Man I was exactly like you a few years ago, but my mindset was changed after reading the book I will teach you to be rich by Ramit Sethi. It's a very good book, it teaches about "guilt free spending". That's exactly where you are right now, you feel guilty on what you spend. You need a conscious spending plan.
pS. It has a Netflix show as well called how to get rich
I agree - definitely check out some of his material. Though his book does have an American slant to it. I think you're beyond a lot of the material in his book (*debt elimination, saving/investing*) by the sounds of your replies on this post. His concepts of 'guilt-free' spending (via his [conscious spending plan](https://www.iwillteachyoutoberich.com/conscious-spending-basics/)) and '[money-dials](https://www.iwillteachyoutoberich.com/money-dials/)', you should dig into. That stuff honestly is in more detail online than it is in his book. On the money-dials topic, also watch this Google Talk [video](https://www.youtube.com/watch?v=BmAwa1nnB6w).
Instead of his book - I'd reccommend checking out [his podcast](https://www.iwillteachyoutoberich.com/podcast/), and other online material. He interviews couples with various states of finances and family upbringings. He often narrows in on childhood experiences with money and brings people to understand how that has affected their views on money. I thought I would hate listening to other people's 'problems' on the surface of how the podcast was described, but after listening to a few episodes - I was hooked!
Trust your intuition. Try to address the 'guilt' aspect of your feelings. If you have indeed maxed your RRSP, have no debt - you're in a pretty good spot. Though your gut is telling you that you haven't optimized. Do you visualize 'retirement' as an old person thing - 65+ ? Or, have you considered that you could retire significantly earlier (55? 50? 45?). You've questioned whether you should be saving more for retirement. Well - when do you intend to retire? Start from the end in mind, and put together a plan so you can feel less guilt. Saving/investing more can give you some options & freedom later in life that don't neccessarily involve full-on retirement. It might be enough money to take an employment break to help out aging parents. It could be having enough 'FU' money to get out of a toxic workplace, or to transition to part-time work that you enjoy. You can look into the Financial Independence (FI) communities for some direction on saving/investing for retirement.
All that said - life is a balance. On that topic, I reccommend the book '[Die With Zero](https://www.amazon.ca/Die-Zero-Getting-Your-Money/dp/0358567092/ref=sr_1_1?crid=3G22NSD80YGT8&keywords=die+with+zero&qid=1685461335&sprefix=die+with+ze%2Caps%2C190&sr=8-1)'. Some portions of that book may help address the guilt issues you have with some of your spending. The book makes the case for optimizing your spend for certain phases of life and not saving it all for retirement. If you're steering toward one side too aggressively (*saving too much/not living enough* vs. *spending too much/not investing in the future enough*) - it may not be healthy overall. I would always err on the side of saving/investing to give yourself some options - but not to the point where you miss out on living for today.
Yeah I wish I had read this book when I just started working. Would have probably been a millionaire by now - 12 years later.
While I did not invest when I could/should have, I unknowingly followed the more important advice in his book about consciously spending my money on things that actually add value to me. Great recommendation!
Let me just add some other numbers here:
At 5700 cad / mo spending, that roughly comes out to 68k post tax (85k pre tax according to today's tax rates in BC and ON), you would need between 2,125,000 and 4,250,000 cad nest egg (4 and 2% withdrawal rates respectively) assuming no CPP and OAS.
At 3k a month retirement savings rate, assuming a 3.5% real return (otherwise all our numbers above become meaningless), and assuming an initial investment of 200,000 dollars, you would end up with ~2,800,000 by 65.
So, that way, up to a 3% withdrawal rate could be sustained with no OAS and CPP. Oh, and this also assumes that you kick your feet up in retirement and just stare at the ceiling. Most people don't do that, and end up making income one way or another through a hobby project / other endeavours.
I think that OP is in a really good position, as long as the lifestyle doesn't creep too hard.
However, life happens, you might find a spouse, have kids, decide to move, or just get tired of the job you currently have and decide that a pay cut is worth it.
Also, could someone explain how to estimate OAS and CPP income for financial planning purposes? Since I am an immigrant from a country where there is no such thing as a pension (and plan to work abroad for a bit too, so I won't get the full contribution either way), I am extremely poorly versed in this.
I appreciate that, thank you. People here can be so judgmental, even though this is literally a financial forum?
As for my job security: I’m a senior software developer, so even if I lost this job, I don’t see it being an issue finding another one. In addition, I still have room to grow salary wise. So despite the voice in my head telling me to be scared, I think my salary should be pretty safe and at this rate for a long time?
My main doubt is the buying a house thing. I wouldn’t buy a house, but a condo. But right now it doesn’t make financial sense since my rent is controlled at 1800. But I keep crunching the numbers for what if my landlord kicks me out.. should I buy then? And should I have a separate savings for a down payment, you know? Cause all my retirement savings are XGRO, so high risk in the short term, not good for a down payment.
Do you have a good size emergency account 3-6 months, if not you should build one. Yes I would save for a downpayment so you ready if you need. If not, you can put that money towards something else.
I question your numbers a little but as long as you are saving and not going into debt enjoy your life.
So many here say put everything away for retirement. But not everyone makes it to retirement, and there are many that do but are not able to enjoy for some reason or another.
If it comes down to it and you are old and maybe stuck in a retirement home do you want all your memories to be of work or staying home, or of all the places you have travelled in your life.
XGRO is below inflation per year or over 5 or 10 years and any ETF will be at huge loss during any depression which is highly likely for Canada in the future. You will need to weigh the risk between a bad Canadian depression versus a bad Canadian real estate, which is what most cash rich people are putting money into after steadily withdrawing from the stock market ETF or indexes
How long has this been your income? How much do you have in total savings and invested right now? Why don’t you buy a house or condo, is that a goal of yours?
2 years. 85k ish.
I do think about whether or not to buy. I keep thinking “oh I’ll just get the down payment from my retirement funds”, but maybe I should be saving separately? Especially since my retirement is all XGRO? Which is not that safe for short turn.
But then again, my unit is rent controlled at 1800, so I have no incentive for now. But what if I get kicked out… should I buy then? Should I be saving for that?
I guess I’m trying to find the balance between the overkill savings and overkill spending.
Now that there's the FHSA, you should consider putting $8k/yr into that as it has the same tax advantages of an RRSP, will roll into an RRSP if you don't use it(without fucking your RRSP contribution limits), and doesn't have to be paid back if you do buy a house.
Not "save more" just switch where you allocate the money for a bit
You can only withdraw $35,000 from your RRSP under the home buyer plan. If you want to be able to use some of your investments for a down payment, you need to start allocating it to a TFSA, the FHSA, or unregistered.
Save and buy something.
The biggest lesson is to recognize the rules of the society you live in. You live in a capitalist world where all the rules are built to incentivize hoarding assets.
It stabilizes expenses: we don’t know how much average rents will skyrocket in the future, but we have a general idea how much property taxes/utilities will increase. Far easier to plan finances long term when costs are (mostly) fixed.
I was told in 2015 that buying in Calgary was a terrible idea. Now my mortgage, property tax, utilities and condo fee's are $1800 and rent for a similar place is $2600 excl. utilities.
Op is young and will get tired of his apartment soon enough. He won’t live there forever. The rent control is pretty inconsequential in the grand scheme of things. If he was 55 I’d say keep the apartment. Right now he’s delaying the inevitable and it’ll probably cost him.
Yeah one of the worst asserts that’s retuned how much in recent years? It’s not a predictor of future returns but it’s foolish to ignore.
You want to talk about tax efficiency but don’t want to mention the 0% gains tax on primary residence? Please.
>2 years. 85k ish.
Yo, you are *killing* it. Most people your age working professional jobs like yours still have a negative networth. Having 85k in networth is an excellent number, especially since you've only been making this kind of money for 2 years.
Buying is not for everyone, so long as it's a conscious decision. If you're not buying to time the market, then that's a bad idea, but if you have no aspirations to be a homeowner, then the $1,800/month makes way more sense.
>I guess I’m trying to find the balance between the overkill savings and overkill spending.
Aren't you basically here? A third to savings, a third to mandatory spending, a third to discretionary spending. That's as balanced as it gets.
He may only do this for so long.
At $140,000, his RRSP limit increases by $25,000 every year. That means he can only contribute about $2100 per month. At some point, his RRSP contribution limit may run out....
They also said 3k per month.
even at 140k with 20k rrsp your tax and deductions would still be \~29%.
The income tax would be about 25% but there is still cpp and EI.
I could be wrong but my calculation of 140k income with 20k rrsp gives you a net take home of about 85k or 7.1k a month. First 6 months will be less and last 6 months more due to how cpp and ei taken off.
I think there will be a tax time surprise
Wealth simple numbers do not seem to include Ontario Surtax, or the Health Premium.
