Jan 26 – Coaching opens eyes to alternative ways to succeed with money: Janet Gray

January 26, 2024

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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Janet Gray, Money Coaches Canada

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