Millennial Money is a weekly submission-based series that provides financial advice to millennials. Read the full series here.
At 26, Jocelyn spent four years working her way up from dishwasher to sous-chef at a Toronto restaurant. Today, she earns around $40,000 a year and lives comfortably – going out for drinks and dinner – without paying rent.
“I was relaxing since I was living at home, saving money and just paying off student debt,” she said.
But now she’s off to a big change – and a pretty immediate one.
“My parents told me they were planning to sell their house by the end of the year, and I would have to find my own house,” Jocelyn said, adding that she was stressed about her situation.
Because she’s worked hard to make money at the restaurant, she doesn’t want to leave – she’s comfortable after her many years of experience there.
However, since it is located in downtown Toronto, she will likely have to find her own place as her parents plan to move north.
“I never really thought about my money like that. Now I have to consider rental accommodations that always take me downtown,” she said.
Because of all the expenses she saved on housing and the easy access to public transportation she enjoyed to get from her parents’ house downtown for work, she admits that she tends to splurge.
“I work in a restaurant as a sous chef, I can eat at work mainly. But also because I’m in this industry, I end up going out quite often to drink and eat with co-workers and friends when I have the day off,” Jocelyn said.
On nights she chooses to go out late, she’ll opt for Uber home, which costs just over $25 each way.
“I almost never turn down a dinner or a drink, and I go out after work too,” she said. “I will have to change that when my parents want to sell our family home.”
So far, in a savings account, Jocelyn has set aside $2,000. She’s also debt-free, but with the looming prospect of renting alone in town, she wants some clarity.
“Do I live with a roommate? Where is it accessible? »
We asked Jocelyn to share a week of expenses to get an idea of her finances.
The Expert: Jason Heath, managing director at Objective Financial Partners Inc.
Jocelyn was able to pay off her student loan living at home with her parents, but that’s about to change. They told her that they planned to sell their house by the end of the year and that she would have to move.
She managed to save $2,000, but she will need a lot more to pay first and last month’s rent and also have an emergency fund. She thinks she might need a roommate. I think the best thing she can do is try to prepare a reasonable budget.
According to Statistics Canada’s latest household spending survey, the top three household expenses were housing (29%), transportation (19%) and food (15%). Jocelyn doesn’t have a car and uses public transit, so her transportation costs are relatively low. Currently, she does not pay rent and her parents buy groceries. So she can expect her monthly costs to increase significantly when she moves.
Assuming she stays in North York, Rentals.ca reports the average rent for a one-bedroom apartment in May is $1,781 per month. For a two-bedroom apartment, the average rent was $2,367. So if she shares a two-bedroom apartment with a roommate, she might be able to reduce her rent by about a third, or nearly $600 a month. There are other fixed costs, like renters insurance, internet, and other miscellaneous expenses that can be less if shared.
It’s worth mentioning that Jocelyne’s monthly costs of $865 suggest that she should save around $1,400 per month based on her after-tax income. Considering she just finished paying off her debt, she might just have that much more each month. But looking at their after-tax income and actual monthly savings (or lack thereof) might be the best test of what you’re spending. People tend to greatly underestimate the money they spend.
Even though Jocelyn now has $1,400 more each month, she may struggle to pay her rent and food without serious changes to her other expenses or income. She hopes to get a promotion and a corresponding increase in her income, but failing that, moving will require a change in her financial habits. The sooner she gets used to these changes and reduces her expenses to increase her savings while she is still at home, the better prepared she will be to move.
Results: She spent less. Expenses week 1: $419.50 Expenses week 2: $366.50
How she thinks she did: Reading all of this, Jocelyn said she felt “nervous” as her parents kept reminding her of their plans.
“I realize that they think I had it too easy compared to my brother, and so I’m going to have to figure things out,” she said.
Take away food : If there’s one major thing that stands out, it’s that she’ll have to drastically change her lifestyle.
“Working in the food industry, you constantly see people eating, drinking and enjoying the food while we work at a fast pace in a hot kitchen,” Jocelyn said. “That’s why there are so many temptations to go for a drink or a meal, because we see it as a moment of relaxation.”
To make the necessary changes, she’ll do her best to start shopping at her parents’ house while she’s still there to prepare breakfasts, as well as lunches and dinners when she’s not working.
“I want a better idea of the cost of all these extra things. I realize it’s not just about rent, but so much more,” she added.
With Heath depressed, Jocelyn is now considering finding a place with roommates.
“I don’t mind doing this if it means I can get to work at an efficient time,” she said, adding that if she can’t find anything near or within walking distance of work, she’ll consider going to work. move further west or east, as long as it’s near a subway station.
In the meantime, she will continue to work hard for a promotion, while spending her days off looking for places to rent instead of going out for a drink.
“Learning to say no will be difficult, but it’s necessary if I want to be independent.”
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