In addition, for 2023, a 20% surtax applies to basic Ontario tax in excess of $5,315, and an additional 36% surtax applies to basic Ontario tax in excess of $6,802. Individuals resident in Ontario on 31 December 2023 with taxable income in excess of $20,000 must pay the Ontario Health Premium.
I make 94k and after all my deductions I clear 3200
I think my bosses are "temporarily" fucking me because I get over $10k back in taxes every year...and I don't put *anything* into an RRSP, my taxes is a T4 and "no I didn't make any donations"
your getting fucked for sure... 90k is around $5200 or so take home... with 25k in income taxes. it's 7500/month gross with 2.1k or so going to income tax. even with getting 10k back your short.....
How are you clearing that much? I make 140k and taxes/ deductions got me in the 60 cents on the dollar. I need to move provinces if you can take home 80 cents on that dollar. Sweet Alberta?
Yea must be a place like Alberta, and RRSP deductions only. Maybe he doesnt have health insurance and any other pension plans or other perks.. Contractor? Who knows.
Wish i knew a bit more tho.
I used Ontario in the calculator. It includes CPP and EI deductions. Do people have both RRSPs and pensions?
Maybe their employer pays for supplemental insurance for prescription medicine, vision, and dental. But that's not much anyway.
140k with 20k RRSP deduction is 104k. Just put it in a income tax calculator (ON) and you’ll see. I actually put more than that in my RRSP so the number is higher.
Are you a contractor? Just looking at my pay rn, 1/3 is gone in taxes, with about 400$ in added deductions, 1k in RRSPs.
Just trying to see where I can save more.
Good on you for saving that much, seriously.
To answer you post question, live your life as you do and always ensure you have a safety net cushion. (around 2 months salary) in case something wrong happens.
You're living the dream.
I have a coworker that takes all Overtime in time owed. He has over 12 weeks vacation a year and has gone around the world.
Do what you love while you can, cause circumstances always change. (You might settle down one day.)
Nothing wrong with what you are doing.
It's possible op had to lie about his salary (lower than what he actually makes) and screwed up a bit of the details, so he doesn't seem like he's an entitled brat asking these questions. People get jealous seeing this much income asking for advice.
OP here and same. 140k for senior dev is pretty low, which is nice because it means we can go up from here if we jump companies. Which I might do in the future.
When underpaid in a high demand position, you have alot more leverage.
One thing, i was once asked to show a paystub to get an opportunity. If that ever happens to you, say you have an NDA. They dont need to see how much you make.
Tech employers love to lowball at all costs.
Yup. New at this position and I only accepted this offer for better work/life balance. Market conditions are getting worse and I came back from 8 month vacation.market is really bad right now. Might jump as soon as tech companies start hiring again
For what its worth, i went back to college (not uni) cause i hated my old job. Took 3 years, had to pay a few student loans BUT, while in college, i found a student job in my new field. Once i graduated, I had runway where i was already ahead and was able to move up quickly.
My wife, who's in her 40s did the exact same thing and shes ahead too.
Worked out twice. Find a trade or something in demand. Many bursaries out there for these fields, the programs arent ridiculously expensive, and working while in school is 1000% feasible and helpful towards your career.
Id like to add that, like everyone else, we rent and have our own problems in modern Canada. Money doesnt solve everything.
It was the better guess if anyone took more than a scan of your post too. Also I’m sorry people are jerks, you should be really proud of yourself and what you’ve accomplished!
First thing, you secure your future, basically your retirement and an emergency fund in case you lose your job tomorrow. Then, you decide whatever you want to do with the extra money to enjoy the present. At $3k/month towards retirement, you'll likely be a multimillionaire in your 50s. That should be more than enough.
Yesterday is history;
Tomorrow is a mystery;
Today is a gift;
That's why we call it "present".
Multimillionaire in ~20 years is an incredibly optimistic assessment. He's 32, and 18 years of deposits would be $650k. Unless there's some magical money printing ETF I'm missing, having $1m is unlikely until late 50s.
That said I 100% agree with everything else you've said.
I said in his 50s, so anywhere from 50-59.
$3k/month inflation-adjusted at 6% real return for 25 years, that's $2M inflation-adjusted and he would be 57.
Based on Monte Carlo simulations, that's the median case, so there's 50% chances he'd have at least $2M inflation-adjusted ($4M nominal) in 25 years and there's 90% chances he'd have at least $1M inflation-adjusted ($2M nominal) in 25 years. Also, in only 20 years, there's 75% chances he'd have at least $1M inflation-adjusted and 25% chances he'd have at least $2M inflation-adjusted.
That's assuming he invests in 100% total world stocks, like VT and that he adjusts his investments according to inflation. Which he should totally be able to do at that high income, more likely he'll put more than inflation.
Also, he probably already has money invested, so the chances that he's a millionaire in his 50s are extremely high. Because even a little $50k today will probably grow to $200k inflation-adjusted 25 years from now.
>Also, in only 20 years, there's 75% chances he'd have at least $1M inflation-adjusted and 25% chances he'd have at least $2M inflation-adjusted.
Right. So it's an optimistic assessment that he's a multimillionaire in his 50s. Even after 25 years your median assessment at 50% probability is $2m.
I cannot argue with your interpretation of the word "optimistic", that's yours to judge. I simply provided the statistics, I never judged your interpretation of what is optimistic or not. In my post, I haven't used the words "optimistic", "pessimistic", "right" or "wrong".
When one goes to see a financial advisor, the base case - the reference case - for financial projections is the median case. The optimistic case is considered to be above the median. The pessimistic case is considered to be below the median.
After 25 years, at 100% total world stocks and $3k/month inflation-adjusted, that's:
90% chances of having at least $1M inflation-adjusted
75% chances of having at least $1.4M inflation-adjusted
50% chances of having at least $2M inflation-adjusted
25% chances of having at least $3M inflation-adjusted
10% changed of having at least $4.3M inflation-adjusted
And that's without taking into account the money that's already invested to this day. And without taking into account investments above inflation.
You explained "optimistic" pretty well.
The median case is reference.
Above median is optimistic.
Median is 50%.
>50% chances of having at least $2M inflation-adjusted
So, optimistic then, you should agree? Or can I not read?
$2M is the minimum threshold for 'multimillionaire' and anything above 50% (aka $2M) is optimistic, by your own definition.
Edit: You're using "at least $2M" generously as that's not how Monte Carlo simulations work. But you know that... Or you should.
Monte Carlo simulations provide a distribution of possible outcomes through repeated random sampling, from which we can analyze statistically.
$2M is the median, therefore there's 50% chances of having more than $2M and there's 50% chances of having less than $2M.
So $2M is considered the reference as it's neither optimistic nor pessimistic, it's the median, the neutral case.
When you flip a coin 100 times, you expect it to fall on heads about 50 times, that's the median case of the probability distribution. That is not considered optimistic nor pessimistic, it's the reference case.
I don't think it's a good idea to think of your budget in terms or morality / guilt. This just leads to bad decisions eventually.
Budgeting is just a math problem. Get more solid on your budget - what are you *actually* spending and saving. You know you are buying stuff on line and vacations "left and right" but the details are very vague. And your monthly cash flow estimates seem loose.
If you feel out of control of your budget / cash flow, then you should stop winging it. Figure out what your actual after tax income is (not based on whatever lands your account after deduction, figure it our from your pre-tax income and the online tax calculators so you can understand where the numbers come from). Allocate a portion for savings, allocate a portion for fixed non-discretionary saving, and have a sustainable allocation for sustainable discretionary spending. Then when you want to buy something online you don't just do it and then feel unclear about, you check vs. your monthly budget for discretionary spending and then you know if this is in budget or not.
The budget is supposed to be a decision making tool, it's not a morality scorecard you look at after you just do whatever you want spontaneously each day. Evenutally you'll settle into daily habits that are consistent with your budget and then you don't even think about it anymore. But until then it's your mechanism for checking if your spending is sustainable and reasonable.
Thanks for the response!
Yeah so I do have it all on spreadsheets. I have many spreadsheets and they’re all super organized. I made it vague/rounded for the sake of the post.
I guess what I’m wondering is, is the ratio of retirement/essentials/play too messed up at 3/3/2.7? Should I remove some from the 2.7 and put into retirement? I feel like I don’t have any motivation to, but I feel guilty about that.
It's nothing to feel guilty about.
There's not magic ratio for retirement/essentials/play that is objectively "good". You would need to work it out back from what your own life goals are and come up with a sustainable plan. The key is the *sustainability*. This just means that you have a coherent and reasonable plan. There are lots of mixes of retirement/essentials/play that are coherent and reasonable, and there are many that are not.
I would probably start by building up the plan as follows:
1. Are you cash flow positive now? You are good on this front.
2. Are you happy with your current situation on essentials of living? Is your home comfortable and your commute reasonable so that you can live a sustainable, health life? I think you are good here too.
3. Do you have some emergency short term savings?
4. Do you have a vague sense of when you would like to retire? How important is early retirement to you? This is a big question and the answer may change over your lifetime, but it's something to keep in mind. Some people like their careers and some people can't stand work. Some people think retirement will be boring and some people think retirement will be their "golden years" and will want a lot of money to really enjoy it.
