Shane is finally debt free. After paying $ 25,000 into OSAP last year – mainly because he finally landed a full-time job and quit the gig economy – he went from paying down debt to saving.
Earning $ 75,000 a year as a graphic designer and paying as little as $ 1,300 a month in rent for a one-bedroom apartment, Shane says it’s the first time he’s been able to save a few hundred dollars per paycheck. Her monthly goal is to save $ 1,000, which is also complemented by self-employment.
But what exactly should Shane invest his money in?
Lately he’s been spending money on furnishing his house – buying a new dining table and a new sofa, but he still has money left. He also has a passion for trying new restaurants and hanging out with friends, and he spends $ 100 a month on natural wine. But he wants advice. “I’m still figuring out what I’m saving for. I guess mainly for traveling and feeling comfortable.
The long-term goal? Start your own business and become your own boss. But this dream seems far away.
On a typical workday, Shane skips breakfast. “I’m not a morning person, so normally I run for the door.” If he has time, he will make breakfast at home and walk the 10 minutes to work from his condo. For lunch, it’s usually the preparation of meals, with the exception of pho or sushi one day a week. Monday through Wednesday, he cooks dinner at home, but the weekend is all about going out to dinner with friends and trying new wine bars.
On top of that, a big daily expense is coffee. It could be two a day at independent cafes that cost $ 3-4 each, depending on whether he’s in the latte or Americano mood. Plus, quality food is important to Shane, and that’s what the weekends are all about. “I spend the day having coffee and pastries, buying flowers for the house, running errands. I also try to make a spa day and spend time at the LCBO looking for some natural wine.
Shane knows he spends too much on food and drink, but it’s something he can finally afford without going into debt. He hopes the financial coach will be able to give him some ideas on where his money could go instead of those indulgent purchases.
The expert: Jason heath, Managing Director of Objective Financial Partners Inc., gave Shane this advice:
“Don’t worry about not knowing exactly what you’re saving for right now. It’s good to generally save for the future without a specific goal when you’re young, ”says Heath. “One thing to remember is that despite the frequent advice that you have a long time to retire and to save aggressively, young people often need their savings for a lot of things long before retirement.
> TFSAs are great tools and could be useful for Shane to save when income is falling or when transitioning from employment to self-employment.
> Shane can open an RRSP at just about any financial institution. It’s not a bad idea to consider making some RRSP contributions, knowing that up to $ 35,000 could be used for a down payment using the Home Buyers’ Plan (HBP).
> Shane’s biggest financial risk is having a disability that would prevent him from earning an income. He should make sure that he has good disability coverage in place now while he is an employee. It may prove difficult to obtain coverage in the event that he becomes self-employed.
> Shane spends a lot on eating out and drinking, but saving $ 1,000 per month on $ 75,000 in income is a pretty good savings rate of 16%.
The results: He spent less! Expenses in week 1: $ 363. Expenses in week 2: $ 277.74.
What he thought: “I think I got better this week, in terms of eating less in restaurants and drinking less, but at the same time, it’s something I like to spend my money on, ”Shane says, adding that he will. probably continue his lifestyle, but move on weekends to limit spending on weekdays. “I have a coffee addiction and I can also see that my expenses revolve around food, but this is related to health, necessity and pleasure.”
To take away : Meeting the Millennial Money Challenge “definitely” opened Shane’s eyes to how he could use his money in the future. “I’ve never considered disability coverage, and it’s something I look at and make sure I have a backup plan. I have been financially independent since I was 18, so I have to make sure that something is in place if anything should change that.
Shane will also open an RRSP. “I want to become a homeowner someday, so knowing that there are options with RRSP HBP contributions makes it more tangible. “
Next steps? To plan for the future instead of normal daily expenses. “I have always thought that keeping money was a good option, but this exercise opened my eyes to other avenues and I would like to invest my money in low risk mutual funds.”