Three Things That The Earthquake In Haiti Reminds Me About Personal Finance

by Hank Coleman

I usually do not talk too much about the specifics about my personal life, but I wanted to take just a minute to thank everyone for their support and patience while I was helping out with earthquake relief in Port-au-Prince, Haiti. To say that it was a moving experience spending these last six weeks down there is an understatement. The amount of devastation just cannot be put into adequate words.

Looking at the rubble in the Caribbean capital made me think about a few things with respect to money and emergency funds. And, I also thought about what we can and should do to prepare as best as possible for the worst case scenario in our lives.

Cash Is King. How much cash do you have incase a disaster happens? What if a working ATM were not readily available? What if there were no power for days at a time? When I was growing up in Charleston, South Carolina, we went without running water and power for almost two weeks in September 1989 after Hurricane Hugo hit the city. Anyone who has been to a third world country or a Caribbean island knows that cash is about the only currency in operation. Many people in that area of the world do not use and recognize the power of credit cards. Cash is king, and you will need some of it to operate with immediately afterwards should a disaster strike.

Emergency Funds Are Very Important. According to a study from Principal Financial Group, 56% of American workers have an emergency fund set up in help them when times are tough. Almost 30% of them also say that their emergency funds could cover more than six months of living expenses, should they need it. Many of us consider an emergency fund if we get laid off or hit with a big, unexpected expense, but do an actual emergency is a prime reason to have an account that bares its name.

Inflation & Capitalism Are Alive and Well. A 20 oz. Coca-Cola cost the equivalent of 75 cents before and immediately following the earthquake. By the time that I left the country on the 25th of February, a soda was double that price. Surveys conducted by several Non-governmental Organizations (NGOs) suggested that the price of commodities such as rice skyrocketed immediately after the earthquake in Haiti, but eventually the prices stabilized and returned to a level of only 20% to 30% higher than pre-earthquake levels. Capitalism was also alive and well in Port-au-Prince. Many enterprising Haitians have found out that they can support themselves and their families very well by selling good to the thousands of Americans who have flooded into the tiny country to help. There is definitely a stimulus of American greenbacks floating around the capital.

The disasters in Haiti and now the recent earthquake in Chile are two huge wakeup calls to look at our own situation. Hurricane Katrina was no different either. Would you be ready if a disaster struck you in your hometown? Do you have enough cash and supplies ready incase of an emergency?

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{ 1 comment }

Ryan March 1, 2010 at 8:21 pm

All great points regarding emergencies. More importantly though, thanks for the service you all did/are doing down there in Haiti. I’ve never been in a situation like the Haitians are in (either on the side of living through the emergency or delivering aid). I don’t think I would be able to put the experience in words.

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