45% of Canadians unprepared for emergency spending

CTVNews.ca Staff
Published Monday, Aug. 13, 2012 8:15AM EDT
Last Updated Monday, Aug. 13, 2012 5:31PM EDT

A new poll for one of Canada‘s biggest banks reveals many Canadians don’t have a reserve fund set aside to cover unexpected emergency expenses.

According to the poll conducted for CIBC, 45 per cent of Canadians have no emergency savings. And if they were to encounter an unplanned expense they would likely have to dip into retirement savings or take on debt in order to cover the shortfall.

The survey, which was conducted by Harris/Decima on behalf of the bank, found that younger Canadians are less likely than older Canadians to have an emergency fund.

Among Canadians aged 45 to 64, 60 per cent say they have funds put aside for an emergency.

However, among Canadians aged 18 to 44, only 51 per cent say their household has emergency savings set aside.

Christina Kramer, executive vice-president of CIBC’s retail distribution and channel strategy, said older Canadians’ tendency to be better prepared may be attributable to their greater life experience.

“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,” Kramer said in a news 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.”

On average across Canada, 55 per cent of those surveyed said they had an emergency savings account.

When the poll results were broken down by province, B.C. residents were most likely to be prepared for the worst, with 60 per cent saying their household had an emergency savings account.

Quebec and Manitoba-Saskatchewan followed, at 57 per cent.

In Atlantic Canada, 55 per cent had emergency savings.

Ontario and Alberta fell below the national average, with just 53 per cent of those surveyed saying they had an emergency account.

CIBC recommends that its clients set aside three months of income in an emergency fund, and once those funds have been used, that they make it a priority to replenish the account.

“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,” Kramer said.