Last week's CBC Marketplace episode Show Me The Money took an average investor (with a hidden camera and glowing lights in her pants) into BMO, CIBC, RBC, Scotiabank, TD, Dundee Securities, Edward Jones, Investor's Group, Money Concepts, and Primerica shopping for advice on what to do with a $50,000 inheritance she'd just received.

Of course we had to talk about it on Because Money, and - graciously - Preet Banerjee agreed to reprise his expert role from the Marketplace episode to talk a little more about the complicated world of financial advice, his surprise over the high rate of non-compliant and pretty horrible advice given, and to expand on his view that there are really good people out there working as financial advisors who oughtn't be lumped in with the bad ones, and that what the industry really needs is a good trimming of the "dead wood" in the industry.

I - unsurprisingly, I suppose - disagree. The investment advice industry, conflated as it is with the broader world of financial planning, looks from the outside as though it's an advice industry that happens to offer products that help you implement your financial planning goals. Those products pay for the planning you receive, which is why Preet made the case that those with smaller amounts to invest are better off paying a commission on their investments instead of paying directly for their advice.

But those small investors need more than just investment advice. In my experience (and in friend of the show Noel D'Souza's) the new/small investor's needs are more heavily weighted to the goal setting, prioritizing competing goals, and cash flow planning than on the investing advice. They're looking for more than cursory advice there, which is why reliance on advisors paid with trailing fees doesn't fit.

Remuneration for that kind of advisor is tied to the amount of the investment, and results in outsized emphasis on investing alone for clients who need more than that, while at the same time not creating much of an incentive for the advisor to spend more time on such a small account when there are more lucrative clients waiting.

Smart organizations don't spend any more time on loss-leader activities like cash flow planning, debt paydown, or behavioural coaching than they have to. The nice person across the desk from you has a nice manager who has a nice district vice president who has a nice regional manager, and every one of those people has one job: make the most amount of money for the company in the least amount of time without making any egregious errors, running afoul of securities regulators, and generally being as feel-good, PR-friendly as possible.

An episode like this one - while illuminating for investors  - is another chance for the investment advice industry to blame a few bad apples or poorly-trained but well-meaning individuals and go merrily on their way without making it any easier for consumers to find a source of advice with a price tag they can evaluate fairly.   

The point: Learning to live on a budget is hard. Pretending it's not is stupid, and counter-productive, and will eventually end up being the reason you quit.

Let’s talk about the most important part of personal finance: debt repayment investing budgeting.I’ll wait until you finish yawning.

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Listen, I know. We can call it the much more awkward “how you spend your money”, if it makes you any happier about this. And - even better - I’m going to save you the impassioned speech on how spending more than you earn is a sure road to ruin; you know that already. In fact, there are a whole lot of people who spend more than they earn quite happily, running into emergencies here, long periods of financial stress there, and yet somehow managing to get through their entire lives without even a faint whiff of ruin.  Luck happens.

But if accidentally getting through life okay isn’t really your thing, and if purposefully matching your spending to the things that are really important to you sounds like the kind of life you want to live, I have some words of discouragement for you.

Yes. Discouragement.

It’s going to be hard. Unless you have pretty big margins, or pretty small (or negotiable) existing commitments, it’s going to be a tough slog, at least for a while. This is the stabilization period that no one really mentions in the classic personal finance sequence of success that usually goes “make a budget, pay off debt, build an emergency fund*, save a couple of bucketloads of money, buy a unicorn, live happily ever after.”

There’s something really important missing right between “make a budget” and “pay off debt” right there at the beginning of the deceptively simple fixed-your-life-you’re-welcome formula, something so important that its omission is the reason so many people revert back to the Hoping Things Work Out method of financial planning.

(If you have a high enough income or low enough non-negotiable expenses, or if you’re starting out without debt, then you probably won’t go through a stabilizing period and this post doesn’t apply to you. Go away.)

If you’re like most Canadians, you’re coming to the idea of living within your income at a time when you don’t have piles of money just lying around to make the process easy. You probably have obligations that you can’t negotiate your way out of - kids that make downsizing to a bachelor apartment, storing your clothes in crates, and living off of ramen noodles until you’ve got your money under control a non-option, or big mortgage with small equity that takes moving off of the table, or a car that’s worth less than the loan you’re still paying for but a job that you have to drive to because you don’t live in a city and your transportation options are limited to driving a car or hitchhiking.

