Is personal finance just a matter of math, or is there something deeper that makes us make or break?
Offers At the beginning of November, which is Financial Literacy Month, we wanted to understand why a large part of the population did not take control of their personal finances and thus missed the opportunity to secure their present, future or even achieve the goals that are important to them.
After all, there is no shortage of information, with everything that can be found on the web, nor of tools, with all the fintech that has appeared in recent years. Not to mention financial advisors, financial planners, tax specialists, accountants and all other professionals available in the market.
Financial literacy has three elements, notes Annick Kwetcheu Gamo, founder and executive director of Code F, an organization specializing in financial education. Knowledge, skills and confidence. In his opinion, a lot of emphasis is placed on the first two elements, but not enough on the last one.
“We need to get rid of the idea that you just need to know how to calculate or what an interest rate is and how it works to develop healthy personal finance habits,” he says. People need to understand the importance of developing confidence in their financial skills. A person should feel comfortable enough to make the best financial decisions for themselves.”
In order to have full confidence in future financial decisions, Annick Kwetcheu Gamo believes that people need to determine their deeper motivations regarding their life goals and personal finances.
“We really have to ask ourselves why we don’t care,” he pleads. Despite everything out there, many people take little or no action to manage their personal finances.”
Of course, there are people who have a traumatic relationship with money, who have childhood fears. “I have a lot of clients who cry when they hear the word budget,” says Annick Kwetcheu Gamo. For them it is a symbol of deprivation.”
But for others who have the means and no built-in barriers, just talking about money seems to go over their heads. “Then you have to tap into what really motivates a person and build a financial plan around that,” he says.
Portrait of life
Talking about retirement if a person has no intention of retiring (yes, there is!), talking to them about an RRSP is probably the equivalent of dropping the starter to the bottom of the lake.
In this case, you need to discuss with this person their life goals in their 50s, 60s and 70s, suggests Annick Kwetcheu Gamo. Okay, he’ll still be at work. But what is the big picture? Will he want to slow down a bit? If so, has she thought about how to fill that income gap?
“You have to ask him, ‘What’s your life going to be?'” she claims. Is there going to be a career change, kids? You have to paint a portrait of a life that includes the person’s goals. We come back again with his deep motivations.
Loosen the tie
On this topic, Annick Kwetcheu Gamo hears and sees signs that not all financial advisors and planners are willing and open to this type of further discussion with their clients.
As proof, she cites many people who come to her for advice claiming that their financial advisor only talks to them during RRSP season or that they are very focused on selling products.
He also talks about Facebook pages that provide personal finance advice, some of which have more than 100,000 subscribers.
“If people go to Facebook to get help, it’s because they don’t feel like their counselor is listening,” he believes. I believe advisors and planners would sometimes benefit from a loosening of ties.’