Millennial Money is a weekly submission-based series that provides financial advice to millennials in the GTA. Read the full series here.
First, Bob, 36, was temporarily laid off from his bartending job in March due to COVID-19. Then, the pandemic forced the closure of the bar he worked at, shutting out his prospects to return.
Now, after relying on the Canada Emergency Response Benefit for several months, he’s been trying to stay mentally healthy living in the city on $ 2,000 a month.
“I try to eat at home,” he said. “I’ve also been looking for jobs but my schedule is all thrown apart and I find it hard to focus.”
His goals, which were once to buy property near the city have been upended. Instead, now he’s just hoping to be able to save $ 100 a month — in case anything else happens.
But with rent clocking in at $ 800 a month — he splits it with his partner for a place in Toronto’s Bloordale area — he feels like his next urgent step is to find a job, while also prioritizing his health.
“I’m trying my best to channel my energy into finding jobs but I’m also scared to return back into the bar scene,” Bob said.
In a typical day, he’ll cook all his meals at home, play video games, and occasionally, maybe once a month, see a friend at a patio just to make sure he continues to socialize in these difficult times.
“I don’t want to forget what life was like before this,” he said.
With a debt of $ 1,500, which he’s afraid will eventually grow, he wants to know what a money coach would say about his finances during the pandemic.
We asked him to record his daily spending to get a better idea.
The expert: Jason Heath, managing director at Objective Financial Partners Inc., had this to say about Bob’s finances.
- Bartenders like Bob are definitely in a tough position. Financial success relies on busy, bustling bars and tips that aren’t likely to resume any time soon.
- He has done well after five months of receiving the (CERB) to only have $ 1,500 of debt and be pretty much cash flow neutral from month to month. Living lean when times are tough can be a challenge, but his future self will thank him for it.
- As the CERB comes to an end at the end of this month, he will likely qualify for Employment Insurance (EI) assuming he has the required 120 hours worked in the past year. The threshold has been lowered to reflect the fact that many people receiving the CERB will have a gap in their hours for EI purposes. Bob may get a raise when the CERB ends, as the maximum EI is $ 573 per week if he worked enough hours from October 2019 to March 2020. He can qualify for up to 45 weeks of EI which could take him into next August. That buys him time to look for a new job.
- Bob needs to be looking for a new job to continue to qualify for EI. He seems motivated to make a career change and rightly so. The service industry has a lot of risks over the coming year.
- If part of his career change includes any education or training, the 2019 budget introduced the Canada Training Credit that may help. It’s $ 250 that accumulates each year up to $ 5,000 lifetime — so would be $ 750 by 2021. It’s a non-refundable tax credit that will reduce tax payable on his early 2020 bartending income or his CERB or EI. Both the CERB and EI are taxable income. Since the CERB has no tax withheld, Bob should be mindful that he could owe tax in April on the government support he has received since the start of the pandemic.
- He mentions wanting to save $ 100 a month. To be clear, I would take any extra cash flow and apply it against his debt. Avoiding interest on that debt will likely provide a better return than literally saving it in a bank account or Tax Free Savings Account, for example. Debt repayment can be considered saving, of course.
Results: He spent less. Week 1 spending: $ 170 Week 2 spending: $ 140
How he thinks he did: “I think I did pretty well,” Bob said, noting that in both week’s he’s only made a big spend on groceries. What also helps is that he’s able to share some of the home costs and food costs with his partner who still has her job during this time.
Out of COVID-19, he mentions that he’d be spending a bit more. “More transportation, as I’d be socializing more, and going to work,” he added. Though he’s trying his best to remain frugal, he also says that exercise has taught him that he does need to find ways to de-stress and decompress and will be looking for free outdoor options like going on walks or hikes.
Take-aways: “I need a job really badly.” For Bob, that means defining a new schedule even out of work to start job hunting on websites or through friends.
With Heath’s advice, he’s also looking into moving more of his $ 100 a month savings goal into paying off the $ 1,500 debt so it doesn’t grow anymore.
“I’ll be putting a bit of surplus cash into the debt, but will always keep a bit of cash on hand in case of an emergency.”