More than two-thirds (68 per cent) of Canadians have had to rely on a rainy day fund to pay for an unexpected expense. However, the majority (58 per cent) did not have enough saved to cover the full cost of the emergency, according to a BMO survey.
One-half (51 per cent) of Canadians have less than $10,000 in savings to cover unexpected expenses, including 17 per cent who have less than $1,000. And only one-third (35 per cent) of those who were faced with job loss had sufficient savings to sustain them financially.
Fewer than one-half of those who have relied on their emergency savings for a major car or home repair could cover the entire cost (49 per cent and 47 per cent respectively), found the survey of 1,000 people.
Having a lack of extra money available (57 per cent) was cited as the top reason for not putting more away for an emergency.
Nearly one-half (49 per cent) use a tax-free savings account (TFSA), savings account (47 per cent) or other non-registered investments such as guaranteed investment certificates (GICs), mutual funds, stocks or bonds (47 per cent).
About one-third (34 per cent) use a chequing account or high-interest savings account (30 per cent), found the survey. Sixteen per cent keep their emergency savings in cash
However, the personal savings rate in Canada has risen from historic lows of one per cent in 2005 to 5.5 per cent in the first quarter of 2013, according to BMO Economics.
"It's encouraging that the savings rate in Canada is beginning to trend upward. However, many Canadians are still coming up short when faced with a financial emergency," said Christine Canning, head of everyday banking products at BMO Bank of Montreal.
© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.