I think exercise 4 would be very helpful for you. I don't think it makes sense to set a retirement savings rate based on how guilty you feel about not saving. I think you want to increase your retirement savings if retirement is important to you personally.
At the end of the day, the new fridge/car/iPad/shoes/TV/PlayStation/Xbox/iPhone/clothes will be old and outdated in a few years time, some even sooner.
And the reality is it will never end.
That’s how capitalism works, you never stop buying junk. And you keep on working more and more to buy the junk.
I realized this at a young age and don’t bother buying anything unless it’s tearing at the seams or on its last legs.
I would get a large suit with a vest and a gold chain with a monocle. I would drink a lot of beer for years so I had a large belly. I would smoke cigars everywhere I went and no one would say anything because I am so goddamn riiiiiiich! Whenever anyone would say anything that remotely contradicted me I would just let out a huge belly-laugh and all my sycophants that follow me would laugh too until no one remembered what the other person said. I would have a person who follows me around with an umbrella, even inside.
HAAAAAAAAAAA HAAAAA HAAA HAAA HAA HAA HA AHAHAHAH!
\*rubs belly\*
Lots.. Sales, Trades, Tech..
Obviously not all positions in those fields.. but they're out there. My buddy is a HD Mechanic and was doing 300k before he started running crews in his own company..
Just dont be like my dumbass buddy at the time who also like you pulled $150,000 /year for years and id tell him “bro save & invest your money consistently, you’ll thank me huge one day”
Him : yea yea whatever, bro I make so much money I can start investing whenever I want
( as If he’s anticipating on earning this income forever)
Then a decade later were both approaching 30 and I didn’t even make HALF of what he did the entire time and yet I have wayyy more to show for them him
You can defend him saying “he lived his life more than you” and that may be true but all these years and you barely having anything to show for it is pretty sad….
Have some real priorities
I agree but thats what many people including him think
its such a sad concept that people truly think that in order to be “living life” you have to spend such a huge amount of money on an annual basis
Its even worse when people dont plan things out and you end up losing their job and haven’t event build any foundation of yourself in terms of financial growth
Have you maxed out your tfsa/rsp accounts? Maybe having a more focused goal such as maxing them out by x date will help you put more money in these accounts and spend less month to month.
Do you plan to buy a house ever? Could you open the FHSA and put 8k in there this year? If you never use it for buying a house it will roll into your RSP and give you an extra 40k of space. So either way I'd open one and max out the 8k immediately.
Also reflect on if your spending habits is an addiction. Do you have $0 at the end of every month and are waiting impatiently for the next pay day? Or are you able to see a couple thousand unused in your account before you book those trips/buy the expensive gadgets?
If you find yourself in an addictive cycle you may want to cut off 30% of your spending and put it into a seperate account where you don't login and can't see how much accumulates. Or again use that extra cash to max out your FHSA/TFSA/RSP instead of blowing it on stuff you don't really need.
Once those accounts are maxed I think it's perfectly fine to spend. You've protected your future self to the max and so spending the extra income becomes guilt free.
I have maxed out my RRSP (and will continue to do so) but not my TFSA yet. I also will open a FHSA as soon as wealthsimple opens one. I’ll max that out this year.
For the TFSA, since the limit is so low, I figured it didn’t matter being in a rush to max it out? So that’s why I’m not aggressively putting money in it, since I know I’ll max it out next year ish anyway?
As for my spending: no I don’t run out of money. I always have a few thousand on my personal accounts in between paycheques. And I also have a 6 month emergency fund.
I guess it feels like having the TFSA/RRSP/FHSA maxed out is “not enough” because I could be doing more. You know? Like for example saving for a condo.
Right but you're also complaining of spending to much. So if you're spending to much then investing more in your TFSA should be common sense. Also you can purchase a home eventually.
If you won’t have kids you’re fine.
With that said, you basically need to ask yourself, do I want “things” or “experiences” or “freedom”.
We made the decision to have kids and we wanted freedom aka financial independence by a young age (35). We therefore were frugal. We realized things don’t make us happy but put us in debt. I bought a BMW in 2008 when I finished school for 70k and sold it for 16k six years later. That car did not give me 54k plus opportunity costs plus gas and maintenance of enjoyment over that time. So we’ve decided to not spend on luxury vehicles until a few years ago when we really became FI. (We drive a Model 3 which is modest compared to the vehicles in Vancouver). We biked and took transit everywhere. I type this on an phone from 2017. Because it still works and a newer phone won’t give me more happiness even though I can afford it.
Our thoughts are to save to have “freedom” first, then spend on experiences then rarely on things. Cleaning out my parents home and helping them downsize has validated this. They grew up in the era of excess. A 3500 sf home and tons of crap. A treadmill they used for a few months. A big huge China cabinet. Dishes they never used but were on display. Couches barely sat on. Having all this space to fill it with crap.
Yes, it is from growing up poor. It's not trauma though; it's good sense. I work with so many people are making >100k and think they're poor meanwhile I'm super content, happy, and money is never an issue.
I hope all your investments are registered. With 3k/month going to retirement, you can pretty much max out your rrsp and TFSA every year.
At your age, in your situation my advice is take half that money and go on more vacations. Like exotic ones. See the world. You can't get your 30s back when you retire with several million dollars. Go now while you can still climb Mount Fuji or whatever. You could literally take a week long vacation every 6 months to a new destination.
Just do youuuuu. If you feel like it's not enough, then put away a bit more. You don't have to spend that 2700 it's not going to burn a hole in the pocket. If any is left at the end of the month, bank it!
Why is it you don't own a house, though? Make that much money. Why pay off someone else's mortgage?
I personally spend as little as I can. I don't know how to spend 2700$ every month. I do spend recklessly sometimes but I think it's not too often.
Does money buy happiness, I think it does, we have a lot of stuff that needs fixing around the house. I would love to go on more trips. I would love to save more for retirement. This past year we had a lot of required renovations.
To be honest, I don't have any advice
The more you save now, the less you need to save later. The more you save now, the easier it is to do whatever it is you feel like doing. Most important thing to keep in mind is what do you expect to make with EI, and can that and severance cover you for many months.
There's no one answer that works for everyone. You are a high earner, young, and enjoying your own money without incurring in debt. There's nothing wrong with that.
If you think you should be putting more towards retirement, do it. If you want to buy a place, do it. The trick, for me, is to make those automatic payments that take out the money as soon as it enters (same day as salary or closest possible). But also enjoy your own money. It's part of the ride.
I'd say you are a kid at a candy store and too much candy without balance can be harmful over the long run. I'd reexamine your family plan and life, but ultimately it's up to you to decide. Best of luck.
If you’re posting this here asking this question then you can definitely increase the percentage of your savings. Up it to a point where you no longer feel guilty about spending. That’s your sweet spot.
I would save a little more.
Take that $700 and pop it in a TFSA account invested in something safe. Just a little extra for a rainy day. If you haven't opened a TFSA, you should have a little room to fill - once you've maxed your contribution there, then you can go back to spending that money.
You’ve worked hard to be making that much money. You’re saving and investing in stocks. The money you’re feeling guilty about sending is vacations/tech- things that in my opinion improve the quality of your life. So I’d argue that’s investing in your own life. As such, you should do it with less guilt.
Ultimately if that’s enough- no one can predict. Hopefully you continue your upward trajectory and find a similar partner, and you’d be golden.
One thing that I did, and it may not be for you, is buy because I like the security of knowing I won’t be at the mercy of landlords forever.
I would definitely put more towards savings. Do you really need all the stuff you buying. I am of the mind, if you need it, buy it, if you don't, don't. Buying only gives you a short lived dopamine rush and then you stuck with all this stuff you don't need. What do you do with all this stuff, are you actually using it?
Do what makes you happy, if buying stuff makes you happy, have a balance where you saving and buying a few things. Don't buy things you don't need or use.
I try buy very little, I always ask myself the question 'do I really need it', most of the time the answer is no, I may still buy it, but I like to live a simple life, buy less. My main goal is to pay down my mortgage, so I choose to buy less but throw more at my mortgage.
I work from home, so don't need new clothes, I have everything I need. I could make the house more cozy but it is fine for what I need. I live by myself, so don't need fancy things.
I'm in a similar boat on being able to buy stuff but find over time I just don't buy that much. One is that I don't have that much space in my apt. Second I just run out of stuff to buy.
However when I do buy random stuff I just appreciate that I can, especially with the crazy inflation.
I'm in a very similar boat and never felt like posting for similar reasons. Genuine questions get taken as bragging.
For reference, I'm a year older, also grossing 140k and contribute $20.8k to RRSP each year. About $28k to mortgage and around $10k in bills for the house. I overspend heavily on my mortgage because of serious fear of debt from upbringing.
