BMO Bank of Montreal
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BMO Bank of Montreal

April 16, 2012 10:15 ET

BMO Encourages Canadian Households to "Clean-up" Their Financial House This Spring

TORONTO, ONTARIO--(Marketwire - April 16, 2012) - As the weather turns warmer with the onset of Spring season, BMO Bank of Montreal is encouraging Canadians to add personal finances to their Spring cleaning to-do list.

Reducing household debt continues to be an ongoing priority for Canadians, meaning reviewing spending and savings goals and overall financial priorities are likely top of mind.

"Spring is a great time to revisit financial goals and priorities to ensure they continue to coincide with both your present situation and your future plans," said Su McVey, Vice President, BMO Bank of Montreal. "Whether you have just graduated university or college, recently bought a new home or started a family, reviewing financial priorities regularly is a necessary part of keeping your financial house clean year-round."

Ms. McVey added that BMO offers BMO MoneyLogic, a free online personal finance tool that provides BMO customers with insights into their spending and savings habits.

BMO recommends Canadians look at the following areas to tidy up their financial house this Spring:

Review the household budget: Reviewing your weekly, monthly and yearly budget on a regular basis will ensure that it coincides with your priorities and identifies possible areas to scale back. According to a recent BMO study, 33 per cent of Canadians are living at or beyond their means, with 27 per cent living paycheque to paycheque. It's important to maintain a healthy credit rating to ensure you are not affected by excessive debt. Using tools such as BMO MoneyLogic is a no-cost, easy ways to track your expenses daily.

Reassess short and long-term savings goals: While it is important to stay on top of present household expenses, it is equally important to sustain your short and long-term savings goals, such as contributing to a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Plan (TFSA). Based on the BMO TFSA Calculator, if you contributed the yearly maximum of $5000 over a period of 30 years to your TFSA (with an average rate of return of 5 per cent), you would earn approximately $348,800 on a total investment of $150,000 - $88,500 more than earnings achieved from a taxable account.

Revisit overall debt repayment plan: Have another look at your overall debt repayment plan. If you find your monthly payments are becoming more difficult, consolidate higher interest debt with a personal line of credit where possible to help manage the household balance sheet. Some department store credit cards can have interest rates as high as 29 per cent. As examples on BMO SmartSteps illustrate, for every $1000 in balance that you carry, you could save up to $230 each year by using a line of credit instead (based on a Personal Line of Credit interest rate of Prime +3 per cent).

BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $538 billion as at January 31, 2012, and more than 47,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.

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