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Financial health: What if we all took action?

15 February 2021 by Nancy Paquet
How to manage personal finances?

By Nancy Paquet, Senior Vice-President, Strategy, Investment and Savings, Retail Banking 

This last year, we’ve seen the negative impact of the pandemic, but it’s also had some positive effects on Canadians’ personal finances. While many households and businesses have experienced difficulties and have had to depend on different benefits, others were financially prepared to get through this unprecedented situation. Some people have even managed to save money. I commend everyone’s courage.  

Everything we’ve gone through as a society since March 2020 has triggered a collective awakening and shown us that we have to act for Canadians to reach a healthy financial situation. But how much responsibility do the financial industry, governments and Canadians each bear? 

We can all take an extra step to improve our financial health 

My goal isn’t to urge people to save at all costs, but to help them take a step in the right direction, regardless of their current situation. After everything we’ve learned from 2020, managing (or straightening out) personal finances may be a priority for some. Among other things, this involves stronger financial knowledge and concrete action when it comes to saving.  

Saving is important, but you shouldn’t underestimate the idea of paying yourself first. Part of each paycheque goes towards paying bills, mortgage or rent. Why not pay yourself too? Contributing to your RRSP or TFSA means making yourself a priority and paying yourself a certain amount that you can set aside to achieve your short- or long-term goals, all while taking advantage of tax benefits.  

Getting a handle on your finances also means talking about finances with your loved ones and, most importantly, with your children. In many cases, money is still a taboo subject. People between the ages of 18 and 34 tend to go to their family or friends for personal finance advice. That’s why it’s important to talk about it openly and to teach our children basic financial concepts from an early age. Parents, grandparents, friends: have a conversation with the children in your life about money and savings. If you have an appointment with your advisor, invite your kids so they can listen in. This could help them adopt good habits early on.  

Even though COVID-19 pushed many people to come see us (people who had never spoken to a financial advisor in their life), there’s still a fraction of society that we need to try and reach: people who may be embarrassed about their financial situation, who think you have to be rich to talk to an advisor, or who believe that money is an uncomfortable topic. How can we get these people to come talk us?  

Our industry can have a real impact  

The financial industry has contributed to many major initiatives in the last few years, and I think things should continue in this direction.  

Let’s start with the positive: one big thing is the reintroduction of personal finance classes in high schools. Industry leaders did presentations in front of government bodies a few years ago to convince them that basic financial concepts should be a mandatory part of the school curriculum. It’s a good start; younger people should learn about the basics of finance too. But we need to speak their language for the message to get through. Saving isn’t a fun concept, but what’s fun is seeing your own money grow!   

A lot of work has been done by industry players, who post a lot of financial literacy content on their websites. Social networks like Facebook, Instagram and YouTube are excellent tools for reaching more people across all generations and continuing to democratize personal finances. We’ve come a long way.  

Twenty years ago, the only way to get advice was to go to a bank. Nevertheless, though all this information is readily available, even more people could be reading it. That’s where our industry has more work to do. I think we could do more to show how important saving and good financial health is overall.  

Saving money is boring. Unless investing is a passion, it’s hard to set money aside and get any immediate gratification from it. I believe that we have to put everything into perspective – a global perspective. The industry can improve its approach in that respect. When people come see our experts or use our calculators, it’s easier to concretely show them the long-term advantages – for them, and for achieving their life goals. We need to focus on long-term satisfaction and future benefits in our messaging.  

I also think that the industry can better explain that saving doesn’t mean penny-pinching. While making a choice does mean giving something else up, it doesn’t have to be an either/or situation. Instead of travelling every year (once we’re vaccinated), why not go on vacation every other year instead? You can continue to treat yourself, but also treat your future self by saving and investing.  

Also, too often do I hear people say that our advice is only for people who are better off. It’s a stubborn myth that gets spread around. We need to help people understand that our advisors are there for everyone, regardless of how much they have in their bank account.  

Are you ready to take care of your finances?  

To conclude, I think that we all have a role to play when it comes to our financial health. Let’s take advantage of this new year to take a first step forward… Your first step may be small, but it could still make a difference in your future.  

Dear colleagues, let’s continue to encourage our clients to speak with us about their personal finances by showing openness. Financial institutions are there to support and advise their clients so they may take control of their finances.  

Dear clients, if you’re still hesitant to come see us, check out the resources available on your bank’s website or via Retraite Canada. Take the time to get a financial picture of your situation or make your first budget. No matter your age, it’s never too late to get started. When you’re ready to plan your personal finances, our teams will be here for you. 

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