(Special) – At a time when many Canadians are not feeling very confident about their personal finances, a new study by Edward Jones shows that people may be tempted to overspend their budgets when trying keep up with their neighbours and friends.
A recent survey by Angus Reid shows that almost a third of Canadians are feeling very stressed about money and 30 per cent are pessimistic about their personal financial situation over the next few years.
Another survey by TD Bank found that only 29 per cent of Canadians feel confident they will be able to keep pace with change over the next 10 years.
The poll by Edward Jones revealed that looking at the purchases of others may influence Canadians to buy items that are beyond their budget. The poll showed that 61 per cent of Canadians often look to their friends and wonder how they can afford their lifestyles. This was felt most among the 18-to-34 and 35-to-44 age groups.
An overwhelming majority of Canadians (93 per cent) said they experience buyer’s remorse and admit to regretting their spending habits, felt most by 18-to-34-year-olds and then by baby boomers.
According to Wikipedia, keeping up with the Joneses is an idiom in many parts of the English-speaking world referring to the comparison to one’s neighbours as a benchmark for social class or the accumulation of material goods. Failing to keep up is perceived as demonstrating socioeconomic or cultural inferiority. The phrase originated in a comic strip in 1913 which was published until 1940 in The New York World and other newspapers.
“The purpose of the study was to get a better understanding of what influences spending decisions,” Roger Ramchatesingh, director of solutions consulting at Edward Jones, said in an interview. “What it shows is that while buyer’s remorse is mostly felt among younger consumers over smaller items, the implications are much larger — over time those small items can compound and throw us off our financial track.”
The purchases that Canadians are most likely to regret are tangible ones like clothing and shoes, jewelry and electronics rather than experiential purchases.
“It’s really important to understand how you spend money and where it is going,” Ramchatesingh says. “For example, if you know you enjoy spending money spontaneously, build this into your monthly budget. When it is unplanned it can add up over time and hurt other long-term goals such as retirement or the purchase of a home.”
Ramchatesingh recommends people sit down and decide what is important for them and their families. “Decide what your North Star is and develop a plan to attain it and don’t go chasing someone else’s North Star,” he says.
The poll found that only 44 per cent of respondents have a financial strategy in place and adhere to it. Seventy-five per cent of Canadians believe they should have their finances in order between the ages of 18 and 34, yet only 38 per cent in that age group have a financial strategy and follow it. In the 35-to-44 age group only 44 per cent have a strategy in place.
“The message from the poll is pretty obvious — regardless of what stage of life or generation you are in, get a clear idea of your North Star and put in place a process to get there,” Ramchatesingh says. “A financial adviser can help develop a financial strategy that addresses what is most important to you and help you towards the lifestyle you desire. By following and executing a proven and thoughtful process you can have more confidence.”
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.
Copyright 2018 Talbot Boggs
Talbot Boggs , The Canadian Press
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