After the historic flooding in Louisiana in 2016, FEMA's Paul Huang deployed to help with recovery efforts. He recalls an elderly couple whose grandchildren were helping clean out their home after three feet of flood water destroyed everything they owned. During the storm, the couple was rescued by rowboat.
But Huang, now FEMA's Acting Associate Administrator of Resilience , recalls they were thankful they had flood insurance to cover the damage. Their neighbors, who had canceled their policy after paying off their mortgage, weren't so fortunate.
Huang notes that as a result of flooding from Hurricane Harvey, the devastating Category 4 hurricane that made landfall in Texas and Louisiana in 2017, those without flood insurance got an average of $4,000 from FEMA's Individual Assistance , while those with flood insurance received an average of $110,000. Huang previously served as Assistant Administrator for the Federal Insurance Directorate, supporting the National Flood Insurance Program (NFIP) .
This experience captures the power of financial resilience for Huang.
“We are investing in measures to ensure that when something shocks our system — natural disaster, pandemic, etc. — we are protected and don't fall as deep as we would without having those resilience measures in place.”
What are the steps to becoming financially resilient? Huang says it starts with setting up a budget, which he remembers learning from his parents. He believes financial preparedness should start early, from the time kids receive their first allowance or paycheck from a summer job.
Schools need to step in as well. Huang notes a recent conversation with a member of FEMA's Youth Preparedness Council (YPC) . He told Huang that while he is taught advanced biology, there's no course that teaches the fundamentals of saving money or balancing a checkbook.
The pandemic has underscored the importance of financial resilience, according to Huang.
“The consequence of financial resilience hasn't changed, but has only become more apparent over the last year. With that in mind, it's critical to consider how to bring more equity in the distribution of financial resilience.”
Those are issues on which FEMA and other government agencies are working, says Huang. As part of the solution, he notes FEMA's role in the supplemental unemployment payments during the pandemic, as well as funding for states, tribes and local governments. Huang also started FEMA's Asian American Pacific Islander-Employee Resource Group to help advocate for more diversity and inclusion in the Agency, as well as in the communities it serves.
Looking toward the future, Huang sees opportunities for innovation in financial resilience. He notes an example of banks using data to help guide automatic deposits of customers' funds directly to savings or investments.
Greater focus on human behavior should be another priority, he says. Huang notes that many people spend hundreds of dollars a year on lottery tickets, where the chance of winning a large lottery like Powerball is about one in 300 million. By contrast, there is a one in four chance during a 30-year mortgage that your home will be flooded if you live in a high-risk flood area. Still, only three out of 10 homes in those areas buy flood insurance.
“What that tells us is that, generally, people want to spend their money on things that bring them hope. They don't necessarily want to think about spending to protect themselves from the possibly negative things. It's human nature,” he says. “We can learn more about these human biases and how to sell financial resilience as valuable, worthwhile, and a ‘norm' to do.”
Ready to start planning your financial future? Visit www.ready.gov/financial-preparedness to access free tools, tips, and resources on financial resilience.