Can ‘workaholic’ Lauren who earns almost $ 100,000 buy a house?

Lauren’s friends and family describe her as a ‘workaholic’.

The 27-year-old non-profit professional earns $75,000 a year and earns another $20,000 by teaching at a university, giving advice, writing contracts, and teaching first aid and fitness classes. Lauren says she felt burnt out in recent years and had taken six months off from work.

“I would describe myself as a hard worker,” says Lauren. “But I’ve come to the point where I want to start living and put my money to work.”

Lauren plans to scale back some of her part-time gigs for “more work-life balance,” but fears she won’t be able to reach her goal of buying a house in the next five years.

With such a busy schedule, Lauren says she doesn’t prioritize meal prep and admits to eating out regularly — “about five times a week,” she says. On weekends, she spends time with friends and family, runs errands, and catches up on work and health. Lately she travels a lot for special events like weddings and birthday parties.

“I’ve saved as much as I can over the years, but I still fear I’ll never be able to own a home in Toronto,” she says.

Lauren maxed out her RRSP and TFSA. Two years ago, she transitioned from her government job on an OMERS plan to the non-profit sector, which she says “doesn’t pay out as much money and also don’t have a defined benefit pension, but they match the RRSP contributions of four percent, which I have chosen.”

Can Lauren achieve a healthy work-life balance and save for a house? We asked her to track two weeks of expenses to see what she can do.

Lauren does everything she can to boost her income to six figures by teaching at a university, writing contracts, and teaching first aid and fitness classes on top of her full-time salary.

This allowed her to pay off her student debt and max out her RRSP and TFSA accounts. The problem is that she’s so busy that she often doesn’t have time to cook, but more importantly, she’s worried about work-life balance.

If she worked less, she might spend less by being less rushed, so the net drop in her cash flow, especially after taxes, might not be huge. She admits that she eats out a lot every week and encounters a lot of food waste at home.

She hopes to buy a home in five years, so the new First Home Savings Account (FHSA) is perfect for her. Especially because she can transfer money from her other accounts. If she moves money from her RRSP to her FHSA, it can be done through a direct transfer, with the money remaining tax protected.

She won’t get a new tax deduction, but she can withdraw tax-free from the FHSA for a qualifying first home purchase. A better option might be to use her TFSA, withdraw $8,000 per year and contribute the annual maximum of $8,000 for the next five years. This will give her the maximum $40,000 in FHSA contributions and the ability to claim tax deductions and get a tax refund at the same time.

She may have enough cash flow to max out her FHSA, but her TFSA or RRSP is a backup plan if she cuts back on her part-time work.

Lauren has a group RRSP at work with a company match. Any time an employer gives you money to contribute to an account as an employee perk, take advantage of it. She should also look at her other benefits, especially disability insurance, if applicable.

She ticks all the right boxes financially, but her biggest risk right now is her health. If she has a disability that prevents her from working, she must replace her income. Some employers do not have disability insurance.

Others have different levels of coverage you can choose. Still others have some coverage, but it can’t replace all of your income. Especially in Lauren’s case, her income is more than just her salary because of all her part-time work.

Lauren’s hard work has given her a good head start financially. Making good financial choices after high school can make a big difference. It may be hard to appreciate at the time, but working hard in your 20s and trying to avoid debt can make your 30s and older a lot easier.

Week one spend: $480. Week two spend: $465.

Take away food: “As a Chinese-born Canadian, I mentally inherited the hustle and bustle and have held multiple jobs since I was 16,” says Lauren.

“I’m ready to focus on my work-life balance,” she says. “I understand that working all those extra hours is not sustainable. … Ultimately, I aim to get a well-paying salaried job and invest my money.

Lauren agrees that the First Home Savings Account is a good fit. “Since it’s a new initiative, I don’t know much about the account, so I plan to look into it further,” she says.

However, Lauren says she doesn’t think she should take her TFSA funds to the FHSA.

“Instead, I would maximize tax-free relief and use other funds for the FHSA,” she says.

Are you a millennial living in Toronto or the GTA and need some help saving your money? Be part of #MillennialMoney and email galsharif@thestar.ca

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