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 Josslyn, the COVID-19 pandemic has been an added challenge to a series of obstacles she’s faced over the past few years.
Three years ago, she quit her high-paced sales job to give herself a mental break. “It was eating at my soul and I felt very depressed during that time,” she said, adding that even though she was making around $ 80,000, she felt alone and isolated.
She picked up a lower income job and, with her cat, moved back home with her parents. “The job was fine, it didn’t pay as much, just above minimum wage, but I was feeling better.”
Then the pandemic hit. She was laid off and has survived on the Canadian Emergency Relief Benefit for most of 2020. When CERB ended, she moved to employment insurance (EI), but her income was a bit less, around $ 1,800 a month.
“Despite all the challenges, I have a roof over my head. I feel ready to look for a career job, but this time it’s proving difficult,” she said.
On a typical day, she’ll spend almost no money on food. She eats most meals at home provided by her parents. She spends most of her money at the LCBO or the cannabis store, she said. On the weekend, she’ll go camping with her family which has been a great outdoor escape. That’s when she help pays for gas, groceries and other supplies.
Josslyn owes around $ 2,000 on her credit card. “I am just wondering if I should rush to pay it off now.”
Eventually, she’d like to find a job and move out on her own, but for now she just wants advice on her situation.
We asked Josslyn to share a sample of her spending to get a better idea.
The expert: Jason Heath, managing director at Objective Financial Partners Inc., on Josslyn’s finances during this difficult time.
- Nearly one in five Canadians between the age of 15 and 24 remains unemployed. It’s good that the requirement for hours worked to qualify for EI regular benefits was lowered by the federal government to only 120 hours in the previous year, as this may have helped Josslyn qualify for EI benefits despite her part-time status prior to the pandemic onset.
- That said, Josslyn has taken an income cut from $ 500 per week from when she was receiving CERB to $ 450 now on EI. The maximum EI is $ 573 per week but that depends on average insurable earnings prior to applying.
- I note her primary expenses include pot and alcohol. Obviously, discretionary spending are areas to reconsider, and almost everyone has areas they could cut out if they look close enough.
- She has been doing a good job keeping her spending lean at less than $ 600 per month, so while she’s living with her parents and has cash to do so, she should really focus on paying off her modest credit card debt and building some savings. She will probably have tax to pay in April given there was no tax withheld on her CERB payments and CERB is considered taxable income. So, she should budget for that as well.
- The ongoing pandemic and recession coupled with her mental health challenges could make it tough to maintain her income in 2021. So, everything she can do now to get debt free and put some money will help.
- There may be other income supports such as the CPP Disability Benefit of the Ontario Disability Support Program (ODSP) that Josslyn may qualify for if her depression is a prolonged and continuous impairment. Hopefully her mental health and ability to secure a new job will mean those government supports won’t matter, and the CERB and EI programs will have provided the stop gap she needed to get back on her feet.
- Cheap entertainment options such as camping with family and looking for ways to get fresh air are good, not only for her pocket book, but also her peace of mind. I hope she can continue to find ways to do stuff like this over the winter.
Results: She spent less. Spending in week 1: $ 134.55 Spending in week 2: $ 112.10
How she think she did: “I did better than last week!” Josslyn said. “It’s exciting that at least this small goal I made led to better decisions.” The main reason for this? Josslyn says it’s that she limited her spending at the LCBO.
She also realized that seeing her expenses presented in a chart really helped her understand more about herself. “I might not have a lot of purchases, but on difficult days I might decide to spend more on some of my vices,” she says. This isn’t to say she’ll stop cold turkey, but it’s a good reminder as she also has goals to stay healthy as the winter limits more outdoor activities.
Take-aways: “I’m really thankful that I have a place to stay,” she said. After seeing Heath’s praise about keeping her monthly spending under $ 600, she realized that she couldn’t have done it if her parents hadn’t given her shelter. “For those who have to deal with a lot and have no option to move home in a pandemic — I can’t imagine,” she said.
Josslyn will get to work clearing her credit card debt. “It wouldn’t take me too long to pay it off, and I guess it will grow if I just let it sit there,” she said, calling it just another small achievable goal, like her second week spending that she could focus on.
Moving forward, she’s going to check into the other income supports that Heath mentioned, including the CPP Disability Benefit or Ontario Disability Support Program. “This exercise has also shown me that I don’t know much about what is offered by our government for support,” she said. Knowing more will help me plan for the future.