by Stuart Wilkinson
Individuals and families are well aware of the high cost of living these days. Every time you buy groceries, fill your car with gas or get new shoes, you are left with less and less in your wallet as prices continue to go up.
In this highly volatile economy, it’s more important than ever to spend and invest smarter. That’s not always easy with all sorts of demands pulling on each of us every day.
The good news is that there are resources out there to help you. As the Chief Consumer Officer at the Financial Services Regulatory Authority of Ontario (FSRA), I’m asking Ontarians to take some time to learn as much as possible about their personal finances and the choices available to them.
As we kick off Financial Literacy in November, I’m reminded of a recent FSRA study that found that Ontarians may not be considering all of their options when it comes to financial advice. Specifically, we found that “word of mouth” was the most common source of financial advice for Ontarians. The next most common source was the internet. Do-it-yourself is a great approach for some of us, but in cases where your life savings could be at stake, it’s important to understand your options.
It’s not the first time we’ve heard this.
Our research has also found nearly 40 percent of Ontarians spend more time planning their vacation than understanding their mortgage, and 50 percent spend more time researching their last cell phone purchase than they did their financial services professional. Only 30 percent of Ontarians actively shop around for the best auto insurance rates.
For what it’s worth, I look forward to planning a vacation, I love getting a good deal on my phone, and it takes a lot of energy to convince myself to take the time to shop for auto insurance. That said, researching the financial options available to you is important and shouldn’t be overlooked.
You don’t need to make potentially life altering financial decisions on your own. FSRA is here to help you through the process. To begin with, here are four actions you can take that can possibly save you money or prevent a financial headache down the road.
1) Learn about your pension options: a pension pays you an income when you retire, for as long as you live. Most Canadians are contributing to the Canadian Pension Plan with each paycheck, but it’s also important to ask your employer if they offer a workplace pension plan. Your future self will thank you.
2) Create an exit strategy for your private mortgage: high interest rates and a rigorous stress test mean that more consumers are opting for private mortgages as opposed to traditional mortgages. Consumers should be aware that private mortgages are a temporary option for one or two years and they have very different terms. It is integral that you ask the right questions and have an exit strategy in place.
3) Verify the credentials of your financial professional: it’s important to be informed when trusting someone with your hard-earned savings. People using the titles Financial Planner and Financial Advisor are required to be approved by a FSRA credentialing body. This means that the individual will have a minimum standard of education and be held accountable for their conduct. You can verify credentials on FSRA’s website: https://www.fsrao.ca/industry/financial-planners-and-financial-advisors/approved-credentialing-bodies-and-credentials
4) Shop around for auto insurance: if you’re in the process of purchasing or renewing your auto insurance, be sure to understand how your driving habits impact your rate. Commit to shopping around and getting a minimum of three quotes from different insurers. Did you know that you have a right to ask insurance companies for the lowest rate possible for the coverage that is best for you?
This Financial Literacy Month; please take the time to research, prepare, and thoughtfully plan your financial decisions. An informed consumer is an empowered consumer.
Stuart Wilkinson is the Chief Consumer Officer at the Financial Services Regulatory Authority of Ontario.