NerdWallet: How to prepare for emergencies that can happen at any time and be costly

When a power outage knocked out electricity to a multistate region in 2003, Gabriella Barthlow, a financial coach in the Detroit area, was prepared. She had enough money on hand to buy food for herself and her two young children, plus put gas in her car in case they needed to leave home.

"I was so happy I had that cash," she recalls. Now, Barthlow encourages her clients to be similarly ready for unexpected events. Power outages, weather interruptions and other disasters can inflict chaos and take a financial toll -- often with little warning -- but being prepared can help minimize the damage.

Here are steps you can take to make sure you're ready for the next emergency.

Set aside physical cash

As Barthlow found, cash can be crucial when you're facing an extended power outage since machines that accept debit and credit cards might not be running. Bernie Carr, author of "The Prepper's Pocket Guide" and founder of apartmentprepper.com, said you want to keep enough cash on hand to cover gas and food for several days and carry at least some of it with you.

"I like to keep $40 in cash in my car or purse so I know I can always at least get home in case the registers aren't working," Carr said.

That money is in addition to an emergency savings fund, which is stored in a savings account to help you get through a period of unexpected hardship or income loss. Financial experts often recommend you build up three to six months worth of expenses into that account, but even much smaller amounts will help stabilize your finances.

Build up supplies slowly

Carr suggests purchasing supplies over time that could help you survive temporary disruptions to power, water and other utilities, as can happen during natural disasters.

"When you next go grocery shopping, set aside $10 and pick up bottled water or your favorite food can or instant oatmeal," she suggested. On the next visit, put together a first aid kit with items such as bandages and antibacterial wipes, or flashlights and extra batteries. Other types of equipment such as a water filter, camping stove and solar lights can also be helpful.

"A lot of emergency gear is also camping equipment, so there are a lot of sales right before and right after summer," Carr said.

Gather your important documents

Barthlow suggests collecting your essential documents -- contact numbers; insurance information; recent bank account statements; identity cards; any marriage, birth and divorce certificates -- and putting them in a waterproof, fireproof box, as well as scanning and storing them online in a password-protected account or on a flash drive.

"I also ask people to declutter their life, because if you're saving a lot of papers, then you can't find the things you need," Barthlow said.

With this streamlined approach, she said, "I could get out of my house in an hour or less and know where all the key documents are."

January can be the ideal time to take on that challenge, said Paul Golden, spokesman for the National Endowment for Financial Education, a not-for-profit that promotes financial education and well-being. "The new year can be a good time to get preparatory work done. It's the time of year when people are taking stock, cleaning up documents and resolving to be better in every way."

Protect your credit

During an emergency, it can be easy to miss a bill or credit card payment, which can hurt your credit, Golden warned.

"If you foresee a disruption in on-time payments with creditors, contact each one and let them know of your situation. Maybe ask for an extension," he suggested.

In cases of widespread disruptions, such as the COVID-19 pandemic or power outages, companies may offer adjusted payment plans to those impacted, but you may have to ask or opt into it.

Fraudsters also frequently target victims of natural disasters, so be on guard. "Be on heightened alert with emails sent to you or phone calls and check who you are talking to before sharing any account information," Golden said.

If you get a phone call from someone claiming to be your insurance company or financial institution, he suggested hanging up and calling customer service to confirm you are in fact speaking with them.

Begin the recovery process

Once the emergency passes, it's time to pick up the pieces: File any insurance claims, rebuild spent emergency savings and replace used up supplies. Golden suggests taking detailed notes of all customer service interactions to make it easier to follow up and track reimbursements. The website DisasterAssistance.gov provides information on local recovery efforts, and 211.org can connect you to community resources such as food banks.

Surviving an emergency can inspire you to get ready for the next one. Experiencing Hurricane Ike in 2008 is what motivated Carr, who lived in Houston at the time, to focus more on preparedness.

Carr said everyone should review their emergency supplies at least once a year. "It should be a regular part of life, like having car insurance. An emergency will inevitably happen, and most people are unprepared because they didn't think about it."

This column was provided to The Associated Press by the personal finance website NerdWallet. The content is for educational and informational purposes and does not constitute investment advice.

Kimberly Palmer is a personal finance expert at NerdWallet and author of "Smart Mom, Rich Mom." Email: kpalmer@nerdwallet.com. Twitter: @KimberlyPalmer.

RELATED LINKS:

NerdWallet: Emergency fund: What it is and why it matters https://bit.ly/nerdwallet-banking-emergency-fund-why-it-matters

Government disaster assistance https://www.disasterassistance.gov/