In our new Smart Money series, #MilliennialMoney, we ask people living in the Greater Toronto Area to record every penny they spend in a typical week. Then, using tips from a financial adviser, we challenge them to cut their spending the following week so they can save more. Will they fail or succeed?
As a property administrator making $38,000 a year, 27-year-old Annie believes that her regular lifestyle purchases — TTC fares to get to work, the occasional coffee — are things she can afford. It helps that she’s living with her parents in North York, which cuts her rental costs (to zero), and yes, her mom looks after the groceries.
“On a regular basis, after transportation, coffee, my next most frequent purchases would probably be alcohol or skin care and also marijuana,” she says. “But like that’s not a lot. That’s probably 60 bucks a month.”
Usually, Annie says she’s pretty good at packing lunches but during slow times, she might dive into a “second lunch” which means a walk over to Subway for a sandwich.
Annie’s biggest problem is dealing with debt. She owes a couple of thousand dollars on credit cards. The debt piles up as Annie pursues her dreams of becoming an actor. She takes at least two improv or acting classes a month. Classes start around $300.
“This is the only reason why I’m working,” she says, adding that the property administrator job is just a day-to-day grind to fund that passion.
Annie says she is open to a new job that would make it easier to fund her acting dream. But balancing her current role with acting classes doesn’t give her much time to fully engage in the search process — and that drives her away from it. “I have made attempts sparsely to apply for jobs, but nothing has come back.”
She’s also actively trying to push for better pay at her job without much success.
“Beyond the 40-plus hour work week, if I job-search, it’s at the expense of my time for my art,” she adds.
Annie is hoping that a financial expert can catch her blind spots in figuring out how she can save enough to fund her career in the arts.
The expert: Jason Heath, managing director at Objective Financial Partners Inc., lays down the advice for Annie.
> “I’m a coffee drinker myself, and I’m not going to critique Annie’s coffee spending. Saving a few bucks here and there on coffee won’t make or break her.”
> “The fall shopping trip is one consideration. Ideally, by shopping off- or late-season, you may get more bang for your retail buck. Whether it’s buying Halloween decorations in November or summer fashion in the fall, you benefit from deep discounts. The tough part is your selection may be limited, and your wardrobe may be a year behind.”
> “At $121 per month, Annie could benefit from a provider change for her cellphone plan. Discount brands like Koodo are significantly undercutting the flagship telco brands like Rogers, Bell and Telus. Their unlimited talk, text, and 4 GB data plan for $55 per month could cut her mobile costs in half.”
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Result: Success! Spending in week 1: $451.31. Spending in week 2: $343.16.
What she thought: Annie said she found the advice very helpful for long-term goals, but not when it came to cutting her immediate week-over-week spend. “The advice provided a bigger umbrella, but didn’t go into immediate control.” She will, however, be taking Heath’s advice to try to save more on a monthly basis.
Take-aways: Cellphone plan changes. Paying $121 per month, Annie says she has a better idea of her next steps — finding a plan under $70 if possible to save an extra $50 or so a month.
As for fall clothing, she recognizes that shopping during sale season would help cut costs, but she believes she “only bought needs” to prep her for the fall/winter season.
Now it’s about working on her spending temptations, which is something Annie says she’s more aware of. “I do want the new Apple AirPods (which clock in around $200-something) but I think I can wait it out,” she says.
Are you a millennial living in Toronto or the GTA and need help with saving your money? Be a part of #MillennialMoney and email [email protected]