Save, spend, repeat: Three money stories
When it comes to finances, everyone’s situation is unique, but there can still be something to learn from others—no matter whether they’re earning enviable sums of money or are struggling to live paycheque to paycheque.
So, let’s take a look at the stories of three people from across Quebec, each in very different circumstances.
Meet a father who has to watch every penny to offer his family the best life possible, a young student who is just starting out in life and doesn’t quite know what to do with her finances, and a man who lives comfortably and invests carefully.
Their stories may help you set your own goals, get motivated, improve your habits, and feel like you’re in good company when you wonder: “Why is it so hard for me to pay my credit card bill? How come my cousin can afford a mansion while I can’t even afford to look at condos on Google Street View? Do I have enough savings for my age? Experts recommend saving 20% of your income, but is that even feasible?”
1. Father on a tight budget
|Car and small mortgage
|Some short/medium-term savings, public service pension plan
|Place of residence
|Smart financial move
|Keeps debt as low as possible. “I’m allergic,” Damien says.
|$10 popcorn at the circus
Damien is a father of two young elementary school-aged kids. His life revolves around his family. To manage the household budget more easily, all his expenses go through the joint account he shares with his girlfriend (and baby mama).
“My phone and my loose change are pretty much all I get to manage on my own!” he says.
“Money keeps running out!”
Damien and his partner have decent salaries — he’s a social worker, earning around $60,000 a year, and she works in education, earning over $70,000.
Both were reasonable incomes, which, once combined, seemed sufficient to Damien for raising his family—until recently.
“Now, money keeps running out. It’s freaking crazy. Even with both of us working decent jobs and having a reasonable mortgage, it feels like we’re always struggling,” he says.
Damien and his family live in a small, remote village, drastically reducing housing costs compared to bigger towns and cities. But life is getting more and more expensive, even where they live.
“This is the first time we’ve had to tighten our belts a bit— you know, we’re swapping butter for margarine and stuff, trying to stretch our money as much as possible,” he says.
How can we say no to our children when they give us puppy-dog eyes?
While Damien is trying to save money, the current economic climate makes it difficult, especially since both parents are not ready to cut back on expenses regarding their children.
“When the circus comes to our little community, and the kids wanna go, it’s hard to say no,” Damien says. “And when we go, we have a hard time saying no to $10 popcorn. … What I manage to save isn’t meant for the long term. I put a little aside, and it pays for my tires or minor expenses like that.”
For his retirement savings, Damien will rely mainly on the pension fund he will receive from his employer, which fortunately will provide a decent nest egg. He admits to being fairly unconcerned about his golden years.
“My father dying three months before retiring kind of shifted my perspective on saving for retirement. … My philosophy is ‘don’t stop enjoying life to save money for retirement.’ Whatever way you like to spend your time, there’s no guarantee that you’ll be able to continue doing it as a retiree,” he says. “I’ve always been a happy person, even when I was relatively poor, so I don’t think I’ll have any problem with not being rich at retirement.”
Making his clunker last
Damien works hard to avoid debt. One of the ways he stays out of debt is by continuing to drive his old car.
“I’m holding on to my old car until we’ve paid off our minivan,” he explains. “I just can’t see how we could squeeze another $400-500 a month into our budget for a new vehicle. But, you know, if I were to stroll into a car dealership tomorrow morning, I’m sure they’d happily finance me for a $40,000 or $50,000 car. I don’t wanna fall into that trap.”
2. Young student seeking financial insight
|Place of residence
|Smart financial move
|Always pays her full credit card balance
Compared to Damien, Évelyne is in the earlier stages of her adulting journey. She’s studying in a technical program and living with her parents, who pay for her education. If she works, it’s mostly for personal spending and to save money.
Évelyne works as a sports coach and occasionally referees basketball games. She’s a diligent student, so she prioritizes her education, even if it affects her annual income. “Since I don’t work during the school year, I make around $10,000 a year. I can afford it, thanks to my parents!” she says.
