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B.C. residents are taking a gamble: 41% don't have money set aside for unexpected expenses
-- TD Canada Trust 2nd Annual Report on Savings reveals British Columbians are the least likely to save money each month--
VANNCOUVER, March 26, 2012 /CNW/ - Servicing credit card debt, saving for retirement, paying bills - British Columbians are among the most likely in the country to admit that at the end of a typical month they have no money left over to put into savings (41% versus 37% nationally).
As a result, according to the TD Canada Trust Annual Report on Savings, 41% of B.C. residents don't have money set aside in case they lose their job, or have to cover significant medical bills, out-of-the-blue home repairs or other unexpected expenses.
The poll found B.C. residents are among the most likely to say they have been in a situation where they needed to rely on cash savings to navigate an unexpected life event (62% versus 53% nationally), yet only 35% had a fund set up. Of those who didn't, 46% had to depend on friends or family, 40% used their credit cards, 36% relied on a loan or line of credit, and 9% dipped into their RSP. British Columbians are most likely in the country to say they dipped into their savings account (23% versus 16% nationally).
"Life is full of surprises and you can't prepare for everything - but you can prepare your finances," says Brett Currah, District Vice President, TD Canada Trust. "It's concerning that so many people are relying on credit cards and lines of credit, instead of cash, as their financial cushion. It's so important that you set aside cash in a savings account for unexpected expenses to help you in situations - good or bad."
British Columbians are most likely in the country to say they don't have money set aside for life's surprises because they're "broke" (62% versus 56% nationally). Residents say balancing financial obligations - like paying off debts from credit cards or lines of credit (38%), paying off their mortgage (11%) and saving for their child's education or their retirement (7%) -makes it difficult to save for a rainy day.
"It can be tough to balance all of your financial obligations, but this is precisely why it's important to set up a cash savings fund for life's surprises," says Currah. "Without one, it is tough to find a way to cover unexpected costs, and if you decide to borrow money, paying back the money plus interest will be another monthly cost for you to worry about."
The good news is that 29% of British Columbians have one to three months of living expenses saved for unexpected expenses, 17% have four to six months saved, and 13% have more than six months of living expenses in the bank.
Currah offers his advice on what British Columbians should consider when setting up a fund to rely on if life throws you a curve ball:
Make it a priority: Start today. Since it is not set up with a specific purpose in mind, it
may not seem like your most pressing savings goal. But, if unexpected
costs arise, it will be your number one resource. You should aim to set
aside three to six months of essential expenses. You can give yourself
a kick-start with your tax return.
Make it automatic: Set up an automatic transfer from each paycheque until you've reached
your target. By that time, you'll have a fund established and you will
be used to the money being taken from your paycheque. Once your fund is
set up you can shift your savings efforts towards your next financial
Avoid temptation: Your fund needs to be easily accessible if you need it but otherwise you
should leave it untouched. If money tends to burn a hole through your
pocket, talk to your bank about ways to avoid temptation, for instance,
you could choose not to link this money to your debit card, so you
don't have easy access to the funds.
Ensure your savings work hard for you: The difference between your 'rainy day' fund and other types of savings
is that you shouldn't have it in investments where there may be
penalties for accessing it or where it could potentially lose money in
the short-term due to market fluctuations. That doesn't mean it can't
earn interest for you though, consider a savings account where it is
guaranteed to earn some interest. A TFSA is a good option, because the
money you earn won't be subject to taxes.
- If disaster strikes, rebuild: If you do find yourself in a situation where you need to rely on your savings, you'll probably develop a greater appreciation for the importance of being financially prepared. Let this be motivation to make rebuilding the fund a top priority, as soon as you are back on your feet.
About the 2012 TD Canada Trust Report on Savings
TD Bank Group commissioned Environics Research Group to conduct an online omnibus survey of 1,022 Canadians 18 years of age or older, including 127 respondents from British Columbia. Responses were collected between January 23-27, 2012.
About TD Canada Trust
TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: www.tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.
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