Most Canadians don’t have an emergency fund: RBC

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VANCOUVER (NEWS1130) – More than half of Canadians have no savings set aside for a rainy day and many who do dip into them to help pay for everyday expenses, a survey by the Royal Bank of Canada suggests.

The October RBC Canadian Consumer Outlook Index has found that 57 per cent of Canadians didn’t have money set aside for emergencies. Three in 10 respondents say they’d used their savings for either everyday expenses or emergencies.

The RBC Index also points to a sharp drop in consumer confidence, with the overall index at 70 points, down 24 points from last quarter as measured against its baseline of 100 established in November 2009.

“The drop in the RBC Canadian Consumer Outlook Index reflects ongoing global economic uncertainty, showing that strong Canadian economic fundamentals insulate us but do not make us immune to the turmoil around the globe,” explains Craig Wright, senior vice-president and chief economist at RBC.

“Given the uncertainty, the drop in the index was not unexpected, though it was disappointing.”

However, the survey also suggests Canadians are “very focused” on finding ways to manage their finances. Over the next 12 months, 33 per cent plan to reduce their debt, 30 per cent intend to spend less, 21 per cent expect to save or invest more, and 21 per cent plan to do all of the above.

Economists — including Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney — have been warning for months that Canadians have been racking up more debt than they can sustain, as a long period of ultra-low interest rates and sluggish price inflation have combined to create easy borrowing conditions.

And the central bank hinted yesterday that it will need to keep interest rates super low for an extended period to stimulate an economy being battered by a sharp global downturn and rising risks. As expected, the target overnight rate was left at one per cent.

In an pessimistic new forecast of future expectations for economic growth, it gave every indication that Canadians can bank on lending conditions staying “stimulative” well into the future.

The RBC CCO survey was conducted online by Ipsos Reid and involved data collected between Sept. 26 and Oct. 3 from 3,054 Canadians across the country. Pollsters consider it accurate within plus or minus 1.65 percentage points 19 times out of 20.

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