Millennial Money is a weekly submission-based series that provides financial advice to millennials in the GTA. Read the full series here.
For 29-year-old Diana, taking care of her family has always been the norm. Making minimum wage — $ 15 an hour — She works part time as a COVID-19 contact tracer. The rest of the time she is taking care of her parents who she lives with, along with her siblings.
“I make around $ 200 a month,” she says.
Diana receives government assistance to stay afloat. It helps her cover a large portion — $ 1,600 — of her family’s rent and her siblings take care of the rest of it. For years, Diana says, her family was in debt. After working part-time jobs and saving extensively — which included couponing and price matching at grocery stores — she and her siblings pulled the family out of debt.
Diana says she hardly has time to think about the impact of COVID-19 on her well-being, but is often afraid for her family. “I just know that even a little money here and there, with assistance, is necessary to help us continue on.”
On a typical work day, Diana tries to cut costs by prepping food at home. “I eat breakfast and lunch before leaving for work. After that, I eat dinner at home.”
On weekends, she’ll go for walks with families in the park, and participate in other outdoor activities. “Sometimes we get takeout if we feel we have enough saved up for the week,” she adds.
Her goal is to have more in emergency savings. “I saved money and we used to be in debt but now it’s been cleared, but I need more security,” Diana says. She also adds that it would be great to be able to start a vacation fund, post-pandemic, because “we’ve never been able to take a vacation or catch a break.”
We asked Diana to share her finances with us to get a better idea of her situation.
The expert: Jason Heath, managing director at Objective Financial Partners Inc., on Diana’s money management:
- I suspect there are a lot of people like Diana right now struggling to make ends meet. Between social assistance and her part-time job, she’s able to pay the rent and not much else. The good thing is she doesn’t have any debt so that makes it easier to go through a rough patch like this.
- I think that’s an important lesson. During your life, you’re going to go through times where you lose a job or have an unexpected illness or go through a breakup. There are plenty of things that can set you back financially. If you are already in bad shape because you have accumulated debt, a life event could push you to insolvency. It’s motivation to pay off debt when you’re young or strive to accumulate an emergency fund.
- One thing for Diana to consider in her new job search is that the 2019 budget introduced a new tax credit called the Canada Training Credit for tuition fees and other courses taken in 2020 or future years. She would have started to accumulate $ 250 starting in 2019 up to a lifetime maximum of $ 5,000. This credit is a refundable tax credit, meaning even if her income is too low to owe tax, she can get a tax refund if she qualifies for the credit. Eligible training goes beyond college and university courses to include institutions providing occupational skills courses certified by the ministry of employment and social development. Maybe there is training that can help her in her search for a better job.
- Diana doesn’t have the burden of car costs that tend to be a financial drain for people whose cash flow is tight, but public transit also limits her ability to work. I hate to be a bad guy and be critical about pet costs, but she even had an unexpected pet expense the week she was tracking her spending for us. Pets can be great, but I think it’s important to prioritize your own cash flow and savings before adding other obligations like a pet or a car or real estate ownership.
- Hopefully, Diana’s social assistance and frugal living help her to hit the ground running with no debt when she finds more work.
The result: She spent more. Spending in week 1: $ 73 Spending in week 2: $ 262.89
How she thinks she did: “I’m a little bummed that I spent so much more, but there was something really necessary for my pet,” she says. Usually, her siblings help pay for the cat’s expenses, but this week they were in a tight spot.
Another extra cost Diana says was for food. “I spent a little more on groceries than I would have liked, but did need some staples for our pantry, as we spent so little on these costs last week,” she adds.
Take-aways: Diana says that she has always been frugal, which is what helped get her family out of debt, but it was good to get some concrete advice.
“Don’t spend on things you don’t really need and think before you buy. Try not to eat out so often. Shop at cheap grocery stores and other retail if you’re going out for groceries and clothes,” she says.
Also, after reading Heath’s advice Diana is looking for ways to be more financially literate. “The first step is to understand how money works or else you’re forever going to be confused about it,” she says, adding that she’s now looking into the Canada Training Credit tax credit mentioned by Heath.
Currently, with the family out of debt and surviving, Diana is hoping to continue working part time and taking care of her parents until they can get vaccinated. “I only want to travel to look for new jobs if I know I can protect everyone else, no matter how hard it is.”
“For now, I’m going to set goals, do some research and figure out how to overcome these burdens.”