With record levels of both public and private debt and stagnant household incomes, Canadians are having a difficult time saving, including for any emergencies. A new poll suggests nearly half of the country doesn't have an emergency savings fund.
Digital Journal reported on a poll recently conducted this summer that shows close to 50 percent of Americans do not have emergency savings, which is usually about three months worth of living expenses. Furthermore, the research found more than a quarter didn’t have any savings at all.
A similar study was conducted, but in Canada by CIBC. The Harris-Decima poll found the same kind of findings: 45 percent of Canadians did not have any emergency savings.
The provinces of Alberta and Ontario are the least likely to have any kind of savings (53 percent) and 60 percent of British Columbia residents are the most likely to have some type of emergency savings.
When it comes to age demographics, those aged between 45 and 64 (60 percent) said they have savings put aside for future emergencies. However, only 51 percent of the younger age groups (18-44) said they have some sort of emergency savings fund. Analysts say the dichotomy stems from life experiences.
“Once you've experienced the financial challenges that come with a leaky roof or an unexpected car repair, the value of having some cash set aside for emergencies becomes clear," said Christina Kramer, Executive Vice President of Retail Distribution and Channel Strategy at CIBC, in the press release.
“Our poll shows an opportunity for more Canadians to start building up an emergency fund, to help get them through an unexpected expense and avoid dipping into long term savings to pay for a short term problem."
What can Canadians do to plan for the future? There are a number of aspects that individuals can take to have both money for a rainy day and cash for an emergency situation, according to various financial experts and articles on the topic (here and here):
- Maintain a budget
- Put aside a percentage of your income
- Establish clear goals and objectives
- Live within your means
“There is a clear benefit to sitting down with an advisor and working through your savings plan to help you establish and maintain a plan that works to meet your life goals,” added Kramer.
The telephone study was conducted between Mar. 22 and Apr. 2 with 2,003 adult Canadians. The survey contains a margin of error of +/- 2.2 percentage points.