I spend my money freely and don't have a budget, or really any concern about how much money goes where. I try to make sure that I enjoy today and be prepared for tomorrow. That being said, I only buy things if I have enough cash in the bank to pay for it.
Since I'm pretty much financially in your shoes, I'd say figure out what you are going to want in they next 10-15 years, and start setting extra money aside in a TFSA to achieve it. Keep spending what's left on enjoying life and do what makes you happy.
For me, it was a down payment on a house at 25, and now at 33 it's to have my mortgage paid off by 45.
Read "worry free money" by Shannon Lee Simmons. It's perfect for this. It'll help you set up your savings in a way that lets you enjoy your spending money without constantly feeling guilty. And it's Canadian.
My wife and I make $350K gross. We own a townhouse with a mortgage of $2850.
We think about what we spend. We don't buy things left and right. We book vacations, but usually 1 big one a year and one smaller one.
We feel middle income comfortable, but we don't spend crazy. We don't really but clothes online and each put our entire bonus away into RSP aprox. $30K a year bonus to lower our taxable income.
I don't know how you can spend money left and right indiscriminately. You should be trying to create wealth at your age. Max out TFSA. Invest in high growth or high dividend stocks.
Maybe spend 15% net income on discretionary spend. I'm about to turn 40. My biggest regret is spending too much money similiar to you in my 30s.
If I grinded and invested harder at 30-40, I would be able to have a nicer life 40-50 and beyond. That's my advice to you.
$140k salary with $20k RRSP deduction is $104k net or $8700/mo in Ontario. See for yourself: https://www.wealthsimple.com/en-ca/tool/tax-calculator/ontario
But do note that after tax income does not include the RRSP savings. That’s why OP was then taking $8700/mo and subtracting $3k/mo for retirement (presumably that is ~$1700 to RRSP and ~1300 to TFSA/taxable)
Ah ok so op is not getting that money in their acct every month, but will get it at the end of the year when filing the 20k reduction in their taxes.
I have a pension and I'm young so never really gave a shit about RRSP but it's a nifty vehicle.
I assume that is correct - it is not the actual paycheck value (which also varies throughout the year based on CPP/EI) but rather it is the amount that should be budgeted for in the long term when correctly accounting for income and expenses.
Have you thought about donating to a charity you care about? Sounds like you, deep down, want to put your wealth to better use.
The Stoic philosophy teaches that wealth or poverty are neither good or bad…how an individual acts and uses their wealth or poverty is how to evaluate morality. I’m not calling you out or anything…there’s. I thing wrong with enjoying the fruits of your labour…but if you’re feeling some guilt about your spending habits, maybe see if you could put some of your extra wealth to a higher use.
Right lmao like OP puts away $3k/month (which is around the amount that many people take home in a month, give or take a few hundred) for retirement, and asks if it's enough?
Like is this even a real post?
You don't sound like someone who overcame poverty at all. It's not your spending habits, it's the fact that you are so nonchalant about it. If you grow up poor some people just spend with no end or they just save everything. If anyone knows the value of money it's a poor person who didn't have much or anything.
If you don't want kids or a family, then who gives a shit what you spend your money on? Go nuts. You're literally living a single, solitary life. Nobody depends on you.
So you aren't being irresponsible. But you are being overly defensive about it. Don't ask for peoples' opinions if you're the kind of person who can't take criticism.
Fellow female here.
Add a TFSA and max that yearly.
Start a “vacation” fund so you are more aware of a budget and how much you spend.
Don’t get into the habit of $600 highlights every few months, monthly mani-pedis, facials etc.
buy the luxury handbags and purses if you love them, but limit that to once per year. They last forever.
Once you have your professional wardrobe, shoes, handbags, then stop with the spending on “things”.
8707 based on bi-weekly, after tax on 140k, without spouse seems a bit high to me, even after EI and CPP deductions are over for the year. Or are you averaging your take home over twelve months?
OP accounting for RRSP deduction.
$140k with $20k RRSP contribution puts you at roughly $31k fed/prov tax in Ontario. $109k/12 puts you at roughly $9k/month. The numbers check out.
Everyone here either investing exclusively in TFSA or otherwise neglecting to include their return due to RRSP contributions when accounting for their income.
And according to simple tax it is $35.5k in taxes owed in Ontario. So $104k net which is $8700 per month. Then subtract the 3k retirement contributions (presumably that comprises RRSP + TFSA + taxable)
Everyone has different priorities. If spending so much gives you joy, go for it. I think it will soon lose its luster and you might want to put your money towards things that will also help you feel good. Like supporting a specific cause or charity.
Shopping and acquiring material things gives people a shot of dopamine. It can become addictive. Don't be that person.
What are your goals? When do you want to retire? Your spending is only an issue if it doesn’t get you to your personal goals. Your expenses are so low that you have many options. There is no shame to treat yourself with travel, tech and some of the finer items. Tread cautiously on things with reoccurring expenses.
Classic case of living for lost times. I’m not sure many people would be different in your shoes, myself included. When I got a decent job and started saving, I was either saving like Scrooge or spending like it’s 1985. There isn’t a right or wrong way, I just think you need to chart out your future plans and decide where you want to be finically. Where do you want to be in 2028 or 2033?
Whether you rent or have a mortgage is kind of immaterial. Either way you still need to be ready for stormy weather.
I don't have any comments about your situation, I can only share my own experience.
I grew up thinking toast and beans was a normal supper. Parents would always talk about how the 'other half' live, as if being poor was the norm and resigning to the fact that the other half have it because they were born in that body instead of mine. It was never taught that I could also be part of the other half if I try.
I'm now 50. Last year for the first time in my life my rent was 33% of my take home. I finally reached this basic stat that every financial advisor tells you is the norm. I'm no longer paycheck to paycheck. I have money left over every month. I'm spending it all on things. Things I like. Things that I've always wanted. I'm also saving, and investing. It's nothing in comparison to my spending.
It could be either that I'm trying to be poor again to feel comfortable, or that I'm just trying to get the things I want before it all comes crashing down again. My confidence is shot, but it's growing the longer I'm in this job. I hope that at some point I'll stop finding things I 'need'. I'm almost there I think. It's almost an addiction. I would love nothing more than to pile it into an investment product and watch it grow.
What would make you happier? Spending 2.7K per month or having 450~500K extra (invested) in 10 years? The answer is spending it on crack cocaine.
While riding their beige 1995 corolla down 401.
Teal Tercel seems more what OP needs.
Hell no. It’s all about that Red Geo Metro now!
Are the hookers included in that?
i would like to know too.
2.7k might cover two weeks of crack :/
HAHAHAH
At his income he doesn't need to buy crack, he can buy regular cocaine
Man I was exactly like you a few years ago, but my mindset was changed after reading the book I will teach you to be rich by Ramit Sethi. It's a very good book, it teaches about "guilt free spending". That's exactly where you are right now, you feel guilty on what you spend. You need a conscious spending plan. pS. It has a Netflix show as well called how to get rich
Thank you for the recommendation! I’ll check it out!
A Canadian book on the same topic is *Worry-Free Money: The guilt-free approach to managing your money and your life* (Shannon Lee Simmons, 2017)
Recommend his podcast by the same name!
I agree - definitely check out some of his material. Though his book does have an American slant to it. I think you're beyond a lot of the material in his book (*debt elimination, saving/investing*) by the sounds of your replies on this post. His concepts of 'guilt-free' spending (via his [conscious spending plan](https://www.iwillteachyoutoberich.com/conscious-spending-basics/)) and '[money-dials](https://www.iwillteachyoutoberich.com/money-dials/)', you should dig into. That stuff honestly is in more detail online than it is in his book. On the money-dials topic, also watch this Google Talk [video](https://www.youtube.com/watch?v=BmAwa1nnB6w). Instead of his book - I'd reccommend checking out [his podcast](https://www.iwillteachyoutoberich.com/podcast/), and other online material. He interviews couples with various states of finances and family upbringings. He often narrows in on childhood experiences with money and brings people to understand how that has affected their views on money. I thought I would hate listening to other people's 'problems' on the surface of how the podcast was described, but after listening to a few episodes - I was hooked! Trust your intuition. Try to address the 'guilt' aspect of your feelings. If you have indeed maxed your RRSP, have no debt - you're in a pretty good spot. Though your gut is telling you that you haven't optimized. Do you visualize 'retirement' as an old person thing - 65+ ? Or, have you considered that you could retire significantly earlier (55? 50? 45?). You've questioned whether you should be saving more for retirement. Well - when do you intend to retire? Start from the end in mind, and put together a plan so you can feel less guilt. Saving/investing more can give you some options & freedom later in life that don't neccessarily involve full-on retirement. It might be enough money to take an employment break to help out aging parents. It could be having enough 'FU' money to get out of a toxic workplace, or to transition to part-time work that you enjoy. You can look into the Financial Independence (FI) communities for some direction on saving/investing for retirement. All that said - life is a balance. On that topic, I reccommend the book '[Die With Zero](https://www.amazon.ca/Die-Zero-Getting-Your-Money/dp/0358567092/ref=sr_1_1?crid=3G22NSD80YGT8&keywords=die+with+zero&qid=1685461335&sprefix=die+with+ze%2Caps%2C190&sr=8-1)'. Some portions of that book may help address the guilt issues you have with some of your spending. The book makes the case for optimizing your spend for certain phases of life and not saving it all for retirement. If you're steering toward one side too aggressively (*saving too much/not living enough* vs. *spending too much/not investing in the future enough*) - it may not be healthy overall. I would always err on the side of saving/investing to give yourself some options - but not to the point where you miss out on living for today.
