As emergency managers, it is our job to educate the public on disaster preparedness, both at home and in the community. FEMA has been at this for some time now, and the results are encouraging. Year after year, more Americans are taking preparedness actions. But as I travel the country, I cannot help but feel we have been missing an essential component of the preparedness message. Together, we have to start talking about the importance of financial health and its relationship to individual preparedness. Americans need to start saving for emergencies, both large and small. And they need to review their insurance coverage.
FEMA’s research, and that of our partners, now paints a compelling picture on the link between financial wellness and disaster preparedness. We know that Americans with higher income take more preparedness actions. We also know that emergency savings makes a big difference in helping families recover more quickly after disasters. However, a 2017 Federal Reserve report found 40 percent adults would not have the cash readily available if faced with a $400 emergency expense. So, at a time when the evidence points toward the importance of savings, many Americans are not in a position to take action.
Together, we can encourage our communities to start saving. As FEMA partners with nonprofit and private sector leaders in financial wellness, we continue to share messaging and resources that can be used to help build financial resilience in communities. For instance, Operation HOPE founder John Hope Bryant talks about the importance of building credit in a recent FEMA PrepTalk. Rebecca Wiggins, executive director of FEMA partner the Association for Financial Counseling & Planning Education®, shares tips on how to talk about emergency savings on a recent FEMA Podcast. The message is clear: Americans of all income levels can and should focus on building up their financial wellness to protect the lives they have built. We have to help them get there. Those stories and more can be found at PrepTalks and podcasts, respectively.
As we continue sharing the message of the importance of saving, we also have to expand the definition of financial preparedness. A large part of protecting every American family’s financial future is insurance. Unfortunately, we have an insurance gap (the difference between what is insured and what is insurable) in this country: approximately 70 percent of disaster losses are uninsured. Those who lack insurance will take longer to recover – and some may never fully recover – adding tragedy to the disaster.
We have made financial preparedness a top priority in our Strategic Plan and I encourage you and your organizations to partner with us in making these discussions central to your message every chance that you get. Homeowners and renters alike should call their insurance agent to check that they have the right coverage for all hazards. And we all must review our household budget for opportunities to set aside emergency savings. If we can accomplish those two goals, the nation will be well on its way to building a culture of preparedness.