I have this sense that most personal finance advice sort of glosses over this awkward fact. There’s never a scale of difficulty in the front of the advice, is there? Never a “Hey, friend, if a $200 surprise will throw off your finances for more than a month, you can do this, but it’s going to take lots of practice”, or a “by the way, if you have kids this entire blog isn’t going to apply to you” disclaimer. There’s a lot of advice about getting your expense column smaller than your income column (less advice about getting your income bigger than your expenses, but that’s a different post for a different day), and even more advice about paying down your debt or investing, but not much acknowledgement that it might take you a while to figure out how to apply the whole thing (waves hands) to your own life, is there?

And do you know what this glaring omission does to most Canadians? It makes them give up. At some point, when you’re trying to reduce your previously $1,200 per month discretionary spending down to $200 because your non-negotiable expenses leave you nothing more, living your life on a budget is going to feel like a much bigger hassle than living your old life and hoping it will all work out.

Plugging a few numbers into a spreadsheet or moving the sliders on Mint does not a budget make; getting used to having only so much to spend and either finding ways to earn more or learning to live cheerfully within those limits does, and it takes practice, occasional failure, and lots and lots adjustment. Sometimes years worth.

So here I am, raining on the parade, handing out be-ribboned bags of discouragement in the hopes that a healthy dose of “it will be hard, but it’s worth it” realism will make the job ahead a little easier to stomach. The pay-off is real. The feeling of not worrying about your next credit card statement, or the sense that things really, truly are going to be fine and it’s not just blind hope or dumb luck that will make it so? It’s fantastic, and it’s worth the work. Trust me. But the work itself is tedious - painful, even. Sometimes it’s downright embarrassing. Pretending that’s not just makes it harder.

*Yes, sometimes it goes “little emergency fund, pay off debt, big emergency fund”, or even (gasp!) skips the emergency fund altogether. Let’s just pretend we agree on the order for a minute and deal with the whole emergency fund snarl another day.   

The point: There's no universal equation into which you can plug your details and receive a perfectly optimized solution to all your personal finance questions. 

I still pay bank fees.

(Hear that? That's the sound of ten thousand personal finance bloggers picking up pitchforks)

Wait! There's more: I don't pay all (or even most) of my expenses on a credit card.

(And that, my friends, is the sound of torches being set alight)

Before the personal finance mob gets here to punish me for violating yet another of the foundational tenets of the creed, let me explain. Quickly.

Until fairly recently, I enjoyed one of the most addicting perks of being a bank employee: free banking. For seven years, I reveled in it. I had accounts for everything; accounts for Christmas, for regular bills, for irregular bills, and for spending, and I never once had to think about the cost.

Personal finance can be a web of confusion.

Edgy, that's me.

Now I do, and - believe me - it bugs me. But you know what bugs me more? Forcing myself to think about my money in a way that doesn’t naturally fit my personality. I am motivated to stay within my budget for discretionary spending when I see the bank balance go down, not when I see a credit card balance go up. I get all edgy when I can’t look at my phone and know immediately how much I have left to spend on groceries without having to subtract the mortgage payment, carry the twelve, and divide by five.

What’s more, my husband and I have joint everything. (Oh, listen, they’ve let the dogs loose.) Neither of us is interested in separating our spending into Yours and Mine.With free employee banking, I had the luxury of creating a method that suits us perfectly and constructing a world of accounts around us to fit it. Now I’m faced with a choice: stick around at my bank and pay the service fees, or study the free banking rules and reward tiers and adapt our system - the one we’ve used quite happily for almost a decade - to fit within them.

So here’s the crux of the issue: I’m not happy to sit on my hands and moan about how none of the free options work for us, but neither am I going to jump into bed with the first company that offers me free banking or 3% cash back without spending some time planning how it’s all going to work.

And - to be clear - by "work", I mean "take up no more than a few minutes of my time to check, involve no transaction tracking, and keep me on budget no matter how much I want to cheat in my weaker moments."

Yes, I have weaker moments. Surprise!