Young, wise and free
Évelyne is quite responsible when it comes to her finances.” I don’t have any debts. I only have a credit card with a very small limit of $500, and I pay it off fully every month,” she describes. She uses her credit card for small, occasional expenses like a night out at a bar, shopping, or indulging in her guilty pleasure: fast food (yes, even sporty types can have a soft spot for greasy fries). And even if her parents are currently paying for her studies, she knows that the moment when she will be solely responsible for her finances is approaching, a prospect that worries her: “Certainly, with the current situation, I wonder if I will have access to a house and everything, like my parents did.”
Budget-conscious but hates talking about money
Évelyne has already saved $5,000, which is impressive for someone so young. But as she points out, that’s money sitting in a savings account, with little growth. She dislikes learning about personal finance and often feels overwhelmed by money decisions. Inflation doesn’t make her super nervous since she doesn’t have many expenses. But she says her lack of information about finances worries her.
“I should start investing, but I hate money! I have no clue how it works, and nobody likes to talk about it,” she says. “I’d like to have some numbers to compare with my own, just to see if I’m on the right track, and whether or not I need to be concerned.” Unfortunately, Évelyne doesn’t really know how to learn more, especially since she hates talking about money.
But there are many resources available for her to gain more financial knowledge and confidence, including right here on this site.
3. The young businessman
|$350,000 mortgage, no other debts
|Maximum contributions to RRSP, plus his employer’s pension plan
|Place of residence
|Smart financial move
|Always puts extra cash into a TFSA
|Financial guilty pleasure
|Loves eating out
Maxwell is 30 years old and enjoys a financial situation that many would envy despite his rather unconventional educational background.”I have a DEC (Diploma of College Studies) in Natural Sciences, but instead of going to university right after graduation, at 19 years old I started working,” he recalls. “After that, I was supposed to go back to school full-time, which I never did. In the end, I got a part-time university certificate while working full time.”
The plan has paid off for Maxwell: he makes $121,000 a year. Initially, he feared that cutting his studies short would put him in a risky situation later on. With time, these worries have faded away.”When I first started out, I was afraid something would happen, ending up in financial trouble. I no longer have any fears. If something were to happen with the company I work for, I’d find something else.”
In fact, things are going so well that he’s in the process of buying out the company he works for! But that doesn’t mean his life is an easy ride. Inflation and rising housing costs are affecting him too, especially in terms of his savings: “I used to save money through automatic transfers every payday. But now, I’ve got a house I have to pay for all by myself, so I’m really on my own with all the expenses: mortgage, taxes, and so on. My monthly housing expenses are still high. When it comes to savings, right now, my focus is on the house.”
He does, however, have retirement savings: he’s maximized his contributions to his RSP, reaching his $60,000 limit, and he also has a pension fund from a previous job. Plus, the only debt he carries is his mortgage — no car loan or any other personal loans.
So, with a strong balance in his savings accounts, a comfortable income and minimal debt, Maxwell isn’t too worried about the future. “I’m a little concerned about mortgage interest rates, but my renewal is still a few years away, so [I’m hoping interest rates will] stabilize on the lower end by then. [...] Yes, I’m feeling the impact of inflation, but I’ve saved enough so far, and I think I’m going to be okay regardless.”
So, what can we learn?
First, inflation and the resulting rise in interest rates have affected everyone: the young student, the family man, and the relatively well-off bachelor. Maintaining a budget is even more important than ever.
Fortunately, creating a budget is not complicated when you use Tangerine’s Left to Spend tool, which simplifies tracking your expenses. This tool could be useful for Évelyne, who wants to know if she is on track with her finances, Damien, who is trying to cut his expenses, and Maxwell, who is paying for a house on his own.
These stories paint a very clear picture of why it’s important to have savings. Once again, Tangerine has savings tools that can help you whether you want to provide your family with fun experiences, build up good personal finance habits, or buy a business.