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Currency Events, Financial Fundamentals

Money Talks

These words are not my own. They are straight from the latest edition of ‘Solutions’ (for Financial Planning) which is a magazine put out by the Manulife Financial.



You and your spouse may share the same values and dreams, but when it comes to finances and managing household debt do you ever find you don’t understand some of his or her actions and decisions? This is common. A recent consumer debt survey found that Canadian homeowners disagree about who manages their household debt.

While the survey indicates men and women both say debt repayment is a top financial priority, dig deeper and you’ll find some telling differences. More than half of men (56%) and more than a third of women (36%) state that household debt is managed by “mostly me.” Conversely, only 10 percent of women and four percent of men indicate that household debt is managed by “,mostly my partner” or “only my partner.”

Different perceptions about who is responsible for debt management within the relationship could reflect a lack of communication, which may make it difficult for homeowners to become debt-free. The good news is that if you and your partner are struggling at all with communication about debit, it’s easy to make some simple, effective changes.

First, get talking
In our 30s, the most common goals are to pay down debt quickly, save for retirement and other long-term goals, and not have to worry about having enough money each month to meet monthly obligations.

Overall, this survey tells us that Canadians homeowners want to be debt-free, but that they’re not necessarily talking with one another about how to get there. In fact, fewer than half of the respondents in their 30s (43%) say they share responsibility for household debt management.

To achieve your gaols, it’s important to work together to put a debt management plan in place. Reach out to your advisor; in addition to financial and retirement planning, many also offer debt management advice. And when you have a plan in place, review your progress with each other on a regular basis.

Address discretionary spending
One of you may love an indulgent evening out once a month while the other would rather buy the latest and greatest tech gadget upgrades. That’s absolutely fine. But if you’re looking to trim monthly expenses, it can be difficult when you have different ideas about what to cut back on. Again, you’re not alone.

When asked what types of discretionary spending they would be willing to cut back on if it would help them because debt free sooner, only 12 per cent of homeowners said they would consider reducing phone/internet/cable services – reflecting the increasingly “wired” nature of our society.

Women and men differ somewhat in this area as well. Women are more prepared to reduce spending on household furnishings (45%), dining out (44%), and entertainment (33%) than men (40%, 37%, and 32%, respectively).

Identifying and reducing non-essential expenses is a good first step towards tackling debt.

Streamline your finances
Another great strategy is to make your money work harder by organizing your finances more efficiently.

The survey found that nearly a third of homeowners (31%) list the interest rate on their debt as a factor that makes it difficult for them to become debt-free.

Given our current low interest rate environment, an easy way for many homeowners to reduce interest costs might be to simply consolidate their debt at a lower rate. All-in-one accounts are excellent debt consolidation products to achieve this.

Be honest about priorities
In general, women appear to be more concerned about debt. At the same time they are less confident about being able to reduce or eliminate it. Slightly more women (81%) than men (75%) listed “being or becoming debt-free” as a top financial priority.

Men and women place relatively equal importance on being debt-free at retirement – with about eight in ten indicating this is a high priority. However, more men (55%) than women (49%) are confident that they’ll achieve that goal.

Moreover, women appear to be more adverse to the idea of retiring with debt consolidation – 60% indicate they would find this scenario very stressful compared to just 42% of men.

In many households there’s a discrepancy between couples in attitudes, perceptions and expectations with regards to debt, likely because each partner is managing personal debt separately or they just aren’t talking enough to one another about finances. The key is to work together and discuss the emotional side of money as well as the actual numbers.

Work with a financial professional
Research shows that nearly three in four people who get debt and cash flow advice from an advisor have a plan for becoming debt-free. Work with your advisor to create a plan that focuses on debt consolidation and repayment to help you manage your debt and overall financial plan more efficiently.

Tyler Brown
Financial Security Advisor
Life Insurance Broker

WP: (519) 648-9580

CP: (519) 212-9859
FX: (519) 489-2740
244 Woolwich St. South, Unit #1 ~ P.O. Box 261 Breslau, ON ~ N0B 1M0



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