Save. Spend. Splurge.

Don’t tell me you don’t have any money to save

Single people like my friend who make good incomes ($50,000 or more), and who have the nerve to tell me they don’t have any money to save to be able to fund retirement incomes, are full of crap.

Extenuating circumstances taken into account, if you make $50,000 or more as a singleton, you should be able to save in your retirement accounts and still live very comfortably.

A friend I know makes a solid $60,000 a year, and after taxes, nets $47,856, which gives her about $3988 a month.

She lives in a very tiny town, pays about $500 in rent (for a 2-bedroom nice place), eats quite frugally because she doesn’t see much value in food the way I do (although she loves eating out in restaurants more than I do), and has paid for her car in cash.

She also gave up her cable television but loves her smartphone, and pays about $70/month towards that.

All in all, I think she spends about $2000 a month for general food & living (that would really be a maximum, I’m thinking more $1500).

She adheres to a pretty strict budget for herself when it comes to lodging and food (especially eating out, she can be insufferable when it’s too close to her budget for the month and she still wants to go out to eat).

You’d think with all of that, she would be able to save 18% of her income to max out her RRSPs.

Nope. No way.

She has the nerve to tell me:

“I can’t afford to max out my retirement accounts, because I don’t make a lot of money.”

You have no idea how much I wanted to scream at hearing that.



  • Souping up her car — Don’t get me started on the $1000 hubcaps she bought to look cool
  • Buying items like $1000 decorations for the home (some sculpture she coveted)
  • The dog. THE DOG. She bought it a $500 customized winter coat and booties.

Let’s stop right there.

(Note: I am not totally unaware that I spend on frivolous things, but she’s complaining about not being able to save and I’m not.)


RRSPs are calculated as 18% of your earned income, so in this case, 18% of $60,000.

Note: RRSPs are the Canadian equivalent of 401Ks in the U.S. It’s saving your gross income before taxes, and it can grow tax-free until you withdraw it at 65.

TFSAs are the Canadian equivalent of a Roth IRA in the U.S. where you save your net income after taxes, and it grows tax-free.

RRSPs 18% x $60,000 = $10,800 or $900 a month

Let’s add on top of that, maxing out her TFSA as well, so we can say “max out all retirement options”.

We have about $5000/year for TFSA contribution room, although in 2013, it is now $5500.

TFSAs are now $5500/year or $458.33 a month

$900 + $458.33 = $1358 (net) saved a month

…Or 34% of her net income

(In gross dollars, she’d be saving $1632.86 a month of her gross income, or 32.66% of her gross income)

Taking her above budget of $2000 a month for her fixed living expenses and food, she is left with about $1988 a month for disposable income and savings (she’s debt-free, thank goodness).

If she maxed out her retirement savings (RRSPs and TFSAs), she’d have $630 left a month as disposable income.

Sure, it’s not going to be as fun with $630 a month to blow on clothes and makeup at $157.50 a week rather than $1988 a month, but frankly, she doesn’t have that money to spare.

Even if she ONLY maxed out her RRSPs, she’d have $1088 left a month as disposable income to spend.

That’s $250/week to spend on whatever she wants, and that’s assuming $2000 covers her fixed expenses (I suspect it’s more $1500 when all is said and done).

On top of that, RRSPs would help lower her taxable income to boot. At least she takes whatever she gets back as a tax refund and puts it into her RRSPs, but that’s still not enough in my opinion.


The problem is she looks at my spending, which is off the charts crazy at times, but doesn’t really take into account that I am not looking at it from just an absolute dollar value, but as a percentage of my income.

I make sure to max out everything I can (RRSP, TFSA, regular investing) before I think about spending some of it. Plus I save it and know when to scale back when times get rough.

I am already well aware that my disposable income is a lot of money to begin with….

…but the truth of the matter is: I make more money, therefore I have more leeway to spend more money.

Think it’s unjust? Unfair?

Well, start brandishing the pitchforks and get a PF lynch mob started then!

Or better yet, review your own situation and either make more money or cut back.


Before fun, and after fixed expenses within a reasonable amount, comes saving.

Save first, have fun later, but don’t be a miser.

If you’re really tight, on a much lower income than $60,000, don’t save to the point where you’re miserable (assuming you’re debt-free).

Save a good chunk of your income, and allow yourself some fun money so you don’t go stir crazy (unless you WANT to live a ascetic life and save all your money instead).


Hey at the end of the day, it’s her money. I’m glad it isn’t really that bad of a PF situation.

It’s just that it only irks me to hear her complain that she doesn’t make enough money to max out her retirement accounts when she’s out there spending $1000 on hubcaps.


I don’t want to hear it. Learn how to budget your money and track your expenses.

In fact, I cut her off when she started her pity party for one, and I told her:

You make more than enough.

You make double an average household here in Canada for parents with 2 kids, and you’re young and SINGLE.

So don’t come crying to me you can’t max out your retirement accounts with shiny $250/a piece hubcaps sitting on your car, and your dog dressed up in a $600 outfit.

There’ll be no sympathy on this end.

P.S. Want to know where to take it to the next level and invest your savings? Read my book.


  • M

    I agree she should choose her priorities by looking at where her money is going.

    Only comment is the monthly income seems high for a net income. It seems to not have the employee deductions for payroll taxes like CPP, QPP, EI and PPIP. I make under what she does but close enough to make my net comparable.

  • Kathy

    I go crazy when someone who smokes a couple packs of cigarettes a day and has tattoos says they cannot save money.

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