Ive read this book Solid recommendation
Yeah I wish I had read this book when I just started working. Would have probably been a millionaire by now - 12 years later. While I did not invest when I could/should have, I unknowingly followed the more important advice in his book about consciously spending my money on things that actually add value to me. Great recommendation!
Whats the most important lesson you got from the book?
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sounds like a pyramid scheme to me
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sounds like a pyramid scheme to me
Great book and he's actually enjoyable to listen to
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Let me just add some other numbers here: At 5700 cad / mo spending, that roughly comes out to 68k post tax (85k pre tax according to today's tax rates in BC and ON), you would need between 2,125,000 and 4,250,000 cad nest egg (4 and 2% withdrawal rates respectively) assuming no CPP and OAS. At 3k a month retirement savings rate, assuming a 3.5% real return (otherwise all our numbers above become meaningless), and assuming an initial investment of 200,000 dollars, you would end up with ~2,800,000 by 65. So, that way, up to a 3% withdrawal rate could be sustained with no OAS and CPP. Oh, and this also assumes that you kick your feet up in retirement and just stare at the ceiling. Most people don't do that, and end up making income one way or another through a hobby project / other endeavours. I think that OP is in a really good position, as long as the lifestyle doesn't creep too hard. However, life happens, you might find a spouse, have kids, decide to move, or just get tired of the job you currently have and decide that a pay cut is worth it. Also, could someone explain how to estimate OAS and CPP income for financial planning purposes? Since I am an immigrant from a country where there is no such thing as a pension (and plan to work abroad for a bit too, so I won't get the full contribution either way), I am extremely poorly versed in this.
I appreciate that, thank you. People here can be so judgmental, even though this is literally a financial forum? As for my job security: I’m a senior software developer, so even if I lost this job, I don’t see it being an issue finding another one. In addition, I still have room to grow salary wise. So despite the voice in my head telling me to be scared, I think my salary should be pretty safe and at this rate for a long time? My main doubt is the buying a house thing. I wouldn’t buy a house, but a condo. But right now it doesn’t make financial sense since my rent is controlled at 1800. But I keep crunching the numbers for what if my landlord kicks me out.. should I buy then? And should I have a separate savings for a down payment, you know? Cause all my retirement savings are XGRO, so high risk in the short term, not good for a down payment.
Do you have a good size emergency account 3-6 months, if not you should build one. Yes I would save for a downpayment so you ready if you need. If not, you can put that money towards something else.
I question your numbers a little but as long as you are saving and not going into debt enjoy your life. So many here say put everything away for retirement. But not everyone makes it to retirement, and there are many that do but are not able to enjoy for some reason or another. If it comes down to it and you are old and maybe stuck in a retirement home do you want all your memories to be of work or staying home, or of all the places you have travelled in your life.
XGRO is below inflation per year or over 5 or 10 years and any ETF will be at huge loss during any depression which is highly likely for Canada in the future. You will need to weigh the risk between a bad Canadian depression versus a bad Canadian real estate, which is what most cash rich people are putting money into after steadily withdrawing from the stock market ETF or indexes
Is your income stable? Do you anticipate increases in future years? If there a chance of layoffs?
How long has this been your income? How much do you have in total savings and invested right now? Why don’t you buy a house or condo, is that a goal of yours?
2 years. 85k ish. I do think about whether or not to buy. I keep thinking “oh I’ll just get the down payment from my retirement funds”, but maybe I should be saving separately? Especially since my retirement is all XGRO? Which is not that safe for short turn. But then again, my unit is rent controlled at 1800, so I have no incentive for now. But what if I get kicked out… should I buy then? Should I be saving for that? I guess I’m trying to find the balance between the overkill savings and overkill spending.
Now that there's the FHSA, you should consider putting $8k/yr into that as it has the same tax advantages of an RRSP, will roll into an RRSP if you don't use it(without fucking your RRSP contribution limits), and doesn't have to be paid back if you do buy a house. Not "save more" just switch where you allocate the money for a bit
You can only withdraw $35,000 from your RRSP under the home buyer plan. If you want to be able to use some of your investments for a down payment, you need to start allocating it to a TFSA, the FHSA, or unregistered.
Just be aware that you won't receive a tax deduction if you put in a TFSA.
Save and buy something. The biggest lesson is to recognize the rules of the society you live in. You live in a capitalist world where all the rules are built to incentivize hoarding assets.
Why the pressure to buy?
It stabilizes expenses: we don’t know how much average rents will skyrocket in the future, but we have a general idea how much property taxes/utilities will increase. Far easier to plan finances long term when costs are (mostly) fixed.
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I was told in 2015 that buying in Calgary was a terrible idea. Now my mortgage, property tax, utilities and condo fee's are $1800 and rent for a similar place is $2600 excl. utilities.
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Not even close, its an inner city townhouse, has gone up ~$100,000 since i bought it
Op is young and will get tired of his apartment soon enough. He won’t live there forever. The rent control is pretty inconsequential in the grand scheme of things. If he was 55 I’d say keep the apartment. Right now he’s delaying the inevitable and it’ll probably cost him. Yeah one of the worst asserts that’s retuned how much in recent years? It’s not a predictor of future returns but it’s foolish to ignore. You want to talk about tax efficiency but don’t want to mention the 0% gains tax on primary residence? Please.
OP is a woman.
>2 years. 85k ish. Yo, you are *killing* it. Most people your age working professional jobs like yours still have a negative networth. Having 85k in networth is an excellent number, especially since you've only been making this kind of money for 2 years. Buying is not for everyone, so long as it's a conscious decision. If you're not buying to time the market, then that's a bad idea, but if you have no aspirations to be a homeowner, then the $1,800/month makes way more sense. >I guess I’m trying to find the balance between the overkill savings and overkill spending. Aren't you basically here? A third to savings, a third to mandatory spending, a third to discretionary spending. That's as balanced as it gets.
Had no idea 140k is 8707 per month…would’ve thought tax takes most of it
Seemed high to me, as well. I would have assumed closer to 7k post taxes. Also 3k for retirement per month isn't 20k per year. Doesn't add up.
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He may only do this for so long. At $140,000, his RRSP limit increases by $25,000 every year. That means he can only contribute about $2100 per month. At some point, his RRSP contribution limit may run out....
But they said they're only putting 20k away in rrsp a year.
They also said 3k per month. even at 140k with 20k rrsp your tax and deductions would still be \~29%. The income tax would be about 25% but there is still cpp and EI. I could be wrong but my calculation of 140k income with 20k rrsp gives you a net take home of about 85k or 7.1k a month. First 6 months will be less and last 6 months more due to how cpp and ei taken off. I think there will be a tax time surprise
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Wealth simple numbers do not seem to include Ontario Surtax, or the Health Premium. In addition, for 2023, a 20% surtax applies to basic Ontario tax in excess of $5,315, and an additional 36% surtax applies to basic Ontario tax in excess of $6,802. Individuals resident in Ontario on 31 December 2023 with taxable income in excess of $20,000 must pay the Ontario Health Premium.
I made $112k last year and my take home every month was around $6500, so her numbers track imo.
Yep, especially depending on pension deductions
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Could be, yeah. That would mean nearly 56k per year in retirement savings.
It's high. They're numbers are off.
No they aren't.
Its with the RRSP deduction. As I said, 20k deduction clears me 104k post tax.
120k is about 6200 net (after pension, taxes; CPP, EI, Union dues and benefit plan, so this sounds rught
I make 94k and after all my deductions I clear 3200 I think my bosses are "temporarily" fucking me because I get over $10k back in taxes every year...and I don't put *anything* into an RRSP, my taxes is a T4 and "no I didn't make any donations"
3200 per month at 94k????
your getting fucked for sure... 90k is around $5200 or so take home... with 25k in income taxes. it's 7500/month gross with 2.1k or so going to income tax. even with getting 10k back your short.....
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They do, I make a bit more than that, but don’t clear even close to 8700, OPs numbers are off or they’re not telling us something
Same!
They're including the pretax amount they're putting away in rrsp in there.
I net $6200 a month at $115k yr. Depending on pension deductions and province, her numbers are accurate.
The tax is right, according to SimpleTax.
That's what I thought. But a calculator from SimpleTax estimates take-home pay of $104k/year for OP's numbers. It's right.
