In the concluding edition of a four-part series, Save with SPP talks to Janet Gray, CFP, of Money Coaches Canada about how money coaching helps people align their finances with their goals

In her career, which now spans more than 23 years, Janet Gray, CFP, of Money Coaches Canada says she’s learned that many people “really do need assistance around their money decisions… there are fires they may need to put out, and there is often an opportunity for financial literacy.”

And, she says, “it doesn’t matter how many zeroes you have in your income,” those with virtually any level of income can have money problems.

Speaking by telephone to Save with SPP, Gray said most people try to find their own way through the tricky waters of finance. “They don’t know how you are supposed to do it, so they may keep doing things wrong,” she explains – thinking that the ‘status quo’ approach is a correct one.

But continuing on that wrong path typically leads to an “acknowledgement point” where folks realize that their do-it-yourself approach isn’t working – and that they need some help.

So, given that, why don’t more people look for help?

“Pride can be a reason,” Gray explains. “They may be too proud to ask for help… it may be embarrassing for them.”

Other reasons for not seeking help, and “muddling along on your own,” include fears about costs, the time and effort it takes, and being comfortable with the way you’ve always done things (i.e., the status quo). Some people (incorrectly) fear the money coach will scold them, or shake a finger at them, and thus they “keep the blinders on,” and continue as they were.

But it is through coaching, she says, they gain perspective – they see there is more than one way to do things, and that there is probably a more efficient way to handle their finances.

It’s interesting, Save with SPP asks, to think about people with all those zeroes in their income having problems.

Those with higher incomes may feel they need a bigger house to keep up appearances, with a flashy car to top it all off, Gray says. But those may be just signs of runaway debt, rather than wealth, Gray explains. She cites the book The Millionaire Next Door, which found that the richest people in the ‘hood tend to live in smaller bungalows for decades, and drive sensible, older cars rather than leasing expensive ones, with low or no debt.

So for everyone with debt, be they high-income earners or not, education on “wants versus needs” is necessary, she explains.

These days, through the science of behavioural finance, there are ways to help “nudge” people into adopting more responsible practices with their finances, she explains.

“Instead of doing this, do that,” she suggests. “It will get you to your goals sooner.” Talking people through “the soft side of it,” will help them see for themselves why they shouldn’t “keep doing things that don’t succeed,” and encourage them to behaviours that will teach them a different, more sustainable and successful way of coping with their finances.

For an example, Gray says, think of getting an inheritance. In a lot of cases, we hear that those receiving inheritances burn through the money quickly, perhaps because they have no plan for dealing with extra, unexpected money.

A plan is key, says Gray.

“Look after the fires first,” she says, such as paying down or paying off debt. “It’s an emotional thing, inheriting money. So for sure, do something fun, maybe in memory of your relative.” But also consider longer-term goals, like saving for retirement, for at least some of the money.

“Go to the goals you have set for yourself financially – what would you do if you didn’t inherit the money?” It would probably be just that – spend some on current debts, save some, and put some away for retirement, she explains.

Asked what she sees as some success stories, she says the ones that stick out for her are from people who – once coached – realized they could afford to retire earlier than planned.

Many people, she explains, work away thinking they can’t afford to retire – but if they do the math, and take a look at what income they can expect from pensions, savings, and other sources, “they might already have everything they need now to go,” she says. “I have had several clients thank me, because they were able to see that they could retire earlier than they had planned.”

Retirees have a unique set of challenges as well.

She says recent research in the U.S. found that many retirees are spending less than they could have, which is basically “making the kids millionaires.” She advises some clients to spend a little more on themselves – “go to the five-star hotel instead of Motel 6… uplevel things a bit!”

Many retirees aren’t sure about how to spend money in their retirement, and worry “they are going to run out of money.” That’s not always the case, and emotions like that can get in the way of clear planning.

It’s also important for retirees not only to understand their cashflow, but to think about their estate plan, and to manage their taxes, says Gray.

When you are working, tax management is easy – it is all deducted from your pay, and you typically get a refund when you file your taxes.

But for retirees, taxes are far less predictable due to receiving multiple streams of income, and must be carefully managed.

Estate planning is also crucial at this stage, she adds. “What do you want to see done with your money upon your death? Do you want to leave money for your kids? Then here’s how much you have to live on. And you have to plan for longevity, and account for taxes,” she says.

You also want to keep things simple for your surviving spouse.

“If you have seven bank accounts, and five registered retirement income funds (RRIFs), and a mile-long spreadsheet, will the spouse be able to figure that all out?” she asks.

