Millennial Money is a weekly submission-based series that provides financial advice to millennials in the GTA. Read the full series here.
Lee, 26, makes minimum wage working six to seven days a week in a warehouse. “Since picking up my shifts, I’ve been able to pay off $ 10,000 in debt,” he says, adding that because of the COVID-19 pandemic, his spending has been down on other aspects like eating out and drinking.
But he wants to find a way to rent his own space in the GTA to have some independence.
“I realize this can’t be done without a change in jobs as minimum wage, $ 14.25, isn’t enough.”
On a typical work day, Lee spends on lunches at fast food restaurants. “I skip breakfast and often buy lunch every shift … around $ 5 to $ 10. Other than that I eat all meals at home with my family.”
On the weekend, he is probably working. If not, he sees friends for a distanced walk or park hangout to keep costs low. Occasionally he’ll buy beers and takeout to treat himself after a long week.
The pandemic has let Lee wipe out his debt but it’s brought on other stressors, like seeing COVID-19 cases crop up at his workplace.
“I’m lucky I have a place to stay at my parents, and if I have to call in sick I won’t lose a roof over my head, but it’s not the case for a lot of people at work.”
On top of having his own place, he wants to save enough to attend barber school and improve his career prospects.
We asked Lee to share a week of spending to get an idea of his finances.
The expert: Jason Heath, managing director at Objective Financial Partners Inc., on Lee’s finances:
Lee’s expenses are pretty lean as it is, but there are different ways to control your income. Overtime is helping pad Lee’s pockets but getting paid minimum wage can make it tough to move out, even when you live in a lower-cost town outside Toronto.
Lee wants to save up to go to barber school so he can earn more and get a place of his own. According to the Economic Research Institute, the average barber salary in Ontario is $ 41,313, or about $ 20 per hour, but can range from $ 31,563 to $ 49,341. This is an increase to his current wage and could open up opportunities to start his own shop.
There’s a federal Canada Student Grants program — the part-time grant is up to $ 3,600 per year for a single person with an income of less than $ 31,468, and a pro-rated grant that phases out for higher incomes. Full-time students can receive up to $ 6,000 in grants from the government.
There’s also a Canada Training Credit you claim on your tax return for university, college or other tuition fees or occupational-skills courses certified by the Minister of Employment and Social Development. Lee may also be able to accumulate $ 250 per year, going back to 2019, to use toward the credit for a future year. Lee likely has $ 750 of potential tax refunds in 2021 and $ 1,000 by 2022. These programs could put a big dent in the cost of his training.
If Lee wants to decrease his expenses, there are obvious ways. He has a car, and while costs are low, could he find a minimum-wage job closer to home? He says he buys his lunch every shift, and his spending confirms a lot of fast-food purchases. A sub or a coffee are not going to make or break him, but the more you can control your income and expenses, the more you can tilt your savings potential in your favour.
Lee has paid off $ 10,000 of debt, which is fantastic. If he can now start plowing savings into a Tax Free Savings Account (TFSA), that would be my inclination. The tax savings from RRSP deductions would not be significant, plus TFSA withdrawals will be more flexible given his plans. Some of his TFSA savings could be needed for barber school, first and last month’s rent, or car repairs, so I wouldn’t invest too aggressively.
The result: He spent less. Spending in week 1: $ 118.50 Spending in week 2: $ 104
How he thinks he did: This week, Lee really tried to cook and bring his own lunches to work for the Millennial Money challenge.
“It was interesting because I had the goal not to buy any food and it really worked. I just need to find recipes that I can make in bulk for the whole week,” he said.
Take-aways: “Wow! It’s great to see that I’m on the right track,” Lee said. In terms of saving for barber school, he was unaware of Canada’s grants and says he’s looking into it immediately.
“It was great to see that this career, like I had planned, could open up space for me also to be an entrepreneur,” he said.
Now, he’s hoping to put savings into his new TFSA and considering finding a job closer to home instead of having to drive to the factory.
“I’ve been looking for jobs in cafes or shops that are closer to home that I could walk to in 10-15 minutes,” he said. “I’ll still keep the car, but it is an expense that gets in the way of my savings.”
Finally, he feels “seen” about taking on more shifts. “There’s nothing else to do other than to work so I decided to just up the shifts temporarily, knowing that this can’t be forever,” he said. “I’ve been able to pay off my debt, (but) now I want to move to the next level of my life.”