Disasters can strike when least expected, leaving individuals and families devastated both emotionally and financially.
In Canada, wildfires have become an increasingly common threat, leaving many residents grappling with the loss of their homes and possessions. While the emotional toll of such an event is immeasurable, it's crucial to develop a comprehensive financial plan to help rebuild your life after such a catastrophe.
In today’s column, I will discuss financial planning strategies for people who have experienced the loss of their homes in a wildfire or other disaster and the steps they can take to get back on track:
1. Prioritize safety first—After a wildfire has destroyed your home, the first step is ensuring the safety of you and your family. Contact local authorities and follow their guidance on when it's safe to return to the area.
2. Contact your insurance company—Reach out to your insurance company as soon as possible to report the loss and initiate the claims process. Understand the details of your homeowner's insurance policy, including coverage limits and deductibles. Insurance companies will send adjusters to assess the damage and determine the compensation you are eligible for. But make sure you get legal advice on the compensation they are offering to ensure it’s fair and correct.
3. Find a place to stay—While your home is being assessed and rebuilt, you'll need temporary housing. This may include staying with family or friends, renting a temporary residence or seeking assistance from local disaster relief organizations. Finding a rental home in the Okanagan can be challenging at the best of times and it is important to look ahead to the busy summer months next year as rebuilding will take significant time and many rentals only allow people to stay until springtime when they switch to AirBnB type accommodations.
4. Document the damage—Once you’re allowed back to the area, it's essential to document the damage caused by the wildfire thoroughly. Take photographs and make a detailed inventory of the items you've lost. This will be crucial when filing insurance claims or applying for government assistance programs. Be sure to include the estimated value of each item and any receipts or proof of purchase you have.
5. Access government assistance—In Canada, federal and provincial governments often provide assistance to individuals affected by disasters like wildfires. Research the available programs and apply for any financial aid or relief that you may qualify for. This assistance can help cover immediate expenses, such as emergency housing and basic necessities.
6. Create a budget—Once you have a clear understanding of your (new) financial situation, create a detailed budget. Calculate your income, expenses, and any available resources. With this information, you can prioritize essential expenses and allocate funds to cover immediate needs. Adjust your budget as necessary to ensure your financial stability during the recovery process.
7. Seek professional financial advice—Financial recovery can be a complex and overwhelming process. Consider seeking assistance from a certified financial planner, who can help you navigate insurance claims, government assistance programs, and amend your long-term financial plan to your new situation.
8. Rebuild your emergency fund—If you had an emergency fund before the disaster, you may have had to dip into it to cover immediate expenses. Rebuilding this fund should be a priority once you're back on your feet financially. Having a robust emergency fund can provide peace of mind and financial security in case of future unexpected events.
9. Re-evaluate your investment portfolio—If you are rebuilding, you may end up spending more than what is provided by your insurance company, and you need to plan ahead for where this money will come from. If some funds may be needed from your savings, it's essential to reevaluate your investment portfolio now to set aside funds in an account that will not be subject to market risks.
10. Rebuild your credit—A wildfire can have an impact on your credit score, especially if you missed payments or incurred additional debt during the recovery process. Rebuilding your credit is crucial for your long-term financial health. Pay off any outstanding debts, make on-time payments, and consider seeking advice on credit repair strategies.
12. Review and update insurance coverage—After experiencing a disaster like a wildfire, it's essential to review and update your insurance coverage to ensure you are adequately protected in the future. Work with your insurance agent to make any necessary adjustments to your policies.
Recovering from the loss of a home due to a disaster is a challenging journey but with careful financial planning and perseverance, you can rebuild your life.
By following these financial planning strategies, Canadians who have experienced a disaster can work toward a brighter and more financially secure future.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.