To mark Financial Planning Week and Financial Literacy Month, BMO Financial Group today issued the results of a study which found that finances dominate the thoughts of Canadians.
According to the study, 63% of Canadians say they spend more time thinking about finances than other aspects of their life, including:
- Planning leisure activities such as their next vacation, shopping plans and deciding what movies and television shows to watch (18%).
- Pondering the ups and downs of their love life (14%).
- Of note, even though Canadians are thinking about money, the percentage of individuals with a financial plan is actually down compared to last year (59% versus 64% in 2012).
A financial plan outlines personal and financial goals and the steps needed to achieve them. Goals can include saving and investing, purchasing a home, continued education, leaving a legacy, having adequate insurance, starting a small business, career change, saving for a child’s education and planning for retirement.
Caroline Dabu, vice president and head, BMO Wealth Planning Group, said: "It’s understandable that money matters tend to dominate the minds of Canadians given that our finances are so intertwined with other areas, including family and how we spend our free time. If people want to reduce the time they spend thinking about dollars and cents and be more secure about their overall financial situation, they should consider working with a professional to develop a financial plan. Identifying what you’re saving for and how you’re going to get there can provide great peace of mind and free up more of your time to attend to other aspects of your life."
According to the study, Canadians who have a financial plan see value in having one; 82% said having a financial plan helped them achieve their financial goals and 69% said that they wish they had created one sooner.
The Barriers to Financial Planning
The study also examined the reasons why a significant number of Canadians still do not have a financial plan. Reasons cited include:
- Do not have enough money to warrant a financial plan (37%)
- Never thought of doing a financial plan (29%)
- Do not know how to start the process (28%)
- Not sure what a financial plan involves (19%)
Dabu added: "The earlier you start a financial plan, the sooner you’ll feel in control of your finances and start progressing towards your short-term goals such as being able to afford a winter vacation, mid-term goals such as the purchase of a home, or long-term goals such as retirement."
BMO offers the following tips on how to get started with financial planning:
Examine your future: Consider the things you want to achieve and your desired financial situation in five, ten or even twenty years. Make a list of these lifestyle goals, objectives and milestones.
Collect the facts: Assess your current financial situation, noting your assets, liabilities, income and spending habits.
Seek expert advice: Consult a financial professional to develop a financial plan based on your short- and long-term goals. A financial professional can help you make the right decisions about managing your finances today to ensure you achieve your financial goals in the future.