This article from Toronto Life seems to have really struck a nerve with Canadians everywhere.
Here are my random thoughts:
1. IT IS HIS (AND HIS PARENTS’) MONEY, NOT YOURS
I can understand his lifestyle. I think at one point I may have flirted with a lot of spending close to what he has done (although no $7000 bacchanals for me), I have spent a lot on clothes for instance.
It is actually kind of brave to put that kind of financial position and free spending out there and be judged for it.
Just because you can spend it though, doesn’t mean you should. See Point #4 below.
It is also his parents who pay for rent and food and so on, and if they’re happy doing it, who are we to rain on their parade?
They may dread being Empty Nesters.. or just don’t see him as an adult yet.
*shrug* It is their lives.
2. HE ACTUALLY MAKES
$130,000 … ~$86,667 A YEAR BECAUSE HE WORKS LIKE A DOG
If we can believe sleeping 5 hours a night, let’s say he puts in a 60-hour work week (around 10 hours a day, working the weekends too).
50 weeks x 60 hours a week (accounting for 2 weeks of vacation) = 3000 hours a year
$130,000 / 3000 hours a year = $43.33 an hour
With a normal workweek of 2000 hours it is really:
2000 hours x $43.33 = ~$86,667
There, feel better?
Update: He admits to 60-hour work weeks. Guess I was spot on in my guess.
3. HE IS NOT ALONE IN HIS $$ SITUATION….
I am actually in the same age range and financial position.
I was in the bank the other day getting some business done, and I casually asked a banker what I would get as a pre-qualifying mortgage if I was interested.
She and I sat down for about half an hour, and she printed out a paper for me that I was approved at the lowest rate possible up to a $600,000 mortgage.
Me, qualifying for that.
All by myself, without my partner’s assets, credit score, whatever.
With his assets, we could have well over a million in debt, signed over to us by a bank without a blink of an eye.
I told her I’d think about it.
I wasn’t really keen on getting a mortgage at all and would rather clear it in cash, but it might be nice to have a cushion.
(I really only plan on paying $300,000 max out of my savings for a home anyway.)
4. BUT HIS FINANCIAL SITUATION IS WORRYING….
“..chunk of my $80,000 savings”
Cue face: O_o
Then again, he is only 31 and has not been a pharmacist long and he does have 4 more years to sock away another $50,000 based on this age to savings chart.
Still, I would just be careful about the spending and do a little more saving.
At least maxing out your RRSP ($23,400), TFSA ($5000) which is $28,400 in total.
Assuming he graduated when he was 23, and he has been saving for 8 years…
8 years of working x $28,400 = $227,200 – $5000* = $222,000
(*The TFSA was only implemented in 2009.)
I just feel like $80,000 is pretty low versus what he could have saved, but then again he has been traveling, drinking and eating it .. so that makes sense, even with the higher amount of disposable income each month (no family, parents paying for household living).
I am also a PF freak, so.. let’s take that into account.
If I were him, I’d look less at the salary amount as being the be-all and end-all, and focus on the net savings banked each year.
(I hope it is invested well too. Index funds. Read my Guide to Your Money if you’re interested.)
5. LIFESTYLE INFLATION CREEPS UP ON YOU FAST
I should know. I’ve been there AND DONE THAT.
He talks about how spending all that money was shocking at first but then became de-sensitized to all of it.
I hope he scales back and realizes at some point it doesn’t need to be wild and crazy spendy all the time to be fun.
I myself am struggling with this spending lark, but ever since I stopped working, I am trying to be less stressed with Baby Bun and NOT SHOP as a hobby, I have been pulling back slowly and kind of proud of exercising my will to not spend.
It also helps that I have re-discovered vintage shopping.
Also, he has a lot of disposable income but that is because he doesn’t pay rent ($1500), so he’s spending that money instead of saving it, which would be the smart thing.