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So I was on tv last week talking about solo earners
Here's the more political version. Also, dump your friends.
Hi, I’m Renée, a finance and business journalist, writer and content strategist. The Budgette is about single finances and publishes twice a month. I prefer to write when I have something to say versus writing because I have to. It gives me time to speak to financial, legal and other experts. When I’m not here, I write and do strategy for other publications and brands. If you want to pay me for my work, that’s great. If you want to work together, message me or you can find me on LinkedIn.
I recently appeared on The Social to talk about how to budget for solo earners. It was a good chat. We talked about housing, travelling and friends’ events. I didn’t cover everything so I wanted to do it here.
What are the positive parts of being a solo earner?
Everyone’s circumstances are different but whether you’re solo by choice, single for now or navigating life on your own for the first time, there is a freedom to being solo. You don’t have to negotiate with anyone over what to do with the money. There is no one else’s opinion to factor in. You’re the only person that you have to consult in decision-making. There’s power in that.
You can go live in a different country or adopt all the animals you want, it might not always be easy but with careful planning the world is your oyster. If you need people to run things by you can ask friends/family or even cultivate a found family to help make decisions.
Of course, as I always say, it’s always a good idea to also consult a financial planner who won’t have a vested personal interest in your finances.
The biggest expense for most people is housing, and it can be really hard if you’re living off one salary. How can solo earners best handle this expense?
Unfortunately, the cost of a one-bedroom is essentially the same whether one person is paying for it or two. The average cost of a one-bedroom in Toronto and Vancouver is well over $2,700. I know, it’s obscene.
There are units that have lower than market rent but it comes down to income criteria and there are usually really long waiting lists. Toronto has a terrible history of maintaining affordable housing. The province is not any better as it seems to have confused available housing with affordable housing.
You might consider moving to a more affordable area, looking for a smaller space or making other accommodations like getting a roommate. It’s not great since surrounding areas around major cities have also gone up in price and the commute is often horrible.
A co-op might be a good choice. They are owned by the people who live in them. That means no landlord to excessively raise rents or renovict you. Co-ops are non-profits and have both market units and subsidized units. Co-ops call units “market units” if the member is paying the full market price. “Subsidized units” are units where the member is paying only a portion of the full market price. The balance of the housing charge is paid by the subsidy program that the co-op works with. Again, long wait times.
If buying a home is your goal you can do it with a friend - just make sure you talk to a financial planner and of course a lawyer. You want to make sure that you have paperwork in place to account for what will happen if someone wants out of the property for any reason - how will that work?
Look, the fact is, you can’t personal finance your way out of unaffordable housing. It takes political will and action to build affordable housing and develop proper rental controls. So vote for people who prioritze affordable housing. Developers aren’t going to do it out of the goodness of their hearts.
We also need to stop seeing the inability to afford something as a crime and a character fault.
The cost of food feels astronomical these days, and a lot of the portioning is designed for a couple or a family, so if you’re single it can mean buying more than you need. Do you have any tips when it comes to shopping for food as a solo earner?
Buying in bulk may not sound like an obvious option – you’re not going to buy a side of beef for example – but buying certain things like dry goods, etc., is certainly possible and can save you money.
Buy the food that you like. That way, you’ll use all of it and minimize food waste.
Consider substitutes of the same thing like substituting dry beans instead of canned. You’ll have to do a little advanced planning and soak them before you cook them.
Pair up with a friend for groceries. It’s not quite bulk-buying but you’re splitting the cost of an item that may spoil before one person finishes it.
Comparison-shop. The fruit and vegetable stalls in my neighbourhood are often cheaper than the big grocery stores.
Even if it’s a ways off, retirement is something that’s on a lot of people’s minds. Do you have any tips for retirement planning as a solo earner?
Maximize your CPP contributions as it provides part of your retirement and is an alternative option to your investments. Maximizing your TFSA will certainly help.
Consider what retirement looks like for YOU and plan for that, talk to a financial planner and keep checking in to make sure you’re on track
Going back to the housing situation, if you have a great group of friends maybe consider a golden girls situation
People are living longer and are generally healthier and not everyone is looking to do that full switch off into retirement mode. Maybe consider more of a slow down and focus on a side hustle or consulting
On one income you have to make adjustments but the good thing is that everything you put away is yours, and you get to decide what to do with it, there is no compromise.
How much money do you feel solo earners should aim to have when they retire?
The general rule of thumb from advisors and planners is 70-80% of your annual income to live comfortably in retirement. But the planners and advisors that I’ve spoken with say it depends on your lifestyle. If you’re frugal, you may not need all of that. I wrote about living on just CPP and OAS here for the Toronto Star.
Another thing to think about when you’re single and retired is to consider your neighbourhood. Is everything you need walkable and within reach? Retirement isn’t just about money but about availability and ease of access.
Do you have any general tips for solo earners who feel pressure to save but it feels impossible when there’s nothing left at the end of the month after rent and other expenses?
One option is to pick up a side hustle but you need to decide if the time is worth the income. If it’s something that provides income without creating burnout, then go for it. A friend of mine did Uber delivery for a couple of hours a week and that worked for them. Another drove for Uber for an extra $150-$200 a month.
Get an outside perspective on your finances. We can get emotional about our finances and when you’re single, you may not have anyone to talk to and get that outside perspective. That’s where you can speak with a financial planner who listens to you and helps you achieve your goals, including finding more money.
Travel can be much more expensive on your own - we’ve all heard about the single tax - do you have any suggestions for ways to make it more affordable?
Some hotels actually have a single-room option. I stayed in the Ace Hotel in New York and a friend stayed in a single room in St Lucia at The Body Holiday resort.
These rooms aren’t banished to the back of the resort and don’t have single beds, they’re just as comfortable as a standard room but maybe a bit smaller (but it’s not like we’re usually spending a lot of time in the room anyway). When I was at the St. Lucia resort, we met a woman who told us the resort had events where solo travellers could meet others if they wanted.
Also, try calling the hotel directly and ask them to waive the single supplement.
Travel in off-peak or shoulder season.
Another option is to travel with tours that either don’t have a single supplement or will pair you with another solo traveller. A friend of mine tried this and shared a room with someone.
Then there is the cost of weddings, baby showers, friend vacations, etc can really add up - especially if you’re covering everything with one salary. Here’s what I do:
At certain points in our lives, it seems like everyone is getting married, having kids, or even on their second marriage. It can be tough when you’re shouldering the cost of all these events and gifts on your own. My advice: Decide how close you are to that person and maybe don’t go to every single event.
Give what you can afford and you’re comfortable with, don’t worry about societal pressures. Your budget is your budget, don’t let anyone guilt you into giving more. If they do, maybe re-evaluate that relationship. Yes, I’m telling you to reconsider that friendship but we do not tolerate bride-, groom- and parent-zillas here.
Dump them if they pressure you.
This week’s readings:
FFS, shut up. Also, they didn’t ask me. Posthaste: Is income tax rate on the wealthy too high? A lot of Canadians seem to think so, poll suggests (Financial Post)
From Reddit (a year ago but some good stuff here) Costco membership worth it for a single person?
I do journalism: Rate hikes, food inflation, mortgage costs: How to get through the cost of living crisis (Toronto Star)