The CIBC released today findings from a recent poll conducted by Harris/Decima revealing that 45 per cent of Canadians do not save in case of emergency. This means that if there’s a car wreck, storm damage, expensive dentist or hospital visit, nearly half of Canadians are unprepared.
Demographically, the poll found that the lack of an emergency savings fund was more likely to be found amongst 18-44 year olds with 51 per cent reporting no emergency monetary preparedness. On the other hand Canadians aged 45-64 are more likely to save with 60 per cent stating they had emergency savings set aside.
Why do older Canadians save while the younger citizens do not? This could be attributed to life experiences, meaning Canadians aged 45-64 have already learned their lesson of a lack of emergency preparedness.
"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, Retail Distribution and Channel Strategy, CIBC. "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."
The CIBC stated that emergency savings needs to be separated from regular savings goals so that it isn’t utilized in other opportunities, leaving savers stranded.
"You don't want to be in a position where you need to cash out some of your RRSPs or take on debt because of an unexpected expense," said Ms. Kramer.
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Even further, an emergency fund, once drained, needs to be rebuilt as emergencies are not just once in a lifetime occurrences.
The CIBC states that a good emergency savings fund consists of three months of income. To keep the emergency fund consistent, contributing to it regularly will build savings over time. Additionally, adjusting contributions when your household cash-flow changes is also important.
"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 Ms. Kramer.