Earning $4,000 a month, with $10,000 in debt, how can you save?

Millennial Money is a weekly presentation-based series that provides financial advice to millennials. Read the full series here.

At 26, Meesha has spent most of her life on the Internet. Due to her use of her apps like Instagram and TikTok, she has become an influencer in the country. Between the partnership deals she has and her job as a part-time waitress, she makes about $4,000 a month.

But now she wonders, is this influencer lifestyle sustainable?

“A lot of my work is submitted and paid to promote on my account. But that’s not constant,” Meesha said, adding that her income fluctuates quite a bit. “That’s why I took part-time service jobs.”

Living in a popular area of ​​town, Meesha said she was lucky to find a rent-controlled unit five years ago. “I’m lucky enough to live alone in Toronto on $1,200 rent,” she said.

As an influencer, her schedule is constantly changing, but she tries to work at the restaurant at least three times a week. As a result, she has a lot of freedom to cook most meals at home.

“On days off, I can have lunch or have a coffee. Also some nights I can go out with friends, depending on how I feel. I usually try to keep my bar spend to $50 a night or less,” Meesha added.

With income shaky, Meesha now wants to figure out her future. That includes figuring out if she wants to do more post-secondary while she still has $10,000 in student debt from her general arts degree.

“I have been slowly paying OSAP, but I want to save enough to go back to school or at least take a two-year course to get a more stable job,” he said. “I can try to continue trusting my work as an influencer, but at the moment it is not enough to maintain my lifestyle.”

In terms of what to go back to school for, you’ve heard from friends that anything in digital or web design could be a good fit, but those programs cost tens of thousands of dollars.

“I only have about $500 saved at any given time, and with payments (from influencers) I could be waiting months to get paid,” he added.

We asked you to share a week of expenses to get a better idea of ​​your finances.

The expert: Jason Heath, managing director of Objective Financial Partners Inc. examines Meesha’s situation

Meesha balances her variable income as an influencer with a part-time job as a waitress. Budgeting can be a challenge for anyone who is self-employed and doesn’t receive a regular paycheck. That makes it important to save when you’re having a good month so you can make up for a slow month with those savings. It can be tempting to spend when you have money in the bank, so setting up separate accounts can be a helpful technique for some.

If Meesha transfers money to a separate account in a good month, that can help her avoid the risk of spending the cash. Because she is self-employed, she also needs to plan for the income tax that she will have to pay when she files her tax return. Once a taxpayer owes more than $3,000 in taxes in two consecutive years, the Canada Revenue Agency will also begin requiring them to pay quarterly tax installments as a prepayment of taxes for the next year. So having a tax account could also help Meesha with her budget.

You should also be aware of the $30,000 threshold for sales tax. Once you have more than $30,000 of annual self-employment income (for four consecutive calendar quarters), you must register, charge and remit GST/HST.

Meesha has no credit card debt and is diligently paying off the remainder of her $10,000 student loan, suggesting that she is living within her means. She admits that she sometimes splurges on clothes, but being a brand-promoting influencer, I guess that comes with the territory.

Much of Meesha’s budget goes to clothes, nails, and bars, but on the other hand, she walks most places, so she doesn’t own a car or spend much on public transportation or rideshares. We all have our indulgences, so it’s her total spending that matters more than how she spends her money.

If she really wants to go back to school, Meesha may need a period where she works a little more and spends a little less to build up some savings. It might be a good tradeoff to build a career while she tries to maintain or build her influencer status. A TFSA is probably the best savings tool for her with a modest income. She should also make sure she understands the self-employment expenses that are tax deductible from her influencer’s income, including some of her rent, accounting fees, and possibly some of her meals and entertainment.

Her monthly income of $1,200 living alone is pretty good in Toronto, and she admits she’s lucky. If for some reason she had to move, her rent could go up, so that’s another reason to save for a rainy day.

Results: She spent more. Week 1 Spending: $525 Week 2 Spending: $1,964

How do you think you did it: “I feel absolutely relieved,” Meesha said. “It’s great to see that even though I feel like I’m in a state of chaos, I haven’t gone overboard.”

Seeing Heath’s advice regarding indulgences, she added that as an influencer, shopping for clothes and nails is part of her job. “It sounds silly to anyone who doesn’t know, but we basically work online, so that’s a big part of the job,” he said.

But while she’s grateful for the opportunity, she also believes something more stable might be better for her financial future.

“Because work is so unstable, I sometimes forget when and where payments come in and out,” he said. That’s why she’s going to take Heath’s advice, along with a huge leap of faith, to open an account just to save for school.

“Going back would give me an additional option, either a six-month crash course or a two-year school,” he added.

Meesha is also now considering opening a TFSA to ensure her money can continue to grow.

“It is surprising that we do not learn these basic concepts in school. I hope it changes for the future.”

Are you a millennial living in Toronto or GTA who needs help saving money? Be a part of #MillennialMoney and email evyk2002@gmail.com
Digital design by McKenna Deighton.

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