It’s critical for spouses to be on the same page about their money. “If one is a leader, and the other is a follower,” there can be problems if the leader passes on first.

“I spend a lot of time helping clients with questions like `will we have to sell the house,’ and `how will we pay for (expensive) long-term care in a memory ward,’ so it is important to keep the finances simple. One of you will be standing longer than the other.”

We thank Janet Gray of Money Coaches Canada very much for taking the time to talk with us for this four-part series!

Great news! The Saskatchewan Pension Plan now offers its Variable Benefit to all SPP members! This flexible benefit option allows you to decide how much to withdraw each year, while the rest of your money continues to be invested by SPP. And, you can still transfer money in from other registered sources! Check out SPP today!

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In this first of a four-part series, Save with SPP talks to Janet Gray, CFP of Money Coaches Canada about what a money coach does and how they can help

Fresh from an interview with CTV Ottawa on record-high credit card debt, Janet Gray of Money Coaches Canada says that while money advice is a key part of her role, there is more to being a money coach than setting up budgets and financial plans.

“Yes, we coach people about money,” she begins. “But what’s a bit unusual about being a money coach is that unlike investment, insurance companies or most other financial planners, we aren’t product focused.” Money Coaches Canada doesn’t sell any investment or insurance products — their purpose is to offer advice and coaching, she explains. All the coaches are certified financial planners (CFP), she adds.

“We are CFP professionals who talk to you about how to optimally manage your money — taking the worry out of it,” she explains. “We help people to see the big picture — here’s your money in black and white, here are systems to manage your cash flow, your taxes. And assist in making your life plans like retirement or estate wishes a reality” And while money coaches can help you manage debts, they are not credit counsellors, she adds.

The money coach, she adds, is someone who can provide “a safe and non-judgmental space to have conversations about managing your money, and how to make things better.” And while getting people to understand their personal cash flow — “where is your money going” — is important, the goal is to have more of a relationship about money and life decisions between coach and client.

Money coaches can “aid in key life decisions — like having your daughter’s wedding coming up or a desired retirement lifestyle, and how to get there financially.” She notes that if you aren’t aware of where your money is currently going, it’s more difficult to save.

Some of the clients she helps already have plans, but no longer have an advisor, so things get stalled. A coach can get them back on track “to implement their plans, despite all the potholes that keep coming at us in life. It’s an ongoing lifetime relationship, not a `one and done’ thing,” she explains.

A key result of coaching is building people’s financial literacy, Gray explains. Beyond the basics of cash flow and financial plan, coaches find they spend “a lot more (time) on financial literacy; we are educating people all the time.”

“There is great information available that they hopefully can share with their kids — do they know about Tax Free Savings Accounts, and when they can be opened? Do they understand the importance of having a power of attorney document? These are things to know that can help them support their kids’ financial literacy as well” she explains.

Money, she says, is a topic many people are uncomfortable talking about. Years ago, she jokes, people didn’t like talking about sex — but now, it’s money and finances.

“I was on CTV Ottawa today talking about the fact that the average credit card debt in Canada is around $21,000. But we’ve seen clients with triple that debt or more. And it’s not the credit card interest rates that are the problem — they haven’t changed much. It’s the fact that everything else is going up — rent, mortgage interest, gas, and groceries. So there is less left over to pay off credit card debt.”

Gray has been a CFP for 23 years and helping Money Coaches Canada clients for about nine years. “It becomes like a relationship, and I also benefit from those ongoing relationships. I get to know these people and can counsel them for everything — financial decisions, are you still on track. And when you get close to people, and know them, they have someone to talk to about their finances in plain English.” Trust builds up and the relationships tend to grow over the longer term, she says.

She had one client who, facing terminal cancer, wanted to make sure his wife had a trusted advisor to talk to about money after he was gone.

“That’s a key point — it’s not just about money, it’s about lifestyle,” she concludes.

In part two of our four-part series, we’ll ask Janet Gray about one of our favourite topics — saving. Watch for part two next month.

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Asked if Canadians are paying enough attention to the importance of retirement saving, Janet Gray of Money Coaches Canada has a simple answer. “No,” says the Ottawa-based financial planner.

“It’s always a case of `out of sight, out of mind,’” she explains over the phone to Save with SPP. A lot of people “don’t really look at it (retirement saving) until five to 10 years from their perceived retirement date.”

Some, she says, belong to pension plans and expect those will look after them. Most don’t have such workplace plans.

A key question, then, is whether or not your retirement savings from all sources will be enough, explains Gray. “You need to know your numbers – have you got enough?” she says. Will you be able to cover your costs after work is over?

And your perceived retirement date may change, she explains. Many of us find that poor health, or changes at work, force them to start retirement earlier than they expected. Again, the question for them is will they have enough, she explains.

When it comes to retirement savings, Gray says she has noticed that many have a sort of “all or nothing” mindset on the topic. People are either fully engaged savers, or they aren’t doing anything.

That said, some people are doing well on the retirement savings front.

“I’ve got clients in their 30s, professionals, who are doing well,” she explains. They want to have an enjoyable retirement, and unlike their parents, “they don’t want to work forever.” But not everyone is so organized, especially at a young age, she warns.

“We really need more financial literacy in Canada,” she says. Retirement savings, she explains, is really a case of “pay me now, or pay me later.” As an example, to match the money saved by someone who starts putting away $100 per month in their 30s, a 50-year-old would need to start putting away thousands a month (due to compound growth and early start), she says. And if you can’t do that, “you’re working until a later age than first planned,” she notes.

With retirement savings, “every little bit helps.” The stats show that most people live on average well into their 80s and even beyond, so without some sort of savings plan, you “won’t have as much money as you’d think you would have.”

It takes discipline to save. “Our culture is really hinged on a `spend now, buy now, live now’” theme, she says. People use credit, which works against them. “A $5,000 purchase plus interest on a credit card would take the average Canadian, making the average income of $29 per hour (from Stats Can), 211 hours to pay off,” Gray notes. Before you buy something for $5,000 on credit, remember that it could take 200 hours of work to pay for it, she warns.

So, how do people change their habits?

“The first step is awareness,” she explains. Once you get the need to have savings, “it’s like the old Nike ad – just do it. Starting small, say $25 a pay, is a good way, because once you’ve started and the money starts to pile up, you will be able to say to yourself “this is working!” and then keep doing it–or more, she says.

There are so many thousands who never take that first step, she says. Many have high levels of debt, which “holds people back so much,” she says, but even if you are restricted by debt you need to set aside what you can for retirement. The biggest mistake people make, therefore, is never getting started on retirement savings, she says.

We thank Janet Gray for taking the time to speak with us. Check out her Facebook page.

Starting small, and making automatic contributions, is something the Saskatchewan Pension Plan can help you with. SPP contributions can be made via automatic transfers from your bank account, and you can choose to increase those contributions when you earn more, or owe less. Why not check them out today?

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Stay the course on your retirement savings plans, experts say

If you’re a retirement saver, these past few months of pandemic-related market turmoil have no doubt raised your blood pressure and caused concern.

Experts tell us to take a deep breath, and to remember this crisis will eventually end, and things will move back to normal, reports The Record.

“While many Canadians may be panicking as they watch their retirement funds drop by tens or hundreds of thousands of dollars, financial experts say it’s important to stay the course regardless of how close to retirement they are — and even if they’ve already finished working,” The Record reports.

“I would certainly encourage all of us to take a big collective deep breath,” states Karin Mizgala, co-founder and CEO of Money Coaches Canada, in the article.

If you aren’t planning to access the savings for retirement income any time soon, you should “stay the course” on your retirement plan, Mizgala tells The Record.

And even if you are withdrawing funds from your retirement savings, it’s important to put the market downturn in perspective, financial author Kelly Keehn says in the article.

“It’s not like you have to cash it all out the year that you retire, and I think people forget that,” she tells The Record.

If your funds are in a Registered Retirement Income Fund (RRIF), the federal government is planning to put new rules in place reducing the amount you have to take out. (Full details on this rule change are covered in this article in Advisor’s Edge).

As well, the article says, you can choose to defer your withdrawals until later in the year, when markets are expected to start rebounding.

Noting that markets lost 35 per cent of their value in 2008/9, and then fully recovered and increased in value, Keehn makes an important conclusion.

“The takeaway is: If this was causing you sleepless nights, maybe in the future you need to adjust your risk tolerance and your risk exposure. But it doesn’t mean acting on it now. That’s for darn sure… This is not the time to make those changes,” she tells The Record.

If you are a member of the Saskatchewan Pension Plan, there’s a feature of the plan you should consider if, as Kelly Keehn says, the markets are causing you to worry and lose sleep. With SPP, one of your options at retirement is to receive some or all of your savings in the form of a life annuity. With an annuity, you get the exact same amount each month, regardless of whether markets are up or down. And you’ll get that amount for life – and can provide for your survivors too, if you choose to. It’s an option that offers peace of mind, so check it out on their website today.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22