A new study shows most plan to spend $200 more this year than last.
Record-high inflation rates have hit Americans where it hurts: their wallet. What happens if they’re hit with a superstorm? Many fear it’ll flood their credit card balances.
That’s the big takeaway from Debt.com’s new Natural Disaster Preparedness study. More than 500 Americans were quizzed on how they feel inflation and climate change will affect their spending.
Nearly 7 in 10 except to spend more this year due to inflation. Meanwhile, 9 in 10 anticipate more super storms over the next five years as a result of climate change.
Howard Dvorkin, Debt.com’s chairman and CPA, feels that could be dangerous for those already struggling to make ends meet.
“Inflation isn’t just making it more expensive to prepare for a natural disaster, it might be convincing Americans to just forget the whole thing,” Dvorkin says. “Just like Americans who fall behind on their credit cards or student loans, at some point, you become so discouraged, you tell yourself, ‘Why bother?’ Well, whether you chalk it up to climate change or something else, more storms are coming. So you need to protect yourself – and it only costs a few dollars.”
A debt disaster
Roughly 3 in 10 respondents said they previously took on $300 in credit card debt to recover from a storm. Dvorkin has coached Americans on their finances for three decades. He’s heard that devastating story from many in that time – and helped them bounce back.
“Natural disasters are one of the leading causes of catastrophic debt,” Dvorkin says. “The others are divorce, illness, and accidents. If they all have one thing in common, it’s this: They can happen to anyone at any time.”
In 2020, the American Institute of CPAs conducted a similar survey. At the time, 61 percent of respondents said they “believe they are likely to be personally impacted by a natural disaster in the next three to five years, including one in five (19 percent) saying they are very likely to be personally impacted.”
Data from the National Centers for Environmental Information proves they’re right.
As of July 2022, there have already been nine weather events this year in the U.S. with collective damages adding up to $1 billion each.
Because everyone is at risk, the only advice is to plan.
Prep your wallet for bad weather
Dvorkin has been stressing the importance of emergency savings for years. There’s no telling what that emergency can be. He recommends having at least three months of living expenses set aside.
When a hurricane, flood, earthquake, wildfire, or blizzard hit – the blow will be less severe.
Not sure how to get started? Read: 4 Ways to Build Emergency Savings Fast. If you’re too strapped for cash now, check out: How to Pay for an Emergency Without an Emergency Fund.
“Anything you sock away for later can help you ease a debt disaster,” Dvorkin says. “If you start now, by the time bad luck catches up to you, it won’t keep you down for long. Financial counselors like me talk so seriously about all debt disasters because we want Americans to be prepared.”
Now matter what kind of debt you have, Debt.com can help you solve it.
Published by Debt.com, LLC