How Much Should I Save For An Emergency?
According to BMO’s annual survey:
Two-thirds of Canadians feel prepared to handle their financial obligations should an event occur which causes a change in job status, financial situation or a financial emergency
More than half of these Canadians have more than three months worth of savings, whith most of them having access to more than $5,000
25% of these Canadians however, would not be able to survive more than three months with this emergency savings
More Canadians feel today, that they can handle a financial crisis at home. The results surveyed last year were only 40% of Canadians felt that they could survive. A jump of 26% (66% today). This is definitely positive news, as the fear of a financial crisis grows everyday (ie: gas prices jumping, euro crisis, housing market fears, etc..).
Canadians Are Saving Less Than U.S. Consumers
What just about every investor will tell you, is to have between three to six months worth of expenses saved up in a high interest savings account, and to avoid using any important investments to help get you by (RRSP plans for example). A report has suggested that Canadian are now saving less money than U.S. consumers, with a personal savings rate of 2.9 (down from 20% in the 1980’s, and even 7% prior to the last recession in 2008.). This can be a result that most Canadians are depending on their current home’s value to get them by. As mentioned in a previous article here, Canadians were asked what they would do should their savings funds run out. The answer for most of them was relying on a family or friend to help assist them. Following using a line of credit or RRSP’s.
Your Next Steps
It is important to start saving now should anything occur in this unpredictable future. Visit your local investment advisor to help build a plan of action. Call us and we will help consult with you regarding any future or current mortgage planning! Don’t forget to follow us on Twitter and/or Facebook