The Financial Confidence Paradox: A Closer Look at Canadians’ Money Habits
CanadianSME Small Business Magazine
Empowering Canadian Small and Medium Enterprises,
– 75% say they have strong financial habits, yet 73% admit to actions over the last year that could be hurting their financial wellbeing –
It’s a common refrain that strong financial habits are crucial at every stage of life. This is particularly true for small business owners who juggle the demands of running a business with managing their own personal finances. Many of us might feel that we’re confident enough with our day-to-day finances. However, a recent RBC study conducted by Angus Reid has found a peculiar paradox among Canadians. While a significant 75% of respondents believe they possess good financial habits, with 62% rating their habits as above average compared to their friends and family, the data tells a different story.?
This paradox is especially relevant for small business owners, who, despite their confidence, may find their financial skills tested by the dual responsibilities of managing business and personal finances.
The Numbers Don’t Lie
The study found that 38% of respondents haven’t set financial goals and 37% have neglected financial planning. This is like building a house without blueprints! Even more worrisome, 34% of poll respondents admitted they even failed to track their own expenses.?
So, are many Canadians inadvertently turning a blind eye to their personal finances? It seems so.
Many Canadians are likely managing their money without a compass, leaving them vulnerable to the unpredictable waves of economic change, such as higher cost of living expenses. This is cause for concern as there is a gap between perceived confidence and actions when it comes to Canadians’ financial habits.
The poll revealed that time constraints are a common issue in managing finances, with 39% of Canadians feeling too pressed for time to focus on their finances, a sentiment that is relatable to many, including business owners and entrepreneurs. In the daily grind of our personal and professional lives, financial planning often gets relegated to the back burner and almost forgotten.
However, with robust financial habits and the support of digital financial apps and tools, not only can we be better equipped to weather economic downturns, but we can also live happier lives.
Boosting confidence with digital financial tools
The study found that a majority of respondents (55%) aren’t always confident in their financial decisions. Digital financial apps and tools, can be a game-changer for those who may lack confidence in our own financial management skills.
Setting financial goals and implementing good financial habits can seem daunting and time-consuming at first, but it’s important to remember that Canadians are not alone in this journey. Digital tools are designed to simplify the process. They can automate savings, eliminate the need for manual calculations in budgeting, and even project future cash flow.
These financial tools can remove some of the monotony associated with money management. For example, RBC’s NOMI suite of capabilities are designed to provide insights, tips, and nudges that can guide Canadians towards better financial decisions. This, in turn, can boost confidence and alleviate financial stress. NOMI Find & Save, one of these capabilities, uses predictive technology to find and save money you might not even realize you have. Since its inception in 2017, it has helped clients put aside more than $6.5 billion into savings, averaging about $495 per month per user. Business account holders at RBC can also access NOMI to track spending and gain insights to make informed financial decisions.
The study also revealed that Canadians are more likely to use AI to assist with their overall wellbeing and daily activities. However, many may be reaping the benefits of AI-driven financial apps and tools without even realizing it!
The Wellbeing Boost of Good Financial Habits
Besides the obvious financial progress one can make with proper habits, there’s another key benefit: our health and wellbeing.
The study showed that Canadians are acutely aware of the positive impact that good financial habits can have on their overall wellbeing, with a significant majority (81%) acknowledging this connection.
Good financial habits, like budgeting and saving on a regular basis, are not just about wealth accumulation; they’re a cornerstone for our overall wellbeing, especially for those of us steering the ship of a small business. They can also help with the following:?
From Paradox to Prosperity
The survey results highlight a critical need for financial education and the strategic use of technology. For entrepreneurs, digital financial tools can transform the gap between confidence and action into a bridge towards financial prosperity.?
As many of us know, financial wellness isn’t just about making the right moves but ensuring those moves are informed, strategic, and most importantly, consistent. As the financial landscape continues to evolve, embracing these tools and habits isn’t just good practice; it’s essential for navigating the complexities of life with confidence and peace of mind.
Peter Tilton, Chief Digital Officer, Personal and Commercial Banking at RBC
Peter Tilton is the Chief Digital Officer, Personal & Commercial Banking (P&CB) for RBC. In this role Peter is responsible for helping to drive RBC’s shift to a more technology-enabled, digitally-driven bank. More specifically, he is responsible for identifying and capitalizing on ways to leverage digital to further position RBC as a global leader in digital banking. Peter has oversight of building the framework to drive the convergence of digital channels with sales, service, and advisor platforms. Peter is also responsible for direct client experiences across mobile, online, tablet, wearables including banking, direct investing, wallet, and rewards and business solutions.
Prior to joining RBC in 2016, Peter was Head of Digital Banking for Australia & New Zealand Banking Group Ltd. (ANZ Bank). Peter’s previous roles at ANZ included leading the Analytics & Insights, ATMs, Foreign Exchange, International Banking and International Payments functions.
Peter has a Computer Science and Education Degree from the University of Melbourne and his Master’s in Human Resources Development from Queensland University of Technology.
Peter lives in Toronto, Ontario with his wife and daughter.
What is the definition of "good financial habits"? Most money coaches I have seen always talk about setting a budget and sticking to it. I don't do this, but I did do analysis on my expenses and generally like most they go to the biggest items like: - house payment - car payment - food (groceries and eating out) - house expenses (gas / water / sewer / electricity) - property tax - insurance - internet / mobile - only after all that is there left over for "fun" or regular everyday stuff.
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