This 29-year-old was laid off early in the pandemic. She recently found a job, but now her investment property sits vacant. How can she achieve her saving goals?

Millennial Money is a weekly submission-based series that provides financial advice to millennials in the GTA. Read the full series here.

Sarah, 29, has always been someone who sees herself as regimented and in control of her money. But this pandemic year has taken her for quite a spin.

First, she was laid off at the start of the COVID-19 pandemic. Thankfully, she had four months of emergency funds saved and was able to apply for employment insurance until starting a new job as a development co-ordinator in the fall, earning $ 65,000.

“Now that I have a steady income again, I’m thinking about how I can save and grow my money.”

But first, she has to deal with another unplanned event. Last year, Sarah bought a downtown Toronto condo property to rent out while living at home with her parents. But now the lease has been terminated and she has $ 254,000 remaining on the mortgage plus the monthly maintenance fees.

“With the current market during COVID-19 I haven’t been able to find a new tenant and, to be quite frank, I am not expecting to be able to find a tenant in maybe the next six months to one year,” she said.

She believes her self control will help her overcome some of these financial challenges. That includes packing lunch for work every day and cooking dinner at home. She also switched to remote workouts, getting rid of gym membership costs.

Due to COVID-19 she has also cut $ 50 to $ 100 a month of spending on dining out and bubble tea and is saving a portion from cancelling an annual trip that would usually cost $ 3,000 to $ 4,000.

What advice does she want on her finances?

Sarah has already saved another four months of emergency funds and is wondering if she needs to save more.

Also, she has a few goals — both short and long-term — like buying a laptop in two years and a new car, a wedding and a down payment on a home in the next five years.

She is also interested in learning more about investments.

We asked Sarah to share a week in spending to get a better idea of her financials.

The expert: Jason Heath, managing director at Objective Financial Partners Inc., on Sarah’s money management:

Sarah is doing a lot of little things well that make a difference for her financially.

She keeps her expenses modest, and that has helped her buy a rental property and contribute to her RRSP and TFSA.

She cuts her own hair and does her own nails. She packs her lunch for work. She does home workouts, in part due to the pandemic, but has cut out monthly gym costs.

Sarah has opted to keep costs low on recurring expenses that are manageable sacrifices. This is one of the keys to cutting costs and boosting cash flow for people who need to or who want to do so to help them achieve other financial goals.



I don’t believe in frugality at all costs, but I do support frugality when it’s necessary at a young age or during a difficult financial period. Beyond that, if someone is reaching their saving goals, they should feel free to spend their remaining income however they want.

I like how she is actively saving for small and large expenses ranging from a laptop purchase in two years to a new car in five years. Many people forget to plan for these costs and end up going into debt when they’re incurred.

She asks about her emergency fund equal to four months’ expenses. I don’t think there’s a right answer for how much to save up for an emergency. I also think that for someone who is responsible with their money and their debt, a line of credit can be an emergency fund.

She has a rental property and if she has sufficient equity, she can have a home equity line of credit that would likely be at a 2.95 per cent interest rate currently. That’s not to suggest she should keep no cash in her bank account, but she may be able to keep a modest amount of cash, knowing that she has line of credit room and her TFSA as backup plans in the event of something unforeseen.

I’d encourage her to continue to build her TFSA and RRSP over buying another rental property. Owning two properties in Toronto may not be the best way for a young person to diversify their investments. That’s not to say the strategy hasn’t worked out well over the past 10 years, as I have clients who have been very successful investing in Toronto real estate. However, that past experience may not repeat itself going forward from this point.

Although it doesn’t appear Sarah is having a cash flow crunch despite a vacancy in her rental property, she could consider pushing out her amortization on her mortgage to reduce her monthly payments. Despite not having a tenant right now, Sarah’s rental property expenses continue to be tax deductible.

The result: She spent more. Spending in week 1: $ 400.32 Spending in week 2: $ 2,302.96

How she thinks she did: “I didn’t really change my purchasing habits per se, since this week was mainly recurring monthly bill payments. I wouldn’t say I’m a big spender to begin with so I think this week was pretty normal.”

On top the monthly bills, Sarah also contributed $ 1,000 to her TFSA, and another $ 1,000 to her mortgage.

“I didn’t realize my spending seemed that ‘frugal’ until I saw it laid out. I don’t necessarily think I’m excessively frugal at all, it’s just a lot of material things don’t really appeal to me so I never prioritized them,” she said.

As a result, she says she’s able to “cut costs” on daily things and put money toward things that she does enjoy like travel and splurging on vacation.

“I absolutely agree with the financial adviser that I can spend any extra cash without guilt. Best of all, knowing that I can save in areas that don’t appeal to me doesn’t make me feel like I’m missing out on anything at all and has allowed much richer experiences,” she added.

Take-aways: The first piece of advice she’s considering is re-evaluating her “emergency savings.”

“Although it is good to be conservative, especially during the pandemic, I think I might have been a little overly cautious and my money could be put toward better use,” Sarah said.

Also, it was good to know that her TFSA or a line of credit could be used in absolute emergencies. “I hadn’t really taken (that) to heart before because my mindset was on having my emergency fund in cash . This helps me think deeper about how I can better use this money, even if it’s only a couple thousand dollars, it can grow to be something much more.”

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Evelyn Kwong