Millennial Money is a weekly submission-based series that provides financial advice to millennials in the GTA. Read the full series here.
Sammy, 31, is part of the large group of millennials hit hard by the economic impact of the COVID-19 pandemic.
Laid-off from her graphic design job several weeks after lockdown, she’s been surviving on CERB for the past six months.
“Trying to stay healthy mentally and physically has been a big priority during this time, because in the beginning of quarantine while working I would sit 10 hours a day, was highly stressed and was too exhausted at the end of work to do anything,” Sammy says.
Now, she’s taking this time to reconnect with herself, her family, and figure out how to transition back into the workforce — picking up freelance gigs and searching for full-time work — as she transitions from CERB onto Employment Insurance.
Being able to split her time between her downtown condo and her family home in Hamilton has helped her deal with her sudden unemployment. “Being in Hamilton around my family has been really nice, I’m surrounded by the people I love and being fed doesn’t hurt,” Sammy says.
What also helped was finding an affordable rental space — a two bedroom for $ 1,300 a month — to double as her living quarters and a small art studio. It’s a high price when living off of the CERB money she’s getting now, but still much cheaper than most of Toronto’s rental market.
Her weekdays and weekends are now meshing into one another, she says. To stay agile, she’s sticking with a schedule — waking up at 6 a.m., eating breakfast, having a coffee, and picking up new outdoor activities to stay busy. If she happens to be in Hamilton, that means hanging out at home or going golfing with the family. If she’s in Toronto, she’ll see her bubble of friends in a backyard or patio.
“It has been a big change, and many of my local favourite bars and restaurants are closed, so I try to pick places to eat, drink and shop that are small businesses to support,” she says. “I would normally check out art galleries and hang out in cafés to read, but due to the current circumstances I’ve opted for beaches and parks to spend time.”
At this point, Sammy isn’t trying to save for anything. “I am just trying to make sure I can financially support myself during this pandemic,” she says. Prior, her savings would probably have been spent on travel and comfort items.
If she had more money, she’d like to take small steps to redecorate her home in anticipation of a second COVID-19 wave, but for now it’s mostly about staying afloat. “My priority is to make sure I’m not dipping too much into my savings right now.”
Finally, when she gets back on her feet, lands that job, and is able to put a few more years into work, she wants to start her own business and become her own boss.
We asked Sammy to share her daily spends during the pandemic to get a better idea of her expenses.
The expert: Jason Heath, managing director at Objective Financial Partners Inc., on Sammy’s situation:
- Obviously, Sammy’s income and expenses are a bit unusual right now given she is on CERB and has some limitations due to the pandemic.
- No doubt she is happy to hear about the extended CERB payments through Sept. 26. Temporary measures introduced last month should also help her meet the lower hours limit to qualify for EI after her CERB benefits finish and bridge her to a new job.
- I think it’s great she’s waking up early and trying to maintain a routine. It sounds like job hunting is a daily exercise.
- Sammy describes herself as mostly eating meals at home and trying to tighten her belt given her unemployment. However, her money journal tells a different story. There’s a lot of discretionary spending on kayaking, golf, alcohol, fancy coffees and dining out. One week or one month isn’t going to make or break Sammy, but it appears her spending exceeds her CERB payments and she is dipping into savings. If she’s actively planning to redecorate her home in preparation for a second wave, she should consider planning her finances that way as well and consider how an extended period of unemployment could drain her savings.
- I respect Sammy’s goal to start her own business. I did the same when I was 33, a couple years older than her. I would choose it over the alternative, but it’s important to go into self-employment with eyes wide open — it can be hard to take time off when you’re the boss. Every day is a Monday, and you can’t just punch out at 5 p.m. She should build up a savings buffer to cover not only start-up costs, but also give her the flexibility she will need as she ramps up the business.
- Although it pains me to give this advice and sound like an old man, I’d encourage Sammy to consider other financial goals beyond travel. As a single millennial, there are a lot of things that could change in her life in the next 10 years — or maybe not. Sometimes, you have to save for the unknown, which could include a home or a family. One known is that some day Sammy won’t be able to work and setting aside some money for longer term goals like retirement could be part of her savings plan when she returns to work. In the short run, I would do everything I could to reduce discretionary spending in case finding a new job takes longer than she expects.
Results: She spent less. Week 1 spending: $ 443.85 Week 2 spending: $ 346.10
How she thinks she did: “I improved slightly, but I realize that my new hobbies have added up to become bigger expenses,” Sammy says. In particular, she’s referring to her recent interest in golfing and heading to the driving range, as well as kayaking, which cost more than just a park hangout.
She also realizes that she spends too much on eating and drinking in her current situation.
“I have a hard time saying no to fun things, especially during these isolating times and I also love to be generous and make people happy. Regardless, I want to put in more effort to go out for dinner less, because I know it will help me financially in the future,” she says.
Take-aways: Doing this exercise during the pandemic has taught Sammy a lot about herself. “I found that my spending exceeds what I get from CERB and I’ve been spending money based on the moment for instant gratification rather than planning for the future,” Sammy says.
Moving forward she wants to follow Heath’s advice in making sure she can try her best to be more selective with her spending on outdoor activities and dining out — with a balance. “Making coffee at home, limiting the expensive outdoor activities, but not give it up altogether.”
Finally, she realizes that she does get FOMO (fear of missing out).
“I want to work toward not spending beyond my means, it’s tough because fear of missing out in the moment is a real thing, but I’m thinking if it will benefit my future, that should be my focus,” she says.