Personal finance guru Kelley Keehn has just written a book for millennials. Lesson one? Don’t budget

“I’ve seen how messed up people are with money,” says Kelley Keehn, author of “Talk Money to Me: Save Well, Spend Some and Feel Good About Your Money.”

No wonder: Keehn has worked in the finance industry for more than 20 years. She started with a financial planning firm, then she worked at a bank, as the owner of her own firm and finally as an author, educator and consumer advocate for the Financial Planning Standards Council.

To help people get back on track, Keehn has written nine books about personal finance and fraud protection and she appears regularly as the personal finance expert on CTV’s “Marilyn Denis Show.” She has been a regular contributor to CNBC in New York and was a nationally syndicated columnist for CBS Radio.

As a child of a single mother who grew up poor, Keehn knows the value of a loonie. With her new book, geared to millennials, she hopes to teach others to form a comfortable relationship with their money.

Keehn spoke to the Star recently about why you shouldn’t make a budget, a simple way to curb your spending and what to do if your debt gets out of control.

How can I be certain that a financial planner is legitimate?

In a lot of provinces, anyone can call themselves a financial planner. The gold standard of certification is the CFP, the Certified Financial Planner. In Canada, we now have the Qualified Associate Financial Planner (QAFP), too, for ordinary money concerns, since the average person is frustrated with the financial planning industry, saying planners won’t deal with them because they don’t have lots of money. There are lots of planners who use the fee-for-service model and charge by the hour.

Depending on the type of investing you’re doing, you may want to know who regulates the person you’re considering. Spend time vetting the adviser, even if it’s someone you’ve been working with for 20 years. You also want to feel respected and comfortable. Remember, you can always change advisers. It’s a business — you don’t need to feel obligated to stay with someone if you don’t feel you’re getting value for your money.

What is a 30-day anti-budget?

Diets don’t work and pledges (e.g., budgets) don’t either. People find them constricting and don’t follow them.

An anti-budget is an exercise in behavioural change and awareness. For 30 days, you record all of your spending. Do it in a little notebook or an app on your phone. Your bank will also track your spending, especially if you live largely on debit and credit cards.

Next, dig into your finances. See where your other spending takes place during the year: auto insurance, mortgage, cellphone, etc.

At the end of the 30 days, see which categories of spending stand out, for example, eating out or using ride services. Multiply those amounts by 12 and you’ll see what that behaviour costs you annually. Did you realize you were spending that much?

Now, trim your spending. You can always find waste without giving up things you love. It’s not about constricting you; it’s about empowering you.

Why should I have a cooling-off period when I want to buy something expensive?

I enjoy shopping and spending, and when I see something I like, I get all excited and my eyes go squirrelly. That’s the point at which my husband takes me for coffee and lets me think about it. If it’s something that costs more than $ 100 and is a want, not a need, we have an agreement that I will wait 24 hours before buying it. Since I’ve been doing that, I find that I usually don’t buy it — I just got caught up in the mania.

Why do you suggest that people have only one credit card and one debit card?

It’s hard for people to keep track of their finances and banks are good at doing it for you. They categorize things and show you where your spending is going. There are apps that do the same, of course, but if you allow them to link to your bank account, you can nullify your fraud protection.

If you’re self-employed, you should actually have two cards — one that you use for business transactions. The same is true if you travel, so that if one gets hacked and shut down while you’re abroad, you have backup. If you are married and you also don’t need to build credit, you might consider getting a supplementary card on your spouse’s account rather than your own card. You still get separate personal identification numbers and statements, but it’s easier to keep track.

Also, dig into your annual card fee. If you travel often, you can benefit from great points or car rental insurance, but if you don’t, it might make more sense to look for a no-fee card. Do your homework.

You’ve said in the past that two key words in financing anything are “research” and “negotiate.” Can you elaborate?

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Absolutely. In terms of research, you don’t want to be swayed by salespeople when you don’t know the market. As for negotiating, we polite Canadians don’t realize that there are opportunities for negotiating all over the map. Stores may give you a deal if you ask — you don’t need to be rude or pushy. More times than not, you get something extra. If you don’t ask, you certainly won’t get anything.

Is there one message you’d like to convey to Canadians who are struggling with debt?

Yes: your self worth is not equal to your net worth. You are a whole, valuable person, no matter what you are going through. When your confidence is shot and you’re scared, you’re not ready to be resourceful. Reach out for help. Don’t wait. See a non-profit credit counsellor who will take away the shame and help you create a plan, rather than just continuing to worry.

This interview has been edited and condensed.

Elaine Smith



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