Book makes “fin lit” understandable, easy to digest, and inspires action

August 29, 2019

A fear one has when picking up a financial self-help book is that the advice it contains will be so confusing and complex that you’ll feel less financially literate than before.

That’s not the case with A Canadian’s Guide to Money-Smart Living, by Kelley Keehn. In fact, her book – a slender volume – is designed to break down big ideas into small, digestible ones. And once you’re done, you feel that maybe yes, you will go out and follow some of the things you’ve learned.

Keehn begins by saying her mission is “to make Canadians feel good about money.” She says her mom, who as a single parent was an excellent manager of money, would probably change her view that “money doesn’t grow on trees” to “money doesn’t grow in plastic.” Keehn says her mom saw credit cards as being for emergencies – and that they should be paid off in full, every month.

Yet, Keehn writes, even though someone making $51,000 a year will see, in his or her life, “over $2 million past through (their) hands,” why are so many Canadians “living from paycheque to paycheque… burdened with excessive debt… and not better off when it comes to retirement?”

Keehn’s advice is simple. We need to take control of our finances by spending less than we earn, and by paying ourselves first – saving before you spend. “Do not look upon savings as something left over after you’ve spent everything else. Save first, live and budget within the net amount.”

Your goal, she writes, should be “a comfortable life.”

“I’m not talking about applying some complex budget plan to your paycheque that requires you to watch every penny in order to squeeze out something at the end of the month to be put away and called `savings.’ I’m talking about setting aside something from every paycheque before you do your spending,” she writes. The goal should be 10 per cent of your gross earnings, she advises.

You and your partner also need to do a little goal-setting to get on the same page, she writes. Define your goals, establish a “needs and wants” list, check your progress, talk about next steps, make changes, and “take action and get help,” she recommends.

The book reviews major spending categories and offers specific tips to manage each. In the mortgage chapter, her advice is to “seriously consider your options to speed up the mortgage amortization,” so that your biggest expense is paid off as quickly as possible.

In the chapter on credit cards, she notes that most Canadians have a “household debt to disposable income” ratio of around 170 per cent. She cuts to the chase here, recommending people carry no more than three credit cards, and to avoid department store cards that carry higher interest and “are a temptation you should resist.”

Interestingly, she says debit cards can be expensive “unless you have a no-fee arrangement with your institution,” so consider carrying cash to avoid debit card fees.

With any type of consumer debt, remember that when interest rates go up on a loan or line of credit, so do your payments – and you still “have to pay back the entire principal.”

There’s a chapter on retirement savings that walks you through the rules of RRSPs and RRIFs. For RRIFs, she says when you withdraw money each year, it “doesn’t mean you have to spend it, all you have to do is report it as taxable income.” So that money could be reinvested in a TFSA or non-registered account, she says. She explains Old Age Security, noting that depending on your income in retirement, you may have to pay back some or all of the OAS payments you receive. (A good reason to bank it until tax time.)

This is a great book that makes you feel energetic about winning back control of your wallet. It’s a highly recommended addition to your retirement planning library. And a great destination for the money you save is a Saskatchewan Pension Plan account!

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22
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