and duplicate them into an online cloud storage service.

Stay Aware of Scams

Filipinos are known for having a bayanihan spirit, but sadly, this can be exploited by malicious actors on the internet. Consumer fraud is responsible for over P2 billion in losses over the past three years, making financial crimes—including online scams—a serious threat to your savings. In the first quarter of 2022 alone, 42 percent of Filipinos who experienced online fraud attempts encountered phishing attacks. Additionally, 38 percent reported that they were targeted through fraud schemes such as fake gift cards.

Crowdfunding and donation drives are common during major calamities, especially during typhoon season. With the increasing popularity of digital banking and alternative payment channels such as e-wallets, scamming well-meaning donors is just as easy as launching a donation campaign. Even though institutions are now proactively educating Filipinos on financial crimes, scams—especially online scams—can still successfully target less tech-savvy people such as the elderly.

To avoid falling victim to scams masquerading as legitimate donation drives, keep an eye out for aggressive cash donation requests from newly created email or social media accounts. You should also steer clear of donation texts from unknown numbers and suspicious-looking emails from accounts trying to pass off as official entities.

Secure Your Finances, Secure Your Future

Our finances are never completely risk-free, but we can take the steps necessary to keep them intact and accessible during the times we need them the most. Disasters come in many forms and have long-term effects that could take years, if not decades, to recover from. Secure your future today and start protecting your hard-earned money to stay prepared for rainy days.