As much as I’d love to believe otherwise, I’m not a completely rational spender. Our finances are under control only because I took the time to observe our spending behaviours and adapt existing bank products to fit. I know how we spend, and can identify pretty easily the ways in which we’re jointly or individually tempted to go off-road, which means that the systems I’ve built around our spending through rational observation are there to protect us when rationality takes a flying leap out the window.

While I believe that optimal solutions are possible, what’s optimal for my single, naturally frugal and debt-free friend making $92,000 a year isn’t exactly optimal for my married next-door neighbours who bring in $80,000 a year between them and have to cover a mortgage, two kids in daycare, and a car payment, and have a hard time resisting the urge to eat out every single night of the year. 

Optimal is relative

You can be forgiven for believing that there’s one (optimal) way to carry on your financial life, because the entire financial media is constructed on that faulty premise. It’s why articles like “Should I Save for Retirement or Pay Down My Mortgage?” spring up like mushrooms every few months (or weeks, depending on the season and whether the author is trying to sell you RRSPs or not) and are so quickly found and read by folks desperate to discover the secret personal finance sauce so they can pour it all over their bank account and then sit back and watch the dollars (and peace of mind) roll in.

Believe me, I’d love for there to be a simple answer for every possible personal finance question that contains no trace of the phrase “it depends”, but the truth is there’s no Grand Unified Theory of Finance. There’s no formula you can plug your paycheque and net worth into that will spit out whether you should increase the deductible on your car insurance, switch banks, or join the (shudder) smallenfreuden revolution.*

There’s only you, your behaviour, and the systems you set up to optimize your strengths and bypass your weaknesses.

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*Ask yourself this: why on earth would a credit card company sign off on a marketing campaign that encouraged consumers to use their card for everything in exchange for “free” rewards? If you’re one of the super-disciplined minority who pay off their balances every month and are getting something for nothing, good for you. If you’re part of the majority who actually spend incrementally more on rewards cards, under-estimating your actual spending and getting caught short by faulty mental accounting when the due date comes around...well, there’s your answer.

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Some Housekeeping:

The best posts, articles, and news items I find every month are housed in the Canadian Personal Finance News list, curated by me and you, because - much as I'd like to - I can't read everything. Get selective, get critical, and get listing.

Comments are turned off), so if you have a burning disagreement you'd like to share, and can limit yourself to 140 characters, find me on the Twitter machine (@SandiMartinSPF). If you need more space to brawl in have a gentlemanly discussion, you can find me lurking around the Canadian Personal Finance Community mumbling about CPP reform.

The Because Money podcast with me, Jackson Middleton and Robb Engen is live the first Wednesday of the month (usually) at 9:30 Eastern, and available for post-show viewing in all its glory immediately thereafter. Questions, comments, or observations on how much I wave my hands around and say "I don't know, what do you think?" are very welcome, and can be posed on Twitter or G+ using the hashtag #becausemoney.

Hi.

You probably don’t remember me. I was one of a series of warm bodies in that cubicle in Newmarket, the office (with a door!) in Huntsville, and the other office (with a window!) in Bracebridge. I mostly didn’t meet my sales targets and never made my cold-call quota. I was the one talking to clients about cash flow planning when I was supposed to be selling them more credit cards, or – failing that – a debt consolidation loan. You didn’t have to send me on any Achiever’s trips to the Bahamas, but you didn’t have to fire me, either, so I forgive you for forgetting about me.

I haven’t forgotten about you, though. It would quite literally be impossible, since you’re entwined in everything I do. You and your friends hold my life savings, I owe you money for the house I’m typing in right now, and I wouldn’t be able to turn work for clients into money for groceries if you weren’t acting as the intermediary.

I need to tell you something that’s been bugging me for a while, mostly because it’s so glaringly obvious that I feel like you probably already know it and – if you’re the decent, caring, friendly bank that your commercials make you out to be – you’re probably already working on it. Bear with me if you’ve heard this before:Your clients hate being sold to. They HATE it.

In fact, they’d rather keep paying ridiculous service fees on their accounts than come in and ask if there’s a cheaper option, because they don’t want to have to sit down across from one of your employees who’s trained only to sell them stuff. They’d rather suffer an annoying mortgage payment schedule than ask to have it changed, because in the middle of changing it to bi-weekly payments they’ll be pressured into adding mortgage life insurance. They’d rather ignore their asset allocation and not contribute to their RRSPs because they know they’re going to get sold another high-price, actively managed basket of mutual funds that will be rolled into a different fund in a few years to mask underperformance.

