More Canadians feel prepared to handle a financial emergency in 2012 compared with last year – but 25% would not be able to last longer than three months on their contingency savings, according to a BMO survey released today.
The annual BMO Rainy Day Survey, conducted by Pollara, asked Canadians how prepared they are in the event of a change in job status, change in financial situation or unforeseen financial emergency. The survey also asked what sources of contingency savings they had available to them and how long they could weather challenging times.
The poll revealed:
- Two-thirds (66%) of Canadians feel prepared to weather a financial emergency this year, compared with 40% in 2011. In B.C., 71% claim to be prepared.
- More than half (54%) of Canadians have more than three months of savings available, and almost half (49%) have access to more than $5,000 if needed.
- However, one-third (32%) feel unprepared to weather a financial downturn, and one-in-five (19%) would deplete their savings in less than a month.
Su McVey, vice-president, BMO Bank of Montreal, said, “Being prepared for fluctuations in income or unexpected expenses requires an ongoing assessment of expenses and other spending habits.
“The general rule of thumb is to have an emergency fund set aside that is equal to three to six months of your income in a high-interest savings account…to use for unexpected household expenses, along with avoiding the withdrawal of funds from other important investment plans, such as your Registered Retirement Savings Plan (RRSP).”
The poll also asked what the fallback plan would be for Canadians who find themselves without a source of income or finances for six months. It revealed Canadians are most likely to rely on financial support from family or friends (45%), followed by relying on the sale of assets (39%), a line of credit (28%) or RRSPs (26%).
