More than two-thirds of Canadians say they have a monthly budget – but 60 per cent of them don’t include one of their costliest items – their mortgage – in that budget, according to a recent study by IG Wealth Management.
The study, conducted in partnership with Pollara Strategic Insights, found that these budgets include expenses such as groceries (90 per cent), gas (72 per cent), and entertainment and savings (54 per cent each).
Mortgages account for a major chunk of monthly expenses
"In many cases, monthly mortgage payments, along with taxes, account for one of the largest monthly expenses Canadians face," said Alana Riley, Head of Mortgage, Insurance and Banking, IG Wealth Management. "So, while it is encouraging that so many reported having a monthly budget, it's only providing a partial snapshot of their overall cashflow situation if they don't factor in their mortgage. In order to truly optimize the effectiveness of a monthly budget, it should include all major expenses and be a part of a comprehensive financial plan that captures all dimensions of an individual's financial world."
With rising interest rates, integrating a mortgage into a monthly budget has taken on added importance, she said.
More than half (56 per cent) of mortgage holders are concerned about their ability to make their mortgage payments should interest rates continue to rise and just 45 per cent feel they will be mortgage free by the time they retire.
“The value of advice and financial planning has never been more important,” said Riley.