Ah, the first few days of the New Year. A time when wide-eyed aspirations are set and goals are committed to. It’s also that wonderful time of the year when haters pop out of the woodwork to ostracize others for establishing New Year’s resolutions, trolling Facebook feeds and banging out comments of spite.
But despite the expected bout of hater-itis, 80 per cent of Canadians are resolution makers, according to a study by BMO Wealth Institute. (That’s right haters, hate on, we don’t care…).
Perfecting Personal Finance A Top Resolution
Naturally, getting a sweet bod sits at the top with 51 per cent of resolutions by Canadians related to health and fitness followed by – you guessed it – financial commitments.
Of those surveyed, 36 per cent of resolutions related to money matters.
“It’s encouraging to see that so many Canadians will be making financial issues a priority in the upcoming year,” says Chris Buttigieg, senior manager of wealth planning strategy at BMO Financial Group.
And according to the study, it seems financial commitments are easier to keep than diets and workout routines; 60 per cent of those surveyed are sticking with money goals made in past years versus 42 per cent who kept their health and fitness goals.
“Planning is essential to achieving your goals. If your New Year’s resolution is to lose weight, you will need to follow a plan that includes an exercise schedule and a diet regimen,” adds Buttigieg. “Similarly, developing a financial plan is only the first step.”
Making a Financial Plan For Success
According to the poll, 59 per cent of Canadians have a financial plan, and an overwhelming majority (82 per cent) of those say that setting that plan helped them achieve their goals in the past.
“The second and most crucial step is to implement the strategies recommended in the plan,” says Buttigieg. “And finally review the progress of the financial plan at least on an annual basis.”
Face The Barriers To Success
But some are finding it tough to get started.
While 37 per cent cited not having enough money to warrant a financial plan, 29 per cent admit they never thought of drafting on up in the first place. Twenty eight per cent have no idea how to start the process, and 19 per cent are not quite sure what a financial plan involves.
“Having a financial plan is not contingent on your income or how much you have in investments,” adds Buttigieg. “A financial plan can benefit anyone who has goals which require funding and is seeking a roadmap to help achieve them.”
What Should A Financial Plan Include?
CIBC conducted it’s own poll focusing on the financial priorities of Canadians going into 2014. The results paint a picture of the financial concerns and long-term goals that often make up financial plans.
Sixteen per cent of those surveyed put paying down debt at the top of their list and 11 per cent have targeted building savings. Eight per cent are looking to get better at budgeting while another eight per cent are just looking to pay bills and “get by”. Only seven per cent plan on focusing on retirement saving.
Although paying down debt is important, says Christina Kramer – executive vice president or retail distribution and channel strategy at CIBC – having a plan in place makes it easy to tackle several different money goals at once.
“Managing cash flow and expenses are immediate issues, but you also can’t put off your retirement planning indefinitely,” says Kramer. “The good news is that if you start early you can take small steps towards building your retirement savings while also focusing on your current financial needs.”
Tips For Building A Plan
Talk to an advisor: “Trying to do-it-yourself can work for some people, but most Canadians would benefit from taking a broader view of their finances with an advisor including looking at their debt, and then working out a realistic plan to start repaying that debt over time,” adds Kramer.
See the symbiosis: So often the tendency is to focus on one element of your final goals and hammer through it, but seeing the connections between your finances can help you find ways to tackle several at once.
Case in point: reducing a bit of debt or renewing your mortgage at a lower interest rate can free up some money to contribute to your RRSP.
Stick to it li’l saver: No need to elaborate on this one. There are few things more satisfying then surprising yourself by sticking with something. Don’t get discouraged, be vigilant and driven.