I really enjoyed responding to your mail a few months ago. Here are responses to reader messages received since then. I would like to take this opportunity to thank you for writing to me – I read every email, and I apologize for not being able to respond to everyone.
Let’s start with Camille, who lives in Montreal, supports herself and earns less than $55,000 per year. “I put a certain part of my salary aside, among other things, with the aim of becoming an owner. “, she says.
Camille asks how to react when her colleagues suggest she go to a restaurant for lunch, but she doesn’t want to spend her money that way.
“It’s difficult to say ‘it’s not in my budget’ without sounding like a poor wretch,” she says. It’s also difficult to be told “you can afford it, with your salary”. Who decides what my salary allows me or not? How do you manage this kind of situation, in an environment where living below your means is not the accepted norm? »
Indeed, group pressure can sometimes be strong when we try to spend less. (And I would wager that every single person applying this informal pressure would describe themselves as hyper-open-minded. Open-mindedness quickly disappears when it comes to emotionally charged topics like money and group membership. , but I digress…)
My advice would be to say that you have other priorities in your life at the moment. For example, you say that you would like to become a homeowner. Why not answer that you’ve started saving money for a down payment, that it’s not easy, and that eating out isn’t at the top of your list right now? In the process, you take a socially poorly accepted behavior (saving), and you transform it into a highly valued behavior (becoming an owner). You can also add that you would be happy to go eat with your colleagues in a park, for example, so that everyone can bring their own lunch (purchased or homemade). Ultimately, you don’t have to over-justify yourself. Life goes by, colleagues change. In the words of author David Foster Wallace: “You’ll care less what people think of you when you realize how rarely they do. »
Then, Amélie is not impressed by the examples I give in this section. She doesn’t find them realistic.
“In your last text, you said that it’s easy to start saving $400 per month from age 25, so that it could be worth $1 million years later. Apart from young people who live with their parents (like the young person in your example…) and who pay for (or have paid for) their studies (happy for them), I believe that this is far from being normal among young people. 25 years old to be able to make such savings per month! I find it unrealistic. At school, with loans and scholarships (if you’re lucky), an apartment and everything else to pay, it’s often rare that there’s anything left at the end of the month. And it’s also rare that at the start of your career, you have big salaries that can allow you to make these savings. »
I agree: it’s rare that there’s anything left at the end of the month. It’s true at 25, but it’s also true at 30, 40, 50… That’s what life wants.
Since our financial freedom is non-negotiable, I would prioritize investing the $400 ($13 per day) at the beginning of the month and not at the end.
Every expense is a choice and can be optimized. You can have roommates, move close to work and not need a car, only buy what is on sale at the grocery store, reduce costs by cooking in large quantities, etc.
Even today, I like to eliminate unnecessary costs. For example, my cell service costs me $9.20 per month including taxes (Public Mobile). And it’s a tool for my work. Tens of thousands of Quebecers pay 8 or 10 times this amount each month for their phone, and don’t even think about it. For them, it’s just normal.
I also have a life where I rarely travel by car. Without even thinking about it, I save around 75% compared to the transportation expenses of the average Quebec household. Again, this is no coincidence. It’s desired.
Applied to many aspects of life, these decisions make big differences. I’m not saying life is easy, but we live in a time where we have options.
Let’s end with Laurence, who has no questions, but who has cleaned up his finances, with impressive results.
“I’m 25 years old, with a bachelor’s degree in consumer science (I paid for my studies myself). I bought a car on credit, it cost me $450 a month, and once it was paid off, I put the amount into my savings and investments. I don’t even see the $450 that goes out every month for five years anymore, but I feel the satisfaction I experience! I have since made the choice to return to live with my parents. For a year, I have had my post-study job. I now put $2100 (this includes the $450) per month into Vanguard index funds, and off we go. I don’t know what my big project(s) will be, but the capital to enable it will be there! On the way to the $100,000 in capital invested around January 2024. Thank you again for enlightening me, and ensuring that I save instead of going to eat at a restaurant that I forget the next day, or spending on clothes that I have no need for. »
Bravo, Laurence, for putting all this in place at an age when I was spending all my paychecks, and when I was unaware of the existence of index funds. Your solid financial foundations will make you an alien (in a good way) in a stressed population that often lives beyond its means.
Now, I would tell you that at $100,000, it might be time to move to an apartment, but you already know that, and that would sound dangerously like mansplaining, so I’ll let it go.
