About half of Canadians have saved enough to handle emergencies: survey
Published Wednesday, August 7, 2013 6:58AM EDT
Last Updated Wednesday, August 7, 2013 12:38PM EDT
About one-quarter of Canadians are living paycheque to paycheque, according to a new Bank of Montreal survey examining how prepared households are to handle emergencies.
The annual “Rainy Day” survey released Wednesday showed a three per cent drop in the number of Canadians who have the recommended amount of savings set aside to cover unexpected expenses, such as emergency home repairs or the sudden loss of a job.
BMO recommends savings equal to at least three months of income as the ideal emergency savings fund. According to the survey, 51 per cent of Canadians have three months of expenses set aside.
The survey also showed:
- 17 per cent have less than $1,000 to draw upon in case of an emergency
- 20 per cent have up to $5,000
- 14 per cent have up to $9,999
- 18 per cent have $50,000 or more
Two-thirds of those surveyed said they've dipped into their rainy day fund in the past, with car repairs (25 per cent), job loss (21 per cent), and home repairs (20 per cent) being the most common reasons.
"Financial emergencies, such as a broken furnace or major car repairs, can crop up at any time and, without some form of financial cushion, can potentially cause households to take on more debt than is necessary," said Janet Peddigrew, BMO Bank of Montreal vice president, in a statement.
"The ideal emergency savings fund should be equal to three to six months of your income."
Other survey highlights include:
- Canadians in the Prairies feel the most prepared to handle a financial "rainy day" at 74 per cent
- Those in Atlantic Canada face the greatest challenge, with 60 per cent claiming to be prepared, down 14 points from 2012
- Those over the age of 65 are the most likely to feel prepared (84 per cent), while those between the ages of 35-44 are the least likely (59 per cent)
The online survey of 1,000 Canadians by Pollara was conducted between July 26-30.