The National Post reported recently that Canadians are not very well prepared for rainy days, like an economic slowdown. Despite a lot of press being given to the economy inching towards the “”R-word,” most Canadians only have about one month of expenses covered. I heard it suggested that we are in a virtual recession, which is like being virtually pregnant, I’ll bet.
According the an RBC report, Canadians should be paying themselves first:
“The message we’d like to really emphasize is that it’s important to put away money first because you never know when an economy turns and we would hope we’ve got some emergency funds put away to get us through those times,” says Mr. Ratanshi. “The reasons why people are saving less vary from person to person, but there are a lot of individuals who may have the income but don’t have good savings habits.”
A key finding was that most Canadians do not believe they are good savers, RBC said, noting that 83% worry they don’t have enough money saved, and 86% that they can’t save as much as they would like.
“Many Canadians are also not prepared to cope with an unexpected long-term emergency or sudden life-changing event,” it said.
Only 49% have a rainy-day account set up, and of those that do, 55% have only enough saved to cover one month’s worth of expenses, while just 24% have three months’ worth of expenses covered.
“Surprisingly” two-thirds consider their line of credit and credit cards to be their backup in case of an emergency, it said. Meanwhile, 60% of the more than one million Canadians who keep $1,000 or more in their bank account each month, consider that money to be their safety net.
While the survey found that being financially prepared for an emergency is a priority for many Canadians, it is one of many priorities and a lower priority than saving for retirement, paying down debt, paying down one’s mortgage faster and saving for children’s education.