Why financial spring cleaning can spark regular reviews
While most Canadians like to refresh their homes and personal spaces during the spring, less than half are including finances on their spring cleaning to-do list, says one award-winning advisor.
“According to a survey that PC Financial conducted, almost one-half of Canadians would prefer to clean their bathroom and toilet than create a budget, and almost 40% of Canadians surveyed avoid setting a budget or looking at finances altogether,” Jackie Porter, founder of Team Jackie Porter and a financial advisor with Carte Wealth Management, told Wealth Professional.
“Another survey that came out recently also said that many people are only $200 away from peril. So, if they had to come up with an extra $200 right now, that might put them in some economic turmoil. I can see why they should be looking at their budgets right now and trying to figure out their finances, but they might be turning away and not wanting to face it.”
Porter noted that the recent PC Financial survey demonstrated that two-thirds of Canadians (65%) believe that reviewing their finances once a year is enough, even if they’re planning to make financial changes – which almost half (44%) are as they file their tax returns, organize their income and expenses, update their budget, revisit their financial goals, or develop a debt repayment plan.
Porter said advisors should be reminding their clients that they should be spring cleaning their finances, as well as their homes, but that should just be the beginning of their regular financial check-ins. Meeting more regularly to keep up with their life and financial changes is important, particularly now when many Canadians are facing major financial headwinds, such as inflation and high interest rates, so may need to revisit their budgets more often.
“We have to be proactive when it comes to talking to people about the things that make them the most uncomfortable around their finances,” she said. “We need to encourage our clients – I call it professional nagging in my business – to look at their budget with me and review their cash flow because things have changed a lot. A year ago, we were saying that things were opening up and people were getting out there to spend more money, but now interest rates and inflation have gone up, so it’s important to encourage them to look at their numbers.”
She said she provides her clients with budget sheets they fill out to be reviewed, so they can then talk about their goals and check the alignment. “Sometimes, when you do that exercise, people recognize that their budget and their financial goals aren’t really aligned,” she added.
She also encouraged advisors to suggest that their clients consolidate their banks accounts, preferably using no-fee options, to take more stress out of their daily finances. There are also options to allow them to collect points, even if they prefer to pay by debit rather than credit. By working with one institution, they can also build a stronger banking relationship to demand more.
Porter recommends that advisors check in with their clients every quarter to see if their financial goals or money allocation has changed, and whether their budgets need updating and they’re keeping track of their spending, so they’re not just doing it once a year at tax time.
Advisors should also encourage them to review their statements – either investment or credit – to ensure they’re accurate and, especially for credit, not susceptible to any fraud. If they’re investing through auto-payments, they can also check what progress they’re making toward their goals and fine-tune their budgeting and perhaps invest more if they’re spending less in any category.
“Spring cleaning means looking at these things more often, so they can be more intentional around their goals of paying things off and saving for the future,” said Porter.
“We’re checking in more often with our clients, and my female clients really love that as well as using some financial app to see how they’re doing and whether they’re making any progress. It provides them with an accountability partner and then we can always have a meeting to adjust what they’re doing, whether it’s with a line of credit or mortgage or putting more in their TFSA account.
“You should be looking at all of this regularly, so you can help them feel more on top of it.”
