Raise your hand if you conduct most of your financial business online. Me too. The invention of online banking has made what used to be the laborious, time-consuming chore of financial reconciliation fairly easy. In fact, there exists a number of tools, such as Mint.com, that practically automate the task altogether.
Privacy issues aside, this reliance on technology has left us with a very big risk – the risk of losing financial data in a SHTF scenario. It is not difficult to imagine such an event that may take down the electrical grid and the financial services sector along with it. Remember the scenes from 9/11 when thousands of financial statements and paperwork rained down in the aftermath of the attack on the World Trade Center? Imagine the loss of servers, data centers, backup tapes and electronically stored data in that single event alone.
To mitigate the risk losing our financial history presents there is one bit of financial housekeeping everyone should practice, and tax season provides the perfect opportunity.
Print two copies of all of your current financial accounts to paper, and save one copy electronically to a ruggedized thumb drive.
Be sure to include your most recent mortgage statement, loan statements, all bank and brokerage accounts, recent tax returns, and any insurance declarations and coverage confirmations.
One copy should be stored in a fireproof safe at home, or a safety deposit box or similar area protected from theft, fire and water. If you currently have a place designated to store and secure life insurance policies, deeds, titles and other important paperwork, make a little room for these backup copies of your financial accounts.
The second paper copy, along with the ruggedized memory key with electronic copies, should be placed in a Ziploc bag and stored in a water proof container to go with you in the event of a sudden bugout. If you had to suddenly bug out of your home for an extended period you may return to find things looted, and much of your financial documentation may be missing. The copies you took with you may be your only remaining proof of your household financial statement.
Of course, a devastating EMP attack isn’t the only thing that could cause a loss of financial data. An Information Age article from October 2010 cited a study of financial data loss which indicated that “on average, businesses lost $1.7 million to fraud for every billion dollars of revenue they earned.” That is a little too alarmingly frequent for me. The same article goes on to point out that from 2009 to 2010 data loss doubled in the financial services sector.
This year, as you finalize taxes for 2011, skip your favorite television show and take an hour to print your current statements for all of your financial accounts. Then scan, or save digitally, the same documentation to a ruggedized thumb drive for easy access later. Make a note on your calendar to update these documents at the end of each quarter, so the worst possible case if a loss of three months of financial history, not an entire lifetime.