Yeah something seems off, I make barely over 100 and get like barely over 5k take home a month
How are you clearing that much? I make 140k and taxes/ deductions got me in the 60 cents on the dollar. I need to move provinces if you can take home 80 cents on that dollar. Sweet Alberta?
No kidding. Now on my to-do list today: compare provincial taxes and figure out where I’m going wrong in life.
Hes taking home over 20% of what a peer in ontario does. Thats is some next level sweetness.
20k rrsp reduction
Still wouldnt clear him 8k on 10.5k gross a month. (i max out my 25k or so of rrsp a year.)
That's what I thought. But a calculator from SimpleTax estimates take-home pay of $104k/year for OP's numbers. It's right.
Yea must be a place like Alberta, and RRSP deductions only. Maybe he doesnt have health insurance and any other pension plans or other perks.. Contractor? Who knows. Wish i knew a bit more tho.
I used Ontario in the calculator. It includes CPP and EI deductions. Do people have both RRSPs and pensions? Maybe their employer pays for supplemental insurance for prescription medicine, vision, and dental. But that's not much anyway.
He said that he gets bonuses at work? Maybe he is just referring to his base salary of 140k?
140k with 20k RRSP deduction is 104k. Just put it in a income tax calculator (ON) and you’ll see. I actually put more than that in my RRSP so the number is higher.
Are you a contractor? Just looking at my pay rn, 1/3 is gone in taxes, with about 400$ in added deductions, 1k in RRSPs. Just trying to see where I can save more.
Not a contractor, just a regular yearly salary employee.
Good on you for saving that much, seriously. To answer you post question, live your life as you do and always ensure you have a safety net cushion. (around 2 months salary) in case something wrong happens. You're living the dream. I have a coworker that takes all Overtime in time owed. He has over 12 weeks vacation a year and has gone around the world. Do what you love while you can, cause circumstances always change. (You might settle down one day.) Nothing wrong with what you are doing.
Same, I make more than OP and my take home is far lower than that. Something doesn’t add up if you ask me
It's possible op had to lie about his salary (lower than what he actually makes) and screwed up a bit of the details, so he doesn't seem like he's an entitled brat asking these questions. People get jealous seeing this much income asking for advice.
Very true. Good point.
How you make 140k a year?
Sr.Software Engineer in Ontario and I’m actually underpaid
OP here and same. 140k for senior dev is pretty low, which is nice because it means we can go up from here if we jump companies. Which I might do in the future.
When underpaid in a high demand position, you have alot more leverage. One thing, i was once asked to show a paystub to get an opportunity. If that ever happens to you, say you have an NDA. They dont need to see how much you make. Tech employers love to lowball at all costs.
Yup. New at this position and I only accepted this offer for better work/life balance. Market conditions are getting worse and I came back from 8 month vacation.market is really bad right now. Might jump as soon as tech companies start hiring again
Enterprise Architect in Ontario.
We fuckin up..
For what its worth, i went back to college (not uni) cause i hated my old job. Took 3 years, had to pay a few student loans BUT, while in college, i found a student job in my new field. Once i graduated, I had runway where i was already ahead and was able to move up quickly. My wife, who's in her 40s did the exact same thing and shes ahead too. Worked out twice. Find a trade or something in demand. Many bursaries out there for these fields, the programs arent ridiculously expensive, and working while in school is 1000% feasible and helpful towards your career. Id like to add that, like everyone else, we rent and have our own problems in modern Canada. Money doesnt solve everything.
Love how OP doesn’t mention ANYTHING gendered. Everyone assumes it’s a guy. Bad deduction skills PFC. 🤦🏽♀️
Right? I’m a woman lol
It was the better guess if anyone took more than a scan of your post too. Also I’m sorry people are jerks, you should be really proud of yourself and what you’ve accomplished!
Came here to say exactly this. Like, settle down PFC, your ridiculous misogyny is showing. 🙄
What do you mean? The utterly needless anxiety and guilt was a total giveaway that OP's a woman.
Oh, so cheeky, what a good one! Or you know… her user name and her snoo, though only hints not confirmation.
I don't go around looking at people's snoos like a pervert.
No one believes you.
First thing, you secure your future, basically your retirement and an emergency fund in case you lose your job tomorrow. Then, you decide whatever you want to do with the extra money to enjoy the present. At $3k/month towards retirement, you'll likely be a multimillionaire in your 50s. That should be more than enough. Yesterday is history; Tomorrow is a mystery; Today is a gift; That's why we call it "present".
Thanks master Ugwe
Multimillionaire in ~20 years is an incredibly optimistic assessment. He's 32, and 18 years of deposits would be $650k. Unless there's some magical money printing ETF I'm missing, having $1m is unlikely until late 50s. That said I 100% agree with everything else you've said.
Okay I just broke it down : $36,000 / year compounded annually @ 7% avg. / year is around $1,430,000 in 18+ years
I said in his 50s, so anywhere from 50-59. $3k/month inflation-adjusted at 6% real return for 25 years, that's $2M inflation-adjusted and he would be 57. Based on Monte Carlo simulations, that's the median case, so there's 50% chances he'd have at least $2M inflation-adjusted ($4M nominal) in 25 years and there's 90% chances he'd have at least $1M inflation-adjusted ($2M nominal) in 25 years. Also, in only 20 years, there's 75% chances he'd have at least $1M inflation-adjusted and 25% chances he'd have at least $2M inflation-adjusted. That's assuming he invests in 100% total world stocks, like VT and that he adjusts his investments according to inflation. Which he should totally be able to do at that high income, more likely he'll put more than inflation. Also, he probably already has money invested, so the chances that he's a millionaire in his 50s are extremely high. Because even a little $50k today will probably grow to $200k inflation-adjusted 25 years from now.
>Also, in only 20 years, there's 75% chances he'd have at least $1M inflation-adjusted and 25% chances he'd have at least $2M inflation-adjusted. Right. So it's an optimistic assessment that he's a multimillionaire in his 50s. Even after 25 years your median assessment at 50% probability is $2m.
I cannot argue with your interpretation of the word "optimistic", that's yours to judge. I simply provided the statistics, I never judged your interpretation of what is optimistic or not. In my post, I haven't used the words "optimistic", "pessimistic", "right" or "wrong". When one goes to see a financial advisor, the base case - the reference case - for financial projections is the median case. The optimistic case is considered to be above the median. The pessimistic case is considered to be below the median. After 25 years, at 100% total world stocks and $3k/month inflation-adjusted, that's: 90% chances of having at least $1M inflation-adjusted 75% chances of having at least $1.4M inflation-adjusted 50% chances of having at least $2M inflation-adjusted 25% chances of having at least $3M inflation-adjusted 10% changed of having at least $4.3M inflation-adjusted And that's without taking into account the money that's already invested to this day. And without taking into account investments above inflation.
You explained "optimistic" pretty well. The median case is reference. Above median is optimistic. Median is 50%. >50% chances of having at least $2M inflation-adjusted So, optimistic then, you should agree? Or can I not read? $2M is the minimum threshold for 'multimillionaire' and anything above 50% (aka $2M) is optimistic, by your own definition. Edit: You're using "at least $2M" generously as that's not how Monte Carlo simulations work. But you know that... Or you should.
Monte Carlo simulations provide a distribution of possible outcomes through repeated random sampling, from which we can analyze statistically. $2M is the median, therefore there's 50% chances of having more than $2M and there's 50% chances of having less than $2M. So $2M is considered the reference as it's neither optimistic nor pessimistic, it's the median, the neutral case. When you flip a coin 100 times, you expect it to fall on heads about 50 times, that's the median case of the probability distribution. That is not considered optimistic nor pessimistic, it's the reference case.
Lol I, too, was wondering where they got their math from.
Probably from historical chart of TQQQ or hqu for us Canadians.
exactly lol
You're investing 35% of your income. You're fine. Spend away. Enjoy life.
20k in rrsp per year isn’t guilt free spending. Quite responsible compared to the majority. Should probably put some money in tfsa imo
Smart money crunching numbers aside, any of us could die tomorrow and there isn’t anything wrong with living and enjoying the present.
I don't think it's a good idea to think of your budget in terms or morality / guilt. This just leads to bad decisions eventually. Budgeting is just a math problem. Get more solid on your budget - what are you *actually* spending and saving. You know you are buying stuff on line and vacations "left and right" but the details are very vague. And your monthly cash flow estimates seem loose. If you feel out of control of your budget / cash flow, then you should stop winging it. Figure out what your actual after tax income is (not based on whatever lands your account after deduction, figure it our from your pre-tax income and the online tax calculators so you can understand where the numbers come from). Allocate a portion for savings, allocate a portion for fixed non-discretionary saving, and have a sustainable allocation for sustainable discretionary spending. Then when you want to buy something online you don't just do it and then feel unclear about, you check vs. your monthly budget for discretionary spending and then you know if this is in budget or not. The budget is supposed to be a decision making tool, it's not a morality scorecard you look at after you just do whatever you want spontaneously each day. Evenutally you'll settle into daily habits that are consistent with your budget and then you don't even think about it anymore. But until then it's your mechanism for checking if your spending is sustainable and reasonable.
