Being debt free is top financial goal, Manulife Bank survey finds
More than two-thirds of Canadians in a national survey rank being debt-free among their top financial priorities, yet close to half feel they lost ground or only held steady in the past year in their struggle to reach their goal, according to an online poll of 1,000 Canadians.
“Becoming debt-free is a goal that most Canadians share, but few put concrete plans in place to make sure they’ll get there,” said Doug Conick, President and CEO of Manulife Bank of Canada, in a news release.
Even though more than two-thirds of Canadian households (69 per cent) continue to name “debt-freedom” as their top financial priority, a similar number say they did not make any extra mortgage payments in the past year.
The poll for Manulife Bank of Canada was conducted by Research House in late July and early August.
Despite low interest rates in the past 12 months, the poll suggests many of those surveyed did not reduce their debts. More than one in four (29 per cent) said their debt increased in the past year, up slightly (two percentage points) from a similar poll in April.
Another 17 per cent saw no change in their level of debt, while 16 per cent said they did reduce their debt, but by less than they’d expected.
Fewer than one in 10 (eight per cent) said they shaved more than they expected from their debts in the past year.
When asked about their financial priorities, almost a full third (32 per cent) of those surveyed ranked being debt-free as a ’10′ – their top financial priority. Another 37 per cent ranked it as a nine or eight on the 10-point scale.
“If they’re working with a financial advisor and have a plan in place, they stand a better chance of reaching their goals,” Mr. Conick explained. However, 77 per cent of those surveyed said they prefer to manage their day-to-day finances on their own, without advice.
Also, 43 per cent of those surveyed said they would have difficulty making their regular mortgage payment within three months, if the primary income earner lost their job. Of these, 17 per cent would have difficulty after one month. A further 40 per cent could keep up their mortgage payment for 3-12 months.
The remaining 16 per cent have flexible mortgages that allow them to easily increase or decrease their mortgage payment as their needs change.
Almost two-thirds of those surveyed (64 per cent) said they did not make any additional mortgage payments in the past year. Yet nearly half of respondents said they would be likely to make mortgage payments if they could easily access that money again, should their needs change.
Dessa Kaspardlov, a Windsor-based Advisor and Chief Operating Officer of Kaspardlov, Laverty & Associates, notes that while many Canadians understand the importance of debt management, they simply do not have the tools or strategies to do so efficiently.
“We’re often taught that financial planning simply involves saving for retirement,” says Kaspardlov, author of The Fireman and The Waitress and creator of “Dessanomics”. “We fail to consider the role our debts have in our near-term and long-term financial health. Debt and cash flow management is often not given the attention it deserves because the cost of failing to do so is not well understood. A financial advisor can integrate these into a broader financial plan to help clients achieve their goals far sooner.”
