Many Americans admire Canada's publicly funded health care system and other social services. But when it comes to establishing a personal safety net, our northern neighbors aren't necessarily the best example to follow.
That's one conclusion to be drawn from a new study from BMO Financial Group. The report finds that while two-thirds of Canadians feel prepared financially to handle a 'rainy day,' the majority (51 per cent) have less than $10,000 in savings to cover unexpected expenses. And another one in five (17 per cent) have less than $1,000.
The "3rd Annual BMO Rainy Day Survey" conducted by Pollara, asked 1,000 Canadians how prepared they are in the event of a change in job status, change in financial situation or unforeseen financial emergency and revealed:
- 17 percent have less than $1,000 in savings to draw upon in the event of an emergency, while another 20 percent have up to $5,000
- 14 percent have between $5,000 and $9,999 set aside in emergency savings
- Less than one in five Canadians (18 percent) have set aside $50,000 or more for a 'rainy day'
In addition, the survey finds:
- Half (51 percent) of Canadians have the equivalent of three months of expenses set aside, down 3 points from 2012, while 43 percent have less than three months; an increase of 3 points. (BMO recommends having a rainy day fund that can cover 3 to 6 months of expenses.)
- One-quarter (23 percent) say they are living paycheck to paycheck.
- Two-thirds (68 percent) have had to dip into their rainy day fund in the past, with car repairs (25 percent), job loss (21 percent), and home repairs (20 percent) being the most common reasons.
By province, Canadians' preparedness for a financial emergency breaks down as follows:
