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On Eve Of Royal Wedding, BMO Study Finds Few Canadian Couples Show Their "Financial" Cards Before Marriage


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BMO encourages newlyweds to be open when it comes to dollars and cents


* The overwhelming majority of Canadians agree that couples need to be on the same page financially
* Despite this, less than half have discussed key financial matters prior to marriage, including debt, savings goals and establishing a financial plan
* Over half of married or engaged couples have already bought or are planning to purchase a home in the next two years

TORONTO – With the Royal Wedding just days away, the world will be watching as the future King and Queen embark on their new life together. However, unlike other newly married couples, the Royals will not face the numerous financial challenges that confront many newlyweds. BMO Financial Group released a study today that examines how Canadian couples handle financial issues prior to and following marriage.

The study, conducted by Leger Marketing, indicates that the overwhelming majority (92 per cent) of Canadians believe it is important to be on the same page with your spouse when it comes to investment goals and financial planning.

However, the report also reveals that, prior to their wedding, many couples did not address the following:

Less than half (45 per cent) discussed how much money and debt they were bringing to the marriage and their short and long-term saving and investing goals (e.g. purchase of a home/cottage, kids’ education, travel, etc.)
Fewer than one-quarter (24 per cent) spoke to their spouse about establishing a financial plan
Only one-in-five (22 per cent) shared their views with their spouse on how they envisioned their ideal retirement

Most surprisingly, more than one-third (35 per cent) did not discuss any of the issues outlined above at all.

“Before two people get married, it’s important that they have an open dialogue about their current finances. This is the ideal time to start developing a financial plan as a couple, including identifying short and long-term investment goals,” says Tina Di Vito, Head, BMO Retirement Institute. “It is especially helpful to have a financial professional at the table, not only to offer advice and assistance, but also to provide an objective point of view.”

The study also found that 57 per cent of married or engaged couples have or are planning to purchase a home in the next two years. This group has drawn on a number of sources for the down payment on their first property, including:

Personal savings (68 per cent)
Loans (27 per cent)
Investments, such as Registered Retirement Savings Plans or Tax Free Savings Accounts (26 per cent)
Parents/family (21 per cent)

“While we can see that Canadians are looking to a variety of sources to finance the down payment of their homes, it is important for couples to identify early on what these sources are and have an upfront discussion about what they can afford,” says Laura Parsons, Mortgage Expert, BMO Bank of Montreal. “Part of the process includes stress-testing your budget using a mortgage payment based on a higher rate to make sure you can realistically afford what you’ve signed up for over the long term.”

Ms. Parsons adds that total housing costs, including mortgage payments, property taxes and utilities, should not consume more than one-third of the couple’s total household income.

BMO provides the following advice to newlyweds:

Talk the talk – Do not put off having “the” financial discussion with your partner. Discuss the good and the bad, including any high-interest debt you may have and how you can work together to pay it down.
Get on the same page – Make sure that you both agree on your future investment goals and work together to develop a financial plan that will get you there.
Be honest – When it comes to purchasing your first home, be honest with your partner when it comes to what you can realistically afford and the sources of funding you will use for a down payment.
Look into the future – Although it seems far away, do not forget to discuss how you envision your ideal retirement lifestyle, and the steps you need to take, together, to get there.

The online survey was conducted by Leger Marketing from April 18 – April 20, 2011, with 1500 Canadian adults.



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