Please do not hesitate to talk to an advisor... for your own good

Manulife Financial (one of my business partners) released a series of illustrations on a survey (Canada's 2009 Canadian Financial Capability Survey) result yesterday: Making Cents: A Study of the Financial Literacy of Canadians, which shown that many Canadians have real challenges with financial literacy. From budgeting for today to planning for tomorrow.

 

I would like to say something on these findings.

 

 

The first thing I am not very happy with (worry rather), is that 48% of home buyers (maybe even current homeowners) saved less than 5% of the cost of their home. Meaning if they have a property of $300K, they do not even have $15K in savings... That's actually quite alarmed. Imagine, if they bought a property at $300K about 3 years ago, having a 5% down payment, they would have been paying about $1225 a month on a 25 year amortization mortgage. And 15K is just slightly over a years' mortgage payment. 

 

 

Another thing I am not happy is that 52% of future home buyers have no idea what kind of cost (or expenses) they are getting into other than a down payment. I have this young couple put in an offer just because they calculated they were able to carry a mortgage as much as the rent they were paying, and then... Of course, they got into much more expenses like fees, taxes, and needing to fix the roof and windows, things like that. They stretch themselves, hard to borrow more from the bank, and paused all saving plans they had in placed.

 

 

Another thing is not surprising but still not a good sign is that: 43% of people will actually take financial advises from FRIENDS... well, I hope all these friends are financial advisors... :S

 

39% of Canadians struggle to stay informed about finances, while Canada is one of the countries having the most population online, spending the most of our time online (Toronto Star: Canadians spend more time online than anyone else on Earth)! 26,960,000 Internet users in Canada as of March, 2011; 79.2% of the population, according to Computer Industry Almanac Inc (who publishes market research reports for the PC and Internet industry). I guess the complexity of the financial world makes it hard for people to get relevant information.

 

As much as I respect everybody has their own lives, please talk to a financial advisor if you feel you need help.