More than four in 10 Canadians say a single major unexpected expense could derail their finances as many continue to struggle to build emergency savings amid the high cost of living, according to a new poll by RBC Royal Bank.
The RBC Emergency Readiness Poll found 42 per cent of Canadians feel financially vulnerable to a major unexpected expense, while 52 per cent said they have not saved enough for emergencies. Nearly one-third, or 32 per cent, reported having no emergency fund, with that figure rising to 38 per cent among households earning less than $100,000 annually.
The findings point to ongoing financial pressure for many households and suggest that concerns about emergency preparedness extend across income levels. The poll also found that 44 per cent of respondents faced emergency expenses over the past year, while 50 per cent said they regret not starting an emergency fund earlier. Another 41 per cent said they had underestimated how much they should save for emergencies.
"Financial stress in any form can affect how secure and in control people feel," said Erica Nielsen, Group Head, RBC Personal Banking. "We want to help Canadians build the habit of setting some money aside regularly, even a small amount, so that when expenses arise without warning, they have the financial breathing room to handle them."
The poll identified the high cost of living as the primary obstacle to building or maintaining emergency savings, with 76 per cent of respondents citing it as their biggest challenge. The proportion was highest in Alberta at 86 per cent, followed by Atlantic Canada at 83 per cent. Ontario and Saskatchewan/Manitoba each recorded 79 per cent.
Other barriers identified by respondents included difficulty balancing emergency savings with other financial priorities, finances being too stretched to make progress, and having to use emergency savings for non-emergency expenses.
Nationally, 55 per cent said they could not build an emergency fund while also saving for other priorities. That figure rose to 64 per cent in Saskatchewan and Manitoba and 59 per cent in Atlantic Canada. Another 45 per cent said their finances were stretched too thin to make meaningful progress, while 29 per cent said they had withdrawn money from their emergency fund for non-emergency spending.
The survey also found that one-quarter of respondents had recently used their emergency fund to cover an emergency expense but had not yet rebuilt those savings.
When asked how they would pay for an unexpected expense, 41 per cent said they would rely on an emergency fund, while 35 per cent said they would use a credit card. Another 15 per cent said they would borrow money from family or friends, and one in five respondents said they had never considered how they would cover an emergency expense.
Unexpected transportation costs ranked as Canadians' leading emergency concern, with 39 per cent identifying car repairs or other transportation expenses as a top worry. Major home repairs followed at 38 per cent, while 31 per cent pointed to medical or health-related costs.
Despite the financial pressures, the poll found that 68 per cent of respondents said they have an emergency fund.
Among those with emergency savings, 49 per cent said they contribute to the fund at least monthly. Another 34 per cent said they add any money left over at the end of the month, while 27 per cent said they have reduced spending to help build their savings. The same proportion said they have opened a dedicated savings account for emergency funds.
"It's encouraging to see how many Canadians are adopting two of the most effective ways to build their emergency fund: by using a dedicated savings account and through consistent contributions," Nielsen noted.
"Keeping your emergency fund in a separate account makes it less likely you'll spend that money until you truly need it. And by setting up pre-authorized contributions, from your paycheque for example, your emergency fund can grow steadily in the background while you focus on other priorities," said Nielsen. "Having that approach in place can help bring peace of mind and better position you, financially and emotionally, to manage whatever comes your way."
The survey also examined why respondents viewed emergency savings as important beyond financial considerations.
More than half, or 51 per cent, said having an emergency fund provides peace of mind, while 46 per cent said it helps reduce stress. Financially, respondents most often cited having a safety net, avoiding debt and getting through difficult periods as the leading benefits of maintaining emergency savings.
The poll found 49 per cent viewed an emergency fund as a financial safety net, 42 per cent said it helps avoid debt, and 35 per cent said it helps them manage through tough times. Half of respondents also said they wished they had started building an emergency fund sooner.