Canadians Financially Unprepared

More than 40% of Canadians Financially unprepared

More than 40% of Canadians are financially unprepared for a “rainy day” and unsure they will be able to meet their obligations in an emergency, a Leger Marketing survey finds.

The survey of 1504 adults commissioned by BMO in July found a quarter of respondents (26%) had less than three months worth of emergency savings. That’s the minimum most financial advisors recommend households have on hand, and many counsel six months or more.

Debt servicing costs compete with emergency savings

Only 30% have enough of an emergency cushion to last a year or more. BMO blames debt and everyday expenses for these low savings levels.47% of respondents cited credit card or mortgage debt and 41% everyday expenses.

BMO senior vice president Lynne Kilpatrick recommends that debtors consolidate their debt loads by using a line of credit with a lower interest rate, or transferring to a low-rate credit card.

Of those that are saving, 46% hold their savings in investments like GICs, mutual funds or ETFs. 34% use Tax Free Savings Accounts to hold these investments and 15% use high-interest savings accounts for their rainy day fund.