Every semester, Nigel Heath asks his financial-planning students, who range in age from teenagers through to retirees, how many of them have family budgets.
"It's never more than 10 or 20 per cent of the hands that go up," says Mr. Heath, who teaches at Toronto's Seneca College. "I'm always surprised."
The federal budget will be presented in Parliament tomorrow, and financial experts say it is time families across Canada took a cue from Ottawa and made their own money plans public, declaring where their income is coming from and how it will be spent, and whether they will run a deficit or slash spending.
"Having a budget is the first step in avoiding financial difficulties," Mr. Heath says. "It's the best thing [families] can do in difficult times. When jobs are threatened, having a plan in place that gives you confidence that can see you through the difficult times is of utmost importance."
Last month, Bank of Montreal released the results of a national survey that found nearly seven in 10 Canadians don't have a budget. Eighty per cent of respondents said the current economic downturn is not enough incentive to create one.
"When I see that, I go 'Yikes!" says Judy Thomson, director of the bank's retail investments. "You need to know how much money is available to you for spending. How much of that are you allotting to your children's education? How much are you allotting to retirement? Then how much money is left? You need to know what that is. If not, how do you plan for emergencies?"
When it comes to family finances, ignorance does not mean bliss. A study released last week by the Vanier Institute of the Family found that Canadian families aren't well positioned to weather the current economic crisis.
The study, The Current State of Canadian Family Finances - 2008 Report, found that the average household income is 12-per-cent higher than it was in 1990, but spending is up by 24 per cent and total family debt is up 71 per cent, growing six times faster than incomes.
"We're anticipating a pretty hard time ahead of us," says Clarence Lochhead, executive director of the Vanier Institute of the Family.
"When you look at what's been happening on the debt side of things and the spending side of things around households, they're not very well-equipped in terms of being able to absorb the financial shock of this recession."
Creating a family budget is not difficult, Ms. Thomson says. A range of online tools are available to help families draw up financial plans.
"It shouldn't be complicated," she says. "Here is your income. Here are your expenses. What's left? And whatever is left, how do you best use that?"
Al Nagy, a certified financial planner in Edmonton, says that honesty and transparency are the best policy when creating a family budget. You may not need to inform your children about your credit-card debt, but let them at least know the general outlines of the family budget.
"It's important to make your children money-aware early on," he says.
"If the children observe their parents being money-smart, they will develop those characteristics naturally."
Indeed, think of sticking to a budget as a group effort.
"It's beneficial to consider the family as a financial team," Mr. Heath says. "All team members should be in on making decisions or being aware of the current status of the financial situation." Making it a team effort will help cut down on the stress of constantly nagging the kids to turn off the lights or spend less time in the shower.
Even wealthy Canadians need to budget, says Michael Downs, senior vice-president of private capital at Connor, Clark & Lunn Financial Group, an asset management company in Toronto that caters to high-net-worth clients.
