Millennial Money is a weekly submission-based series that provides financial advice to millennials in the GTA. Read the full series here.
This Toronto millennial is exhausted.
She’s the sole earner, covering most living expenses for her boyfriend, even paying off his debt.
“It seems a little mind boggling to me that someone with my salary can’t afford an average townhome in Toronto. Maybe I need to find a boyfriend that actually makes money,” Doris said.
Doris, 34, is employed in pharma and has been paying off debt, which includes a monthly $ 1,800 mortgage payment for the one-bedroom-plus-den downtown condo she shares with her partner.
“I spent time doing a PhD and didn’t get a real job until my late 20s. While I have a fairly high income I am aggressively saving to make up for lost time.”
She works from home and is able to prepare meals which saves on costs. “We probably do takeout once or twice a week for dinner,” she said. On weekends they’ll go out with friends occasionally, but have saved quite a bit due to pandemic restrictions.
Doris’ high income has let her wipe out her student debt and max out her TFSA and RRSP accounts. She is starting to save in nonregistered accounts for two major goals. The first is to buy a townhouse or house in downtown Toronto.
“Most of the townhomes in areas I like, at 1,500-2,000-square-feet, are going for $ 1.1 to $ 1.3 million,” she said. “My boyfriend has only worked odd jobs so I can’t count on him to contribute to the mortgage and major expenses. Occasionally when he has money he will pitch in for the condo maintenance and internet.”
Her second goal? Saving to start a family.
“Due to significant personal health issues, I can’t become pregnant. I am leaning toward IVF” — in vitro fertilization — “with a surrogate, but open to adoption … (either way) the costs of lawyers and medical expenses are going to be $ 75,000 to $ 100,000 or more.”
She feels like money may force her to choose one goal or the other, though “with a child, I will definitely need a bigger place.”
Her relationship also has her wondering how she can stay financially secure. “Is there any financial advice on how to best protect myself?” she asked. “Luckily everything is in my name.”
We asked Doris to share a week of spending to get an idea of her finances.
The expert: Jason Heath, managing director at Objective Financial Partners Inc., on Doris’ finances.
Doris asks about how to protect herself. Common-law partners are generally not subject to the same division of property that applies to legally married couples in Ontario. However, there is a concept called unjust enrichment that could apply if one partner has contributed to or helped build the value of an asset owned by the other. Doris should consider getting family-law advice from a lawyer.
I am sorry to hear about Doris’ fertility issues. This can be difficult emotionally and financially. It sounds like she has a good sense of the costs. Ontario surrogates under age 43 can get two rounds of IVF that are provincially funded. Fertility drugs could cost $ 5,000 each cycle.
Doris and her partner can get some more government support for their costs because fertility costs are a non-refundable tax credit that result in a tax refund of about 20 per cent of their expenses. Given she has her RRSP and TFSA maxed out, I suspect Doris could have enough in her TFSA to fully fund their fertility costs.
It may not be that compelling to invest in a taxable nonregistered account compared to just paying down her mortgage more aggressively. The earnings will be taxable and may not provide a higher after-tax return than her mortgage interest rate, given her high income.
I would not worry so much about buying a larger home right now. Speaking from experience, aspiring parents overestimate how much room is needed for a newborn. They do not move around much during the first year. I would focus on the short-term family planning decisions.
Good luck to Doris and her partner. I hope their road to fertility is a short and successful one.
Results: She spent more. Spending in week 1: $ 304 Spending in week 2: $ 390
How she thinks she did: “I spent a bit more this week, but not by too much,” Doris said.
That includes a new expense, one she now thinks is essential for her mental health. “I recently started online therapy to get some self help to work on anxiety and other couple-related issues. Having a sounding board and sound advice is so important.”
Take-aways: Doris has booked an appointment with her family lawyer to figure out how to protect herself. “He gave me some very clear advice to better protect my assets.”
She also took Heath’s advice not to rush to find a bigger home at the moment. “I’ll probably be holding off, as I encountered a recent career opportunity to work in a global role. Perhaps it will be a good refresh for me.”
This exercise has also pushed Doris to confront her relationship, and what she wants out of it.
“Over the past few years, I’ve received a lot of feedback from loved ones cautioning me about my partner (but) I mostly swept that aside … Doing this self-reflection exercise has made me re-evaluate my future. I’ve had some serious conversations with my partner.”
Finally, she’s not giving up her dream to start a family and is happy to learn that there could be some tax credits for fertility costs.
“At the end of the day I can be independent and also raise a child on my own.”