Hope for the Best, Prepare for the Worst

As the mother of three kids under five, I have no choice but to be prepared at all times. That means drinks, snacks, a change of clothes, diapers, First-Aid Kit and doctors' phone numbers travel with us always.

But while I'm completely prepared for whatever happens on the playground, if a natural disaster were to sweep my house away, I'd be toast.

Clearly, I need to prepare. But how? I recently heard a pundit suggest that we all buy second homes so we have a place to go if our main homes are destroyed. Hmmm. While I do dream of that condo on the beach, the reality is, between my kids and my mortgage, I'm lucky to afford one house.

Thankfully, there are more realistic strategies that can help us all financially prepare for the worst. And with Hurricane Rita bearing down on a Gulf Coast still reeling from Katrina, this, unfortunately, is not a theoretical issue for many Americans.

Scan Your Documents

First and foremost, make sure you have the proper insurance. If you're in a flood zone, you better have flood insurance. If you own a condo or a townhouse, get condo insurance so that the interior and your belongings are insured. (I just did that this week.) Renters should do the same. Just because you don't own your apartment doesn't mean your stuff isn't valuable.

The American Red Cross then suggests you take inventory of all your household possessions. So make a list. Or stand in the middle of the room and take a picture of yourself and your stuff, says Harold Evensky, a CFP and chairman of Evensky & Katz, in Coral Gables, Fla. That will act as proof for the insurance companies if you ever need to submit a claim.

Then, take advantage of technology and consider scanning all your important documents onto a secure Web site, suggests Herb Daroff, a C.F.P. and J.D. at Baystate Financial Services in Boston.