You’re in a full-time job working 40 hours a week in a bustling metropolis like Toronto, and your monthly take-home pay after deductions is $2,000 (approx. $13.50 hourly). The Living Wage[i] amount for Toronto is $18.52 hourly. You’re not there yet, and may not reach that goal in the foreseeable future. However, there are bills to be paid, and you need to eat, have a roof to live under and commute to the office daily. It’s nerve-wracking when you’re forced to choose between essentials, and this may happen often because any unexpected expense can derail low-income earners. We at The Edge know that household budgeting on $2K or less is possible, and have compiled a step-by-step guide that will help plan your finances as well as starting an emergency fund.
- Housing: The average rent for a bachelor pad in the Greater Toronto Area (GTA) is $957 as per a 2016 study by Canada Mortgage and Housing Corporation. Housing will be the most essential and biggest expense on your monthly balance sheet – without including utilities, which will add a $130 hole in your pocket. This is the downside of working in a metropolis but unavoidable as the chance of you moving up the salary chain is higher in the GTA than in other Canadian cities. You will also need to buy furniture, linen, cutlery, and cleaning supplies. Based on Statistics Canada’s 2013 survey of Household Spending, the monthly expenditure on household furnishings is $50.
- Food: According to The Nutritious Food Basket (NFB), a tool used by public health units to estimate the minimum cost of a healthy diet, the average monthly cost of food for a single female (31-50 years old) household in Toronto is $250. The survey includes 67 food items that reflect a healthy eating pattern, and is based on Canada’s Food Guide. NFB does not include processed convenience foods, snack foods, infant food, special dietary foods, and non-food items (laundry detergent, soap, toilet paper, etc.).
- Clothing and Footwear: At this point you don’t have money to buy clothes or footwear monthly. However, tap into your contingency fund to repair/ replace existing shoes/ boots and buy essential weather-appropriate clothing. The post-Christmas week and end-of-season sales are great times for apparel shopping. You can get a pant/ shirt for $15, tees for $5, dresses for $12, and shoes for $25!
- Transportation: Though not at par with its European counterparts, Toronto is decently connected by public transport. A monthly TTC rider pass will cost you $141.50. Keep at least $10 in hand for those unforeseen trips where you’ll have to pay extra fare. A vehicle with the additional baggage of insurance ($150 min) and gas ($100 min) is not financially feasible.
- Loans: Even though you’re on a budget and your needs require all your earnings, you must be mindful of your credit card bills and other loans you may have. Set aside at least $150 to repay your debts and loans every month.
- Phone: For $35 monthly, you will get unlimited calls to Canada, unlimited text/ MMS to Canada and USA, and 2GB data from Freedom Mobile. Chatr offers a similar plan for $40 monthly.
- Internet: TekSavvy, a low-cost internet provider has a high speed, unlimited DSL package for $44.95 monthly.
- Personal care: Personal care includes soap, shampoo, cosmetics, oral hygiene, and haircuts. It’s estimated a single female household will spend around $80 on personal care monthly.
- Bank fees: Canadian banks charge on an average $15 monthly for a single account. Track your transactions diligently as banks will charge extra for exceeding your monthly transaction limits!
- Recreation: Make the local library your favorite hangout. You will get free passes to local attractions. They hold movie screenings and organise activities like chess for adults, as well as lots of workshops. Rent out books/ DVDs to pass the evenings. Invite friends over for potluck and movies at home. This way you’ll save on movie tickets, food, and travel expenses while gaining quality time with friends — a win-win situation!
- Fitness: An average gym membership in Toronto will cost around $20 monthly. This will give you access to gyms that are open pretty much round-the-clock and have state-of-the art equipment where you can stretch those sore muscles and burn the fat.
- Savings: These expenses leave you with $118 to save/ set aside for emergencies like medical bills, birthday parties, weddings, annual vacation, and family visits!!
- Positive outlook: Living on low-income is sometimes depressing. Every time you’re in the dumps, remind yourself that this too shall pass. Take pleasure in the simplicity of a home-cooked healthy meal, walk in the park, and engaging conversations.
You monthly budget[ii]
|Utilities (Incl hydro, laundry)||$130|
|Household expenses (Incl cleaning items, furniture)||$50|
|Transportation (Public transit)||$150|
|Services (Incl phone, internet)||$80|
|Loans & debts||$150|
[i] The hourly rate at which a household can meet its basic needs, once government transfers have been added to the family’s income and deductions have been subtracted.
[ii] For purposes of this article, a household means a single female member.
Nithya Caleb | The Edge Blog