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Name, age: Clay, 34
Annual income: $250,000 from job, $15,000 from side hustle teaching online business courses
Debt: $700,000 on mortgage
Savings: $20,000 in savings account, $125,000 in tax-free savings account (TFSA), $350,000 between him and his wife in registered retirement savings plan (RRSP), $16,500 in registered education savings plan (RESP), $170,000 between the two of them in non-registered accounts and individual stocks
What he does: Marketing in technology
Where he lives: Oakville, Ont.
Top financial concern: “Layoffs. I am in an industry where I work on [artificial intelligence] and I know where this is headed. I think it’s inevitable I will be laid off.”
Clay came to Canada with his parents when he was around 10 and had a humble start here, living in a rental unit in Regent Park in Toronto.
“My parents struggled in the beginning,” he says. “I remember going to Goodwill, and picking up mattresses from the sidewalk to sleep on.” Clay added he doesn’t want his own child to face the same obstacles.
He and his family have done well since then. Clay’s dad was a computer engineer in their former country, and was able to resume that career once he was proficient in English. Clay went to business school and now makes $250,000 in total compensation from his marketing job in the technology sector.
He, his wife and their new baby live in a 2,000-square-foot detached home in Oakville, an upscale part of the Greater Toronto Area.
What does it cost to raise a kid? That depends on how much parents earn
Clay acknowledges that many CEOs tend to live in Oakville but says that isn’t the case where he lives with his family. “It’s a pretty modest home,” he says.
Even still, the couple bought their house early in the pandemic when the market was booming, at a price of $1.3-million. Clay considers their $700,000 mortgage to be “large,” but says they have focused on investing rather than aggressively paying down their mortgage.
“The math tells us we are better off investing the extra cash,” he says. Clay is also looking into leveraging a home equity line of credit to invest and save on taxes.
The couple hasn’t done any major renovations to their home yet and are holding off because they are considering upgrading to a newer house in the future. A lot of their expenses are in a holding pattern, Clay explains, thanks to the new baby and the resulting adjustment to their lifestyle. He and his wife were already homebodies, but the baby has amplified that tendency and reduced or eliminated major parts of their budget, such as travel, he says.
“This used to be a top annual expense when we traveled abroad between two and four times a year,” Clay says. “We use credit card points to pay for our travels and have saved almost $100,000 in flights and hotels. We don’t plan to travel with the new baby so will continue to accumulate points.”
Clay’s wife makes about $130,000 annually when working but is taking an extended maternity leave right now to care for their child. When she returns to work, the couple plans to send their child to a Montessori daycare that costs $2,000 a month.
Clay is thankful for their lifestyle, acknowledging that his good fortune is a mixture of timing, luck, and thorough preparation and savings. He feels the current cost of living would make it much harder for a new immigrant family to thrive in the way his did.
“Our story would be very different, and part of me just feels sad,” he says.
His typical monthly expenses:
Investment and savings: $5,191
$1,100 to pension. “Defined contribution pension, company matches up to $7,000 per year.”
$2,200 to company stock and savings
$583 to TFSA. “We contribute to the max in January.”
$1,100 to RRSP. “I do a lump sum of about $10,000 to $15,000 to max my annual contribution.”
$208 to RESP. “Will contribute the $2,500 per year for the next 14 years to get the annual government grant.”
Servicing debt: $3,500
$3,500 to mortgage. “Will jump to about $4,200 a month when we renew.”
Household and transportation: $1,595
$550 on property tax
$300 on utilities
$80 on gasoline. “Since my wife started her mat leave and I work from home, this has gone down.”
$242 on car insurance
$38 on car maintenance. “Two vehicles: oil change, tire swaps.”
$125 on road tolls. “Highway 407 fees for when we visit the grandparents.”
$170 on cell phones. “Both of us, with phone leases.”
$90 on internet
Food and drink: $1,600
$1,000 on groceries. “We definitely spend a lot on organic meats and vegetables at places like Whole Foods. We do stock up when things are on sale.”
$600 on restaurants. “We do takeout on Friday and Saturday. With the baby, we stopped going to a sit-down restaurant.”
Miscellaneous: $5,570
$5,000 on income tax, Employment Insurance, Canada Pension Plan
$40 on streaming services. “Netflix Standard with ads, YouTube Premium.”
$100 on clothing
$40 on gym membership
$200 on baby stuff. “Diapers, books, toys and clothing.”
$40 on haircuts
$50 on cosmetics
$100 on gifts. “The extended family is growing, so more gifts for birthdays and celebrations.”
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