Title : Emergency tool kit of family finances

Abhay :  Hi Sameer, we generally don’t hear about Emergency Tool Kit in family finances. What is the concept about?

Sameer : All our lives, each one of us, tries to minimize the risks in our lives. We save and invest for the secure future of our family.
We buy insurance, write a will, ensure nomination, seek safety in fixed deposits…and so on. But there is one thing that we often miss-out…i.e… our preparedness in facing a disaster. For example, you may have bought a fire cover for your property….but how would you react when there is actually a fire. For this, you of course need a fire extinguisher. Most independent houses don’t keep fire extinguishers. If they have, not all family members would know how to use it?
You see…….accidents do occur…and they don’t knock before coming. So, we better be prepared irrespective of whether the accidents will ever occur or not.

Abhay : Under emergency tool kit, you speak about a concept of Bug-out-Bag (BOB). What is that?

Sameer : Bug-out-Bag or BOB is a portable bag of items that helps us survive for 72 hours in an emergency situation. This is generally advised to people who are going for extreme sports, mountain trails, or live in places with extreme weather conditions.
Due to global warming, the nature’s fury is rising and events like floods, storms and forest fires are occurring at greater pace then in history.
The primary purpose of a bug-out bag is to allow one to evacuate quickly if a disaster should strike. Besides the family members, it will be the most important asset to carry out of your house.

Abhay : Understood the concept ! But Why is it critical for all of us to have a BOB in the world of personal finance?

Sameer : To appreciate the need for it, we first need to appreciate the fact that no one can foretell when a calamity strikes…and how much damage it shall cause. I know it is a very morbid topic….and my apologies for the same…but it is a reality of life.
For example… we have just experienced 16 minor earthquakes in Delhi in a span of 2 months. We are living in seismic zone 4 which is second highest risk category for earthquakes. Almost every year, we have floods in one part or the other in India. ….like Kerala and Uttarakhand…. There are fire incidents here and there during summers…and during Diwali days….and so on.
These incidents …when happen… can be fatal and disruptive. We know it and therefore we protect our families by buying Term Insurance, Health Insurance and Property Insurance.
When such events occur and …Since we don’t know how much time we would get to prepare & evacuate, having a bag with most critical documents ready for grab & go, can protect us from unthinkable hassles and suffering later.

Abhay : Point taken. So….what all should be kept in the bag?

Sameer : Firstly, according to me, the bag should be Fire proof and Water proof…….. Such bags are available online and are not very costly to purchase ! Now…You should keep whatever is important according to you. But, I would say …following items are a good starting point :

  1. All your Insurance policies
  2. Property papers
  3. Wills & Trust papers
  4. Tax documents
  5. Birth certificates
  6. Education certificates
  7. Passports, Pan Cards, and Aadhaar Cards
  8. Jewellery & watches.
  9. Very importantly….some money i.e. Cash… that you will not touch unless there is an emergency

Some people go to an extent that they keep a first aid kit also in the bag, which according to me is a great idea.

Abhay : That’s a good idea to keep all such things in just one grab & go bag ! Anything else that comes to your mind that we should be careful about ?

Sameer : There are some general tips…that I would like to repeat.
Have adequate insurance….but don’t over insure also. In Insurance, cover all kind of risks..but don’t have too many policies
Very importantly, tell your spouse about all your adventures with money….He/she should know the contact details for all investments that you have made….if he/she doesn’t know already (example…contact details of your MF advisor, Insurance advisor, Bank RM, Chartered Accountant, etc..)
Your online legacy also needs to be put under control. These days, we generally have 15-20 passwords to keep. Therefore, most of us are using online password keepers. May be you and your spouse should create a common account to access all passwords at anytime.

Avatar

By Sameer Rastogi

18 years of experience, PG in Finance and has delivered Wealth Management lectures at IIM Lucknow, IBS Gurgaon and IIPM Delhi. Contributed to various newspapers. Strength – Application of Economic fundamentals to Investment

Leave a Reply

Your email address will not be published.