Managing your personal finances: Introduction
Managing your personal finances may seem like a good idea in theory but according to Eric Kirzner, a professor of finance at the Rotman School of Management in Toronto, “Going solo on your financial future probably isn’t worth the risk”. Never-the-less many Canadians are under the mistaken impression that managing their personal finances is a DIY project.
Managing your personal finances: How knowledgeable are Canadians about personal finance?
According to a recent survey by Tangerine:
- Only 50% of Canadians surveyed consider themselves knowledgeable when it comes to personal finances
- 39% consider their personal finance knowledge satisfactory, saying they only have enough knowledge to get by
- 12% say they have limited or no knowledge
Managing your personal finances: Why aren’t more Canadians hiring financial planners?
There are a lot of misconceptions about financial planning – it’s only for the rich or young, or that it’s too expensive. And, many Canadians think that financial planning is only about budgeting or retirement planning.
Managing your personal finances: What is a financial plan?
A financial plan is a roadmap that shows you where you are today and helps you define your financial goals and aims for the future. And it provides you with the tools, information and structure to help your realize your financial goals and aims. A study by the Financial Planning Standards Board reports that 69% of Canadians still don’t have a comprehensive written financial plan to meet their life goals.
Managing your personal finances: What are the benefits of financial planning?
A study conducted on behalf of the Financial Planning Standards Council has shown that:
- People who engaged in comprehensive financial planning have higher levels of financial and emotional well-being
- Individuals with a financial plan have a better handle on their cash flow, have a plan to pay down debt and are more ready for emergencies
- They have a better understanding of their investments, they know what to do to retire comfortably and have greater peace of mind
Managing your personal finances: Why do I need a financial plan?
According to the Government of Canada a good financial plan will help you understand what your choices are today and in the future, reduce uncertainty about the future and help you make good decisions. A financial plan will answer these types of questions:
- How much income do I need?
- Do I have enough money to retire?
- Should I keep working?
- Do I need to sell property or other assets?
- How much insurance coverage do I need?
- How much money will I receive from government programs?
- What will it cost me to live once I retire?
- How long will my savings last?
Managing your personal finances: What if I managed to accumulate too much debt?
Managing your personal finances may compromise your financial future. Always consult with a professional for financial services advice. If you’re seeking advice about debt, consult with Ira Smith Trustee & Receiver Inc. Our expertise in insolvency and financial restructuring can help you overcome your financial difficulties Starting Over, Starting Now. We’re just a phone call away.