TORONTO, ONTARIO--(Marketwire - Feb. 14, 2012) -
Editors Note: There is a photo associated with this press release.
As Canadians celebrate Valentine's Day across the country today, BMO Financial Group emphasizes the need for Canadian couples to be on the same page when it comes to money management and financial planning.
A BMO study indicates that the overwhelming majority (92 per cent) of Canadians believe it is important to be on the same page with your spouse when it comes to investment goals and financial planning.
However, the report also reveals that, prior to their wedding many couples did not address the following:
- Less than half (45 per cent) discussed how much money and debt they were bringing to the marriage and their short and long-term saving and investing goals (e.g. purchase of a home/cottage, kids' education, travel, etc.)
- Fewer than one-quarter (24 per cent) spoke to their spouse about establishing a financial plan
- Only one-in-five (22 per cent) shared their views with their spouse on how they envisioned their ideal retirement
Most surprisingly, more than one-third (35 per cent) did not discuss any of the issues outlined above at all.
"Before two people decide to make a life-long commitment to each other, it's important that they have an open dialogue about their current finances. Ideally, they'd develop a financial plan as a couple, including identifying short and long-term investment goals," said Tina Di Vito, Head, BMO Retirement Institute. "It is especially helpful to have a financial professional at the table, not only to offer advice and assistance, but also to provide an objective point of view."
The study also found that 57 per cent of married or engaged couples have or are planning to purchase a home in the next two years. This group has drawn on a number of sources for the down payment on their first property, including:
- Personal savings (68 per cent)
- Loans (27 per cent)
- Investments, such as Registered Retirement Savings Plans or Tax Free Savings Accounts (26 per cent)
- Parents/family (21 per cent)
"While we can see that Canadians are looking to a variety of sources to finance the down payment of their homes, it is important for couples to identify early on what these sources are and have an upfront discussion about what they can afford," said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. "Part of the process includes stress-testing your budget using a mortgage payment based on a higher rate to make sure you can realistically afford what you've signed up for over the long term."
Ms. Parsons added that total housing costs, including mortgage payments, property taxes and utilities, should not consume more than one-third of the couple's total household income.
BMO provides the following advice to newlyweds:
Talk the talk - Do not put off having "the" financial discussion with your partner. Discuss the good and the bad, including any high-interest debt you may have and how you can work together to pay it down.
Get on the same page - Make sure that you both agree on your future investment goals and work together to develop a financial plan that will get you there.
Be honest - When it comes to purchasing your first home, be honest with your partner when it comes to what you can realistically afford and the sources of funding you will use for a down payment.
Look into the future - Although it seems far away, do not forget to discuss how you envision your ideal retirement lifestyle, and the steps you need to take, together, to get there.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $477 billion as at October 31, 2011, and more than 47,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
Get the latest BMO press releases via Twitter by following @BMOmedia.
For more information on retirement planning and investing, please visit www.bmo.com/retirement or www.bmo.com/smartinvesting.
For more information on mortgages and housing, please visit www.bmo.com/mortgages.
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