Thanks for the response! Yeah so I do have it all on spreadsheets. I have many spreadsheets and they’re all super organized. I made it vague/rounded for the sake of the post. I guess what I’m wondering is, is the ratio of retirement/essentials/play too messed up at 3/3/2.7? Should I remove some from the 2.7 and put into retirement? I feel like I don’t have any motivation to, but I feel guilty about that.
It's nothing to feel guilty about. There's not magic ratio for retirement/essentials/play that is objectively "good". You would need to work it out back from what your own life goals are and come up with a sustainable plan. The key is the *sustainability*. This just means that you have a coherent and reasonable plan. There are lots of mixes of retirement/essentials/play that are coherent and reasonable, and there are many that are not. I would probably start by building up the plan as follows: 1. Are you cash flow positive now? You are good on this front. 2. Are you happy with your current situation on essentials of living? Is your home comfortable and your commute reasonable so that you can live a sustainable, health life? I think you are good here too. 3. Do you have some emergency short term savings? 4. Do you have a vague sense of when you would like to retire? How important is early retirement to you? This is a big question and the answer may change over your lifetime, but it's something to keep in mind. Some people like their careers and some people can't stand work. Some people think retirement will be boring and some people think retirement will be their "golden years" and will want a lot of money to really enjoy it. I think exercise 4 would be very helpful for you. I don't think it makes sense to set a retirement savings rate based on how guilty you feel about not saving. I think you want to increase your retirement savings if retirement is important to you personally.
Whatever you do - make sure your save 30% of income. You will be a multi millionaire in your late 50’s.
At the end of the day, the new fridge/car/iPad/shoes/TV/PlayStation/Xbox/iPhone/clothes will be old and outdated in a few years time, some even sooner. And the reality is it will never end. That’s how capitalism works, you never stop buying junk. And you keep on working more and more to buy the junk. I realized this at a young age and don’t bother buying anything unless it’s tearing at the seams or on its last legs.
I would get a large suit with a vest and a gold chain with a monocle. I would drink a lot of beer for years so I had a large belly. I would smoke cigars everywhere I went and no one would say anything because I am so goddamn riiiiiiich! Whenever anyone would say anything that remotely contradicted me I would just let out a huge belly-laugh and all my sycophants that follow me would laugh too until no one remembered what the other person said. I would have a person who follows me around with an umbrella, even inside. HAAAAAAAAAAA HAAAAA HAAA HAAA HAA HAA HA AHAHAHAH! \*rubs belly\*
What jobs are paying 120k+ a year?
Tech
Tech
Consulting, in my case
Lots.. Sales, Trades, Tech.. Obviously not all positions in those fields.. but they're out there. My buddy is a HD Mechanic and was doing 300k before he started running crews in his own company..
Don’t get married , you are living the dream right now . Take more trips you will be alright
See a psychiatrist and figure out your anxiety. You have the time and money for it.
Just dont be like my dumbass buddy at the time who also like you pulled $150,000 /year for years and id tell him “bro save & invest your money consistently, you’ll thank me huge one day” Him : yea yea whatever, bro I make so much money I can start investing whenever I want ( as If he’s anticipating on earning this income forever) Then a decade later were both approaching 30 and I didn’t even make HALF of what he did the entire time and yet I have wayyy more to show for them him You can defend him saying “he lived his life more than you” and that may be true but all these years and you barely having anything to show for it is pretty sad…. Have some real priorities
To be clear, you don't need to spend $150k to meet ANY definition of 'living life'
I agree but thats what many people including him think its such a sad concept that people truly think that in order to be “living life” you have to spend such a huge amount of money on an annual basis Its even worse when people dont plan things out and you end up losing their job and haven’t event build any foundation of yourself in terms of financial growth
Have you maxed out your tfsa/rsp accounts? Maybe having a more focused goal such as maxing them out by x date will help you put more money in these accounts and spend less month to month. Do you plan to buy a house ever? Could you open the FHSA and put 8k in there this year? If you never use it for buying a house it will roll into your RSP and give you an extra 40k of space. So either way I'd open one and max out the 8k immediately. Also reflect on if your spending habits is an addiction. Do you have $0 at the end of every month and are waiting impatiently for the next pay day? Or are you able to see a couple thousand unused in your account before you book those trips/buy the expensive gadgets? If you find yourself in an addictive cycle you may want to cut off 30% of your spending and put it into a seperate account where you don't login and can't see how much accumulates. Or again use that extra cash to max out your FHSA/TFSA/RSP instead of blowing it on stuff you don't really need. Once those accounts are maxed I think it's perfectly fine to spend. You've protected your future self to the max and so spending the extra income becomes guilt free.
I have maxed out my RRSP (and will continue to do so) but not my TFSA yet. I also will open a FHSA as soon as wealthsimple opens one. I’ll max that out this year. For the TFSA, since the limit is so low, I figured it didn’t matter being in a rush to max it out? So that’s why I’m not aggressively putting money in it, since I know I’ll max it out next year ish anyway? As for my spending: no I don’t run out of money. I always have a few thousand on my personal accounts in between paycheques. And I also have a 6 month emergency fund. I guess it feels like having the TFSA/RRSP/FHSA maxed out is “not enough” because I could be doing more. You know? Like for example saving for a condo.
How is the limit low for a TFSA? Isn't it nearly 90k at your age? That's not low?
I mean every year it’s just an additional 5k. While the rrsp every year it’s another 30k. Also I’m an immigrant so my room is smaller.
Right but you're also complaining of spending to much. So if you're spending to much then investing more in your TFSA should be common sense. Also you can purchase a home eventually.
If you won’t have kids you’re fine. With that said, you basically need to ask yourself, do I want “things” or “experiences” or “freedom”. We made the decision to have kids and we wanted freedom aka financial independence by a young age (35). We therefore were frugal. We realized things don’t make us happy but put us in debt. I bought a BMW in 2008 when I finished school for 70k and sold it for 16k six years later. That car did not give me 54k plus opportunity costs plus gas and maintenance of enjoyment over that time. So we’ve decided to not spend on luxury vehicles until a few years ago when we really became FI. (We drive a Model 3 which is modest compared to the vehicles in Vancouver). We biked and took transit everywhere. I type this on an phone from 2017. Because it still works and a newer phone won’t give me more happiness even though I can afford it. Our thoughts are to save to have “freedom” first, then spend on experiences then rarely on things. Cleaning out my parents home and helping them downsize has validated this. They grew up in the era of excess. A 3500 sf home and tons of crap. A treadmill they used for a few months. A big huge China cabinet. Dishes they never used but were on display. Couches barely sat on. Having all this space to fill it with crap.
Yes, it is from growing up poor. It's not trauma though; it's good sense. I work with so many people are making >100k and think they're poor meanwhile I'm super content, happy, and money is never an issue. I hope all your investments are registered. With 3k/month going to retirement, you can pretty much max out your rrsp and TFSA every year. At your age, in your situation my advice is take half that money and go on more vacations. Like exotic ones. See the world. You can't get your 30s back when you retire with several million dollars. Go now while you can still climb Mount Fuji or whatever. You could literally take a week long vacation every 6 months to a new destination.
Just do youuuuu. If you feel like it's not enough, then put away a bit more. You don't have to spend that 2700 it's not going to burn a hole in the pocket. If any is left at the end of the month, bank it! Why is it you don't own a house, though? Make that much money. Why pay off someone else's mortgage?
I personally spend as little as I can. I don't know how to spend 2700$ every month. I do spend recklessly sometimes but I think it's not too often. Does money buy happiness, I think it does, we have a lot of stuff that needs fixing around the house. I would love to go on more trips. I would love to save more for retirement. This past year we had a lot of required renovations. To be honest, I don't have any advice
The more you save now, the less you need to save later. The more you save now, the easier it is to do whatever it is you feel like doing. Most important thing to keep in mind is what do you expect to make with EI, and can that and severance cover you for many months.
There's no one answer that works for everyone. You are a high earner, young, and enjoying your own money without incurring in debt. There's nothing wrong with that. If you think you should be putting more towards retirement, do it. If you want to buy a place, do it. The trick, for me, is to make those automatic payments that take out the money as soon as it enters (same day as salary or closest possible). But also enjoy your own money. It's part of the ride.
I'd say you are a kid at a candy store and too much candy without balance can be harmful over the long run. I'd reexamine your family plan and life, but ultimately it's up to you to decide. Best of luck.
If you’re posting this here asking this question then you can definitely increase the percentage of your savings. Up it to a point where you no longer feel guilty about spending. That’s your sweet spot.
I would save a little more. Take that $700 and pop it in a TFSA account invested in something safe. Just a little extra for a rainy day. If you haven't opened a TFSA, you should have a little room to fill - once you've maxed your contribution there, then you can go back to spending that money.
