Love and Money

Ah love… such a wonderful thing, but sometimes financial strains and worries can get in the way. In fact, 84% of respondents in a Money Magazine survey said that money was the source of marital tensions with disagreements about financial priorities topping the list of problems (1). So, how should your client handle their money in order to avoid these wicked pangs of love?

Here are few insights to share with your clients to help them keep their pocketbooks full and those love lights burning strong (without all those headaches!).

Communicate

As an advisor, you know that the world of finances can be complex – TFSAs, RRSPs, RESPs, registered vs. non-registered – it’s a lot and it’s easy for your client to get lost in those day-to-day decisions that shape their financial future. In most households, it’s common for there to be one person who is “in charge” or more involved in the family finances. However, too often this leads to a lack of communication between partners – never a good thing. The outcome is that only the one person can answer critical questions like “what comes in every month vs. what needs to come out to support the lifestyle”, “which account types allow for a beneficiary”, “what are the tax consequences of withdrawals from different accounts” or “what happens if I pass away without a will”? Life is busy, but it’s crucial for your client to set some time aside for an annual review with their partner to discuss these financial matters, matters that will set them up for financial success in the future.

Plan

You understand how complicated money matters can get, so be sure to reach out to your client to offer your expert advice. It’s up to you to provide financial clarity for your client. Encourage them to talk to their partner in order to identify key financial priorities – the earlier the better in fact. At the end of the day, it really just depends on your client’s need within their stage of life – are they preparing for retirement, purchasing a new home, paying down debts, investing or maybe sending their kids to college? It’s a lot for your client to consider, but a good place to start is for them to make a list of their financial goals, have their partner do the same (separately), then work together with you to identify those key goals that are actionable today versus goals that can be deferred to a later time.

Manage Risk

Much like a home, a financial plan requires a foundation – this is where your knowledge of risk management becomes invaluable. Your client should understand their financial risks as well as where their vulnerabilities lie. It would be a true shame for you and your client to spend hours putting a plan into place only to have it derailed by a critical illness or worse. It’s simply unimaginable, but it’s your job to imagine it and then put a contingency plan in place for your client to prepare for such a situation. There are so many excellent financial products available to help your client manage risk.

Save

We all want to save, but it’s not always that simple. Take the time to educate your client not just on how to save, but also where and when to save. Here are few quick tips to share:

  1. Time – have your client identify their time horizon; when do they plan to use these funds?
  2. Automatic deposits – your client shouldn’t be depending on haphazard deposits to save; encourage them to put a systematic savings regime in place.
  3. Taxes – definitely something to discuss with your client; what type of account best suits their savings goal?
  4. Grants, bonds and special benefits – there are so many plans available that can help your client optimize their financial goals. For example, if your client would like to save for their child’s education, have them consider an RESP, which provides “free” money in the form of contribution-matching up to a certain limit. Or if your client is buying their first home while thinking about retirement savings, investing in an RRSP will give them access to $35,000 via a first time homebuyer’s loan program. Your client definitely has options – let them know!

Love and money – we need them both, but sometimes it’s difficult to keep them apart. Help your client feel the love and save some of those hard-earned dollars for a secure and happy financial future.

  1. Money? Sex? What couples are fighting about. CNN Money. n.d.

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