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Financial planning tips

August 07, 2018

How to manage your finances through a natural disaster

How would you handle your finances if you were forced from your home by an emergency or natural disaster? Start with this seven-point checklist.

This summer’s wildfire season has seen hundreds of Canadians evacuating their homes in northeastern Ontario and British Columbia’s Okanagan Valley. Such natural disasters are difficult to predict or prevent.

So what would you do if you were forced from your home by a disaster? You may have already thought about what you would take with you and who would be responsible for making sure all people and pets are out safely. But what else do you need to consider?

What about your finances? You’ve been evacuated, but you still have bills to pay. In fact, you may have more than usual. To help guide you through this kind of crisis, here are seven tips:

  1. Contact your home or contents insurer, even if your home is undamaged. You may be entitled to other benefits related to an evacuation.
  2. Keep all expense receipt, such as fuel, food, clothing, hotel, medications and personal hygiene items. You may be able to claim some expenses through your insurance policy, or through a government assistance program.
  3. If your home has been damaged, work with your insurer to begin a contents inventory list, as you’ll need to complete a proof of loss document. You may want to involve other family members or friends to help with your recollection of what you own.
  4. Work with your advisor to determine how and when you can best withdraw some of your savings, if need be.
    • Non-registered savings. You can withdraw money from any non-registered savings account tax-free (unless an investment is sold and it generates a taxable capital gain). You can re-contribute these withdrawn funds at any time.
    • TFSA. You can withdraw money from a TFSA tax-free. The amount of your withdrawal is added to your TFSA contribution room on January 1 of the next year.
    • RRSP. Any money you withdraw from an RRSP is taxable, and tax will be withheld from the amount withdrawn. In addition, when you make a withdrawal, you lose the contribution room associated with that amount. Any future contributions to your RRSP will be based on your existing RRSP contribution room only.   
  5. Assess your current cash flow situation, especially in regard to significant purchases required for the short and long term. For example, you may need to replace essential items, find or build temporary accommodation or rent or buy a car.
  6. Identify where you may need to negotiate arrangements to pause, skip or cancel preauthorized payments, bills or services. For example, mortgages, lines of credit or loan payments (principle and interest) may be altered or suspended to ease immediate financial strain. Check to see whether your bank offers special accommodations and resources for people in your situation.
  7. If you’ve left behind prescription medications or medical equipment during an evacuation and you have a workplace benefits plan, contact your benefits provider for help with refills and replacements.

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