You might not realize the depth of your clients’ hatred of sales because they have to buy the products anyway, and while you’re mulling over customer satisfaction reports that analyze “length of time spent waiting in line” or “accuracy of transaction” to the fourth decimal point, the survey company you hired isn’t asking anything that can’t be answered with a number from one to five (one being excellent, five being poor), and you’re missing the signal for the noise.

Also, and I know THIS can’t be news to you, your employees hate selling stuff. I know you know this, because you’re constantly rolling out new incentive campaigns, new weekly sales competitions, and new ways of bullying them into selling credit cards to every client they make eye-contact with. You wouldn’t have to incentivize them so frequently nor harass them so heavily if they actually WANTED to add a secured line of credit to every piece of real-estate equity that walked in the door.

So if your clients hate you, and your employees hate you, and what they hate about you is the fact that you’re pretending to offer a service when all you want to do is sell, sell, sell said service, regardless of whether it’s needed, wanted, or helpful, then maybe a solution would be to stop selling.

Just stop.

Tell your employees to focus their time on making sure the mortgage is structured exactly right. That the bank accounts offered are the ones that best suit the client. That the phone is answered, the mistake is corrected, the cheque is delivered. Amp up customer service to the point where clients expect immediate resolution and get it, because no one behind the counter is spending their time worrying about their next performance review and how they haven’t met their targets this quarter, and instead is acting immediately on what needs to be done.

Get rid of the slogans, the catchy tag lines, and the comfy chairs, and stop pretending that your number one focus is the financial health of every Canadian.

Imagine how happy your employees would be if you announced at the end of this fiscal year end that all sales targets were abolished, and that their performance would be evaluated by how delighted the customers were with the level of service they received. Imagine how motivated they would be to do their best work if it wasn’t going to be brushed aside by a manager answerable for branch profitability in favour of going through remedial objection-handling scripts and sales aids.

Imagine how happy your clients would be, if they came to the branch to find out what happened to a payment they made on a competitor’s credit card and weren’t asked why that credit card even existed in the first place, and if they were met with employees whose only job was to make sure that their concern was addressed, their transaction was completed correctly, and their needs were met in the most cost-effective, efficient, and appropriate way possible.

Whoa. My mind is kind of blown just thinking about how exciting that would be.   

The point: Learning to live within your means is discipline you have to practice. Financial catastrophe always strikes, and having the necessary skills already mastered will mean the difference between dealing with it and moving on or being overwhelmed and giving up.

"I'm getting by. The bills get paid. What's the point of restricting myself to a budget?"

Rein in your surprise, because I actually have an answer to that question: it's so easy to spend more than you earn, shifting the shortfall between credit cards, consolidating to a line of credit that's growing in barely noticeable increments, relying on next year's tax return to pay it off and then having to use it for something else instead.

It's so easy to run merrily through the rainbows and unicorns of life, ignoring what your money is doing because you've always had enough.

So easy, that is, until a crisis hits.

Let me illustrate with a purposefully imperfect example: karate.

In karate you practice daily because you have a goal in mind: you want to be able to do all the things that a black belt does. You want to progress in skill. If you stop practicing, you can't earn the next belt, but it's pretty unlikely that some masked ninja is going to jump screaming out of the air and attack you on the sidewalk next Saturday (I hope.)

Unless the world is a significantly different place than I think it is, you'll never encounter a real-life moment that will make you sorry you didn't practice karate more diligently.

The screaming masked ninjas of money are the broken washing machines, the car repairs, the trees falling on houses, the sudden layoffs, and the prolonged illnesses that happen without warning and quickly lay waste to your chequing account, your plans, and your credit cards.

The ninjas will come. If you haven't been practicing your skills, an event that would have been a temporary setback will instead be catastrophic. You'll survive, because that's what people do. But wouldn't you rather have been prepared?

Wouldn't you rather practice living within your means, and - as a side benefit of all that discipline - build wealth and all the flexibility and choice that comes with it?