The younger generations often get a bad rep for poor financial planning but they face unique challenges in 2018, according to the managing director of the IFSE Institute.
Christina Ashmore is fully behind Financial Literacy Month, which begins today and encourages Canadians to take control of their finances and reduce stress by doing things like making a budget and having a savings and debt reduction plan.
The IFSE Institute today also launched its “Tip of the Day” to raise awareness of these issues and to build on its role as an educator to the industry, ensuring advisors are well trained and with the expertise to help clients and inspire confidence for them to make better decisions.
It’s not just the young that need help with financial planning as the problems affect people of all ages and situations. Ashmore said the negative impact of these stresses can be life-changing and that simply educating is not enough; clients have to be empowered to make better decisions.
She told WP: “Financial issues can cause stress in the population, have a potential impact on health, work and personal relationships.
“The government has done a lot of research into it and they know that simply providing information to Canadians is not enough, so the population really need to be instilled with the confidence and skills to make better decisions and to develop better and more positive economic behaviours.”
Ashmore believes that today’s society is more consumer-led but said that the world is also a different place with more onus on the individual to take charge of their finances.
She said that some of the younger generation don’t have as much economic ability or certainty with their employment, which makes it harder to plan.
“The other thing is employers have played a role in helping individuals plan for retirement with pension plans and some of that has shifted as well. There are fewer and fewer defined benefit plans, which provide that guarantee for people at retirement. The shifting of the risk has moved from the employer to the individual to be able to save for their own retirement.”
Ashmore highlighted SunLife Financial’s Canadian health index, which listed some of the financial stress triggers like household bills and managing the day-to-day money, budgeting and simply trying to maintain their expenses and costs. A failure to build up an emergency fund for unexpected expenses is another issue.
Ashmore said: “There needs to be a savings mentality for individuals and some of those attitudes have shifted. There is not so much focus on saving and planning. We look at some of these financial events that they want to prepare for like their kids’ education or retirement, that is something that needs to happen earlier and people need to start thinking about and start preparing for.
“And one of the challenges Canadians face is there is only so much take-home money at the end of the day and when their cost of living, especially in areas like Toronto and Vancouver, is so high, some of the future planning takes a bit of a back seat to some of the immediate needs they have.”
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