We are still short on cash and deep in Debt
You’ve heard the saying, “save for a rainy day”. More and more these days Canadians are putting money aside for their savings, but the majority of us are still short on cash when unexpected expenses arise. According to a new BMO Rainy Dave survey, sixty-eight per cent of Canadians surveyed have had to dip into their rainy day fund in emergency situations but the majority of them (58 per cent) didn’t have enough funds cover the full cost of the expenses.
BMO Economics data indicate that the personal savings rate in Canada has risen to 5.5 per cent in the first quarter of 2013 from a historic low of 1 per cent in 2005.
Fifty one per cent of Canadians who responded to the survey have less than $10,000 socked away for unexpected expenses and 17 per cent have less than $1,000.
Only forty nine per cent who needed to draw from their emergency fund for major car or home repairs were able to cover the whole cost, says the survey.
Furthermore only thirty five per cent of those in the poll who had to deal with a job loss said they had enough money put away to keep them going financially.
“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, BMO Bank of Montreal.
There are a lot of ways of cutting back on non-essential spending. You can bring your lunch to work, take your coffee to go from home, cut down on dinners out or even carpool with colleagues. The money you save by doing any of these can be put towards a rainy day fund.
The poll also showed that forty one per cent of Canadians who participated in the survey would mostly likely sell assets such as a car or jewellery if and when their rainy day savings depleted. Twenty seven per cent said they would leverage a line of credit and 18 per cent said they would cash in their investments. If they still did not earn enough cash to cover expenses, they would ask their family or friends for a loan.
So how much should you have in your rainy day fund? Typically your fund should be equivalent to six months of your income. Do you have that right now?
Saving for a rainy day is the smartest phrase anyone can practice, and yet many of us are not listening. A savings account is not quite as attractive as a vacation or new “had –to-have” item to display. Although Canadians are saving more these days, they are still not saving enough to cover emergencies that can sink them into a hole of debt.
If you’d like some help building a budget or getting out of the hole of debt you just buried yourself in, there are companies that can help.“ Freedom from debt row” is just a phone call away. OCCA Consumer Debt Relief has been helping Canadians resolve debt for over a decade. A free financial assessment by OCCA may be the answer to your debt trouble and door to your financial freedom..
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