October 13 – International Day for Disaster Risk Reduction: Financial Planning Is Essential to Withstand Disasters!
First, Protection… Then Income… And Finally, Growth!
A.G.V. Srinath Vijay,
Co-Founder.
https://gbvmfservices.in/, ARN-148604
Phone -
9080705714
A
Flood That Changed a Family’s Life
Arun, who
lived in Chennai, had worked hard for many years to buy a house. Every month,
he paid a portion of his salary towards his home loan EMI. He also invested in
mutual funds to save for his children’s higher education. However, a sudden
spell of heavy rain caused floodwater to enter his house. Several household
belongings were damaged, and he could not go to work for a few days. He needed
a substantial amount of money to repair his home.
Since his
investments had been earmarked for his children’s future, selling them
prematurely caused him considerable stress. If he had maintained an adequate
emergency fund and purchased home insurance, he could have managed the crisis
more comfortably.
This story
teaches us an important lesson: protecting our lives and property from
disasters is essential, but protecting our financial well-being is equally
important.
Why Is
Disaster Risk Reduction Day Important?
October 13
is observed every year as the International
Day for Disaster Risk Reduction. Its objective is to raise
awareness about reducing loss of life, property damage and economic losses
caused by disasters.
The theme
for 2026 is “Resilience
Starts at Home.” It emphasises the importance of making homes
safer and ensuring that families are prepared to face disasters such as floods,
cyclones and earthquakes.
We cannot
predict exactly when a disaster will strike. However, we can plan ahead to
reduce its impact and recover from the financial losses it may cause.
1.
Emergency Fund: The First Line of Financial Defence!
When a
disaster occurs, salary payments may be interrupted, business income may
decline, medical expenses may rise, and homes or vehicles may require costly
repairs. Having readily accessible funds is essential in such situations.
Generally,
it is advisable to maintain an emergency fund equivalent to three to six months of essential
household expenses. People with irregular incomes, including
self-employed individuals, may need to set aside a larger amount.
This money
can be kept in a savings account or in low-risk, readily accessible options,
such as liquid mutual funds, after understanding their risks and redemption
timelines. Emergency funds should not be invested in stock market instruments
because their value can fluctuate significantly.
The primary purpose
of an emergency fund is to provide immediate financial support when needed.
Therefore, capital safety and accessibility should take priority over returns.
2.
Insurance: A Shield Against Financial Losses!
A home is
one of the most valuable assets owned by many families. Floods, cyclones and
fire accidents can cause extensive damage, and repairing a house may involve
substantial expenditure. Therefore, families should consider appropriate home
or property insurance.
Similarly,
adequate health insurance can help manage medical expenses, while life
insurance can provide financial protection to dependants if the family’s
primary income earner dies. Vehicle owners should also review whether their
motor insurance provides suitable protection.
However,
purchasing an insurance policy does not automatically guarantee compensation
for every type of damage. Policyholders should carefully check the terms and
conditions to understand whether losses caused by floods, landslides, cyclones
and other natural disasters are covered, and whether any exclusions or special
conditions apply.
3. Think
About Financial Safety When Buying a Home!
When
purchasing a house, many people focus primarily on the price, loan facilities,
proximity to schools and transport connectivity. However, they should also
examine whether the locality is prone to flooding, whether adequate stormwater
drainage is available, and whether the building has been constructed according
to appropriate safety standards.
During
construction, using quality building materials, waterproofing terraces and
bathrooms, and ensuring safe electrical installations can help reduce future
repair costs.
Spending
money on preventive measures in advance is often more prudent than facing
substantial repair expenses after a disaster.
4. Protect
Your Investments and Financial Goals!
When a
disaster creates an urgent need for money, families may be forced to sell
investments earmarked for their children’s education, marriage or retirement.
Such situations can be avoided, to a considerable extent, by maintaining a
separate emergency fund instead of depending entirely on long-term investments.
Mutual fund
investments should be selected according to the family’s financial goals, risk
tolerance and investment horizon. Maintaining adequate liquidity can help avoid
being forced to sell investments at a loss during a market downturn simply
because emergency funds are insufficient.
Families
should also have a contingency plan for servicing home loans, personal loans
and other financial commitments. Thinking in advance about how to manage
expenses and loan repayments if income is temporarily interrupted is an
essential part of financial planning.
5.
Family Financial Preparedness for Disasters
|
Action
to take |
Benefit |
|
Build an emergency fund |
Helps manage unexpected expenses |
|
Purchase suitable home insurance |
Helps cover eligible property damage |
|
Maintain adequate health insurance |
Reduces the financial burden of medical expenses |
|
Safeguard copies of important documents |
Makes it easier to retrieve essential records |
|
Prepare a contingency plan for loan repayments |
Helps plan EMI payments during temporary income
disruptions |
|
Follow official disaster alerts and warnings |
Enables quicker and safer decisions |
|
Maintain adequate life insurance for the family’s
income earner |
Provides financial support to dependants in the event
of the insured person’s death, subject to policy terms |
6.
Financial Planning Must Go Hand in Hand with a Safety Plan!
Every family
member should know the locations of nearby safe shelters, emergency contact
numbers and evacuation routes. Important documents should be stored in
waterproof bags, and secure digital copies should also be maintained.
Families
should make advance arrangements to assist senior citizens, children and
persons with disabilities during emergencies. Keeping essential medicines,
drinking water, emergency food supplies, flashlights and basic first-aid
materials readily available can also make a significant difference.
Conclusion:
Prepare Today for a More Secure Tomorrow!
A disaster
does not merely cause physical damage. It can also threaten the wealth that a
family has accumulated through years of hard work. Therefore, disaster
preparedness deserves the same importance as savings, investments, insurance
and debt management in a comprehensive financial plan.
This October
13, let us review our family’s financial preparedness and take the necessary
steps to strengthen it.
Remember: Small precautions
taken before a disaster can help prevent substantial financial losses
afterwards. A safe home, a prepared family and a sound financial plan are the
foundations of a secure and peaceful future!
For More details and Investing
A.G.V.
Srinath Vijay, Co-Founder.
https://gbvmfservices.in/, ARN-148604
He is a
Qualified Personal Finance Professional (QPFP). His father is also a mutual
fund distributor. Hailing from Pollachi, he currently provides financial
services to approximately 2,500 individuals.
Read articles written by Mr. A.G.V.
Srinath Vijay in Nanayam Vikatan, a leading personal
financial management magazine https://bit.ly/4uj1I1Y
Phone -
9080705714
Email - srivj.sv@gmail.com
Address: 33, SV Towers, New Scheme Road,
Pollachi
- 642 001
Tamil
Nadu
Office
Time: Monday – Saturday: 10:00 AM – 06:30 PM
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme
related documents carefully. The past performance of the mutual funds is not
necessarily indicative of future performance of the schemes.