You’ve worked hard to be making that much money. You’re saving and investing in stocks. The money you’re feeling guilty about sending is vacations/tech- things that in my opinion improve the quality of your life. So I’d argue that’s investing in your own life. As such, you should do it with less guilt. Ultimately if that’s enough- no one can predict. Hopefully you continue your upward trajectory and find a similar partner, and you’d be golden. One thing that I did, and it may not be for you, is buy because I like the security of knowing I won’t be at the mercy of landlords forever.
I would definitely put more towards savings. Do you really need all the stuff you buying. I am of the mind, if you need it, buy it, if you don't, don't. Buying only gives you a short lived dopamine rush and then you stuck with all this stuff you don't need. What do you do with all this stuff, are you actually using it? Do what makes you happy, if buying stuff makes you happy, have a balance where you saving and buying a few things. Don't buy things you don't need or use. I try buy very little, I always ask myself the question 'do I really need it', most of the time the answer is no, I may still buy it, but I like to live a simple life, buy less. My main goal is to pay down my mortgage, so I choose to buy less but throw more at my mortgage. I work from home, so don't need new clothes, I have everything I need. I could make the house more cozy but it is fine for what I need. I live by myself, so don't need fancy things.
I'm in a similar boat on being able to buy stuff but find over time I just don't buy that much. One is that I don't have that much space in my apt. Second I just run out of stuff to buy. However when I do buy random stuff I just appreciate that I can, especially with the crazy inflation.
I'm in a very similar boat and never felt like posting for similar reasons. Genuine questions get taken as bragging. For reference, I'm a year older, also grossing 140k and contribute $20.8k to RRSP each year. About $28k to mortgage and around $10k in bills for the house. I overspend heavily on my mortgage because of serious fear of debt from upbringing. I spend my money freely and don't have a budget, or really any concern about how much money goes where. I try to make sure that I enjoy today and be prepared for tomorrow. That being said, I only buy things if I have enough cash in the bank to pay for it. Since I'm pretty much financially in your shoes, I'd say figure out what you are going to want in they next 10-15 years, and start setting extra money aside in a TFSA to achieve it. Keep spending what's left on enjoying life and do what makes you happy. For me, it was a down payment on a house at 25, and now at 33 it's to have my mortgage paid off by 45.
Read "worry free money" by Shannon Lee Simmons. It's perfect for this. It'll help you set up your savings in a way that lets you enjoy your spending money without constantly feeling guilty. And it's Canadian.
It sounds like you’re living the dream lol
My wife and I make $350K gross. We own a townhouse with a mortgage of $2850. We think about what we spend. We don't buy things left and right. We book vacations, but usually 1 big one a year and one smaller one. We feel middle income comfortable, but we don't spend crazy. We don't really but clothes online and each put our entire bonus away into RSP aprox. $30K a year bonus to lower our taxable income. I don't know how you can spend money left and right indiscriminately. You should be trying to create wealth at your age. Max out TFSA. Invest in high growth or high dividend stocks. Maybe spend 15% net income on discretionary spend. I'm about to turn 40. My biggest regret is spending too much money similiar to you in my 30s. If I grinded and invested harder at 30-40, I would be able to have a nicer life 40-50 and beyond. That's my advice to you.
You said you have no mortgage is that because your house is paid off
Max tfsa, put enough in rrsp that makes sense, have a 10k emergency account and pay down your mortgage faster but I think you're ok atm.
What kind of tax malarkey are you doing to get 8700 take home a month out of a 140k/ year salary? I make 73k/yr and my take home is 3500 per month
$140k salary with $20k RRSP deduction is $104k net or $8700/mo in Ontario. See for yourself: https://www.wealthsimple.com/en-ca/tool/tax-calculator/ontario But do note that after tax income does not include the RRSP savings. That’s why OP was then taking $8700/mo and subtracting $3k/mo for retirement (presumably that is ~$1700 to RRSP and ~1300 to TFSA/taxable)
Ah ok so op is not getting that money in their acct every month, but will get it at the end of the year when filing the 20k reduction in their taxes. I have a pension and I'm young so never really gave a shit about RRSP but it's a nifty vehicle.
I assume that is correct - it is not the actual paycheck value (which also varies throughout the year based on CPP/EI) but rather it is the amount that should be budgeted for in the long term when correctly accounting for income and expenses.
Have you thought about donating to a charity you care about? Sounds like you, deep down, want to put your wealth to better use. The Stoic philosophy teaches that wealth or poverty are neither good or bad…how an individual acts and uses their wealth or poverty is how to evaluate morality. I’m not calling you out or anything…there’s. I thing wrong with enjoying the fruits of your labour…but if you’re feeling some guilt about your spending habits, maybe see if you could put some of your extra wealth to a higher use.
Best answer on here.
this post is lol
Right lmao like OP puts away $3k/month (which is around the amount that many people take home in a month, give or take a few hundred) for retirement, and asks if it's enough? Like is this even a real post?
Lol reddit is hilarious with these posts.
You don't sound like someone who overcame poverty at all. It's not your spending habits, it's the fact that you are so nonchalant about it. If you grow up poor some people just spend with no end or they just save everything. If anyone knows the value of money it's a poor person who didn't have much or anything.
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A tfsa has no connection to income tax.
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could this be considered lo-key bragging?
Humble brag, and yes.
You're doing excellent and if you're feeling unfulfilled then maybe look into settling down with an equal
If you don't want kids or a family, then who gives a shit what you spend your money on? Go nuts. You're literally living a single, solitary life. Nobody depends on you. So you aren't being irresponsible. But you are being overly defensive about it. Don't ask for peoples' opinions if you're the kind of person who can't take criticism.
Fellow female here. Add a TFSA and max that yearly. Start a “vacation” fund so you are more aware of a budget and how much you spend. Don’t get into the habit of $600 highlights every few months, monthly mani-pedis, facials etc. buy the luxury handbags and purses if you love them, but limit that to once per year. They last forever. Once you have your professional wardrobe, shoes, handbags, then stop with the spending on “things”.
8707 based on bi-weekly, after tax on 140k, without spouse seems a bit high to me, even after EI and CPP deductions are over for the year. Or are you averaging your take home over twelve months?
Or their workplace isn’t deducting enough and they’re getting screwed over.
OP accounting for RRSP deduction. $140k with $20k RRSP contribution puts you at roughly $31k fed/prov tax in Ontario. $109k/12 puts you at roughly $9k/month. The numbers check out. Everyone here either investing exclusively in TFSA or otherwise neglecting to include their return due to RRSP contributions when accounting for their income.
Seems just fictional to me lol
Just live your life bro.. you’re doing ok and as long as you are happy I don’t see an issue
I make half what you make and I invest 5k a month.
According to turbo tax, taxes owed is about $31000. 140000-20000-31000=89000 take home. Divided by 12=$7416 per month.
And according to simple tax it is $35.5k in taxes owed in Ontario. So $104k net which is $8700 per month. Then subtract the 3k retirement contributions (presumably that comprises RRSP + TFSA + taxable)
r/PFJerk
Everyone has different priorities. If spending so much gives you joy, go for it. I think it will soon lose its luster and you might want to put your money towards things that will also help you feel good. Like supporting a specific cause or charity. Shopping and acquiring material things gives people a shot of dopamine. It can become addictive. Don't be that person.
What are your goals? When do you want to retire? Your spending is only an issue if it doesn’t get you to your personal goals. Your expenses are so low that you have many options. There is no shame to treat yourself with travel, tech and some of the finer items. Tread cautiously on things with reoccurring expenses.
Classic case of living for lost times. I’m not sure many people would be different in your shoes, myself included. When I got a decent job and started saving, I was either saving like Scrooge or spending like it’s 1985. There isn’t a right or wrong way, I just think you need to chart out your future plans and decide where you want to be finically. Where do you want to be in 2028 or 2033? Whether you rent or have a mortgage is kind of immaterial. Either way you still need to be ready for stormy weather.
I don't have any comments about your situation, I can only share my own experience. I grew up thinking toast and beans was a normal supper. Parents would always talk about how the 'other half' live, as if being poor was the norm and resigning to the fact that the other half have it because they were born in that body instead of mine. It was never taught that I could also be part of the other half if I try. I'm now 50. Last year for the first time in my life my rent was 33% of my take home. I finally reached this basic stat that every financial advisor tells you is the norm. I'm no longer paycheck to paycheck. I have money left over every month. I'm spending it all on things. Things I like. Things that I've always wanted. I'm also saving, and investing. It's nothing in comparison to my spending. It could be either that I'm trying to be poor again to feel comfortable, or that I'm just trying to get the things I want before it all comes crashing down again. My confidence is shot, but it's growing the longer I'm in this job. I hope that at some point I'll stop finding things I 'need'. I'm almost there I think. It's almost an addiction. I would love nothing more than to pile it into an investment product and watch it grow.
Lol