Meet Maria, a 27-year-old marketing professional making $ 55,000 a year, who lives in Toronto’s Danforth-area with two roommates. By 2021, she’d like to move into a place by herself, and by the following year, find a pad with her partner.
In five years, she sees herself buying a home with her partner and starting a family.
Without any student debt to pay off, Maria thinks she’s well on her way. Now all she needs is a little direction.
Maria knows to save money she may have to sacrifice some of her after-work and fun activities. She has already implemented meal prep four out of five work days a week.
“If I don’t bring lunch, which is usually towards the end of the week, I’ll typically grab something quick at one of the many food places near my office like Basil Box, Tim Hortons, or sushi,” she says.
She also preps her breakfast at home Monday to Friday. Two to three times a month she’ll treat herself to a Tim Hortons breakfast sandwich.
Maria generally eats dinner at home but she also loves to socialize which involves going out for dinner once in a while and playing in a volleyball league. She also likes online shopping. In fact, this makes up most of her monthly spends. Paying off her monthly credit card bills for these activities including dining out can range from $ 1,000 to $ 2,000.
She typically spends the weekend with her partner, running errands or grabbing drinks and dancing with friends.
On top of her five-year plan to buy a home, she also wants to have enough money for two to three vacations a year.
The advice: Janet Gray, a financial adviser at Money Coaches Canada, says it’s great that Maria already has savings goals. Now, it’s about focus.
> Make sure your goals are super defined. How much is needed and when? If you plan to move out, you would likely need first and last month rent deposit. For example, that might be $ 4,000. If you want to move in 12 months, you need to set aside $ 333 each month for the next year.
> Set your major goals first (move in with partner, home ownership) and then open separate online savings accounts for each goal and make deposits each pay day — after paying off your bills of course.
> Set aside money for reasonable discretionary spending — after your saving goals are filled. Note that credit card spending is just a plastic version of payments made for purchases. Look closely at your credit card statements to see if those purchases are related to your needs and your goals, and not just unconscious indulgences.
> You are doing well with your food spending. Try looking at all areas to see where you can find surplus spending to save for your goals. Before you know it, you can reach your goals!
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The results: Success! Spending in week 1: $ 462.28. Spending in week 2: $ 434.09.
What she thought: After getting Gray’s advice, Maria made a conscious effort to limit her spending this week. “I had the money coach’s advice in the back of my mind every time I went to make a purchase,” she says. She questioned all the purchases she was tapping with her credit card — making sure it was a) worth it and b) in line with her goals of moving out by next year.
Take-aways: What is Maria going to do next? Thanks to Gray’s advice, Maria plans to set up a separate savings account. “I hadn’t considered how much I would have to set aside for first and last month’s deposit, so this definitely helped me realize I need to start planning and saving now if I want to be able to stick to my timeline for my goals,” she says.
After recording everything with the #MillennialMoney challenge Maria became hyperconscious of her spending. “I consider myself decently financially-conscious, but I found it helpful to track my spending,” she says. “It was also really helpful to have a money coach look over my spending. Sometimes you rationalize purchases to yourself, so it was nice to have an objective pair of eyes to put my financial spending in perspective with my goals.”