At 25, making $50,000 can she afford to move out?

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

Brittany, 25, splits her time between living at her parents’ home in Brampton and her boyfriend’s condo in downtown Toronto. She is looking for more stability — instead of going back and forth on public transit multiple times a week.

While she had goals to find a place to rent with her boyfriend in Toronto over the next few years, a major change has pushed her schedule up. Her parents are selling their Brampton home and moving to St. Catharines for a smaller, less expensive home.

“My parents dropped a bomb on me with the move,” Brittany said. “I’m afraid that this will create too much distance from my work and my partner. I want to be able to find a place by then.”

Brittany knows it will be a challenge finding a place of her own in the city, earning $50,000 a year working in a stock room at an Etobicoke mall. So, after discussing with her boyfriend, the two are hoping to find a place together — on a shared income of $100,000.

Brittany believes that she saves around $2,000 a month from her paycheque in her current situation.

“I also have $10,000 in student debt, but it’s being automatically chipped away at,” she said.

On a work day, Brittany does her best to bring lunch two to three times a week, but takeout isn’t uncommon. On weekends, Brittany explores the city’s many food options, an interest she shares with her boyfriend.

“When I’m downtown with my boyfriend, we splurge on food, trying new trendy restaurants,” she said. “We will dine out for dinner two times a week and go to cafes three times a week. I know it’s expensive but that’s what we enjoy.”

The couple also goes skiing once a month, which drives up their sports and hobby costs, but only for half a year.

So, can Brittany save enough to rent a place with her boyfriend in downtown Toronto? We asked her to share a week of spending to get a better idea.

The expert: Jason Heath, managing director at Objective Financial Partners Inc.

Brittany’s cash flow is good and she believes she saves about $2,000 per month, but there are a lot of expenses to consider that currently doesn’t have.

She plans to split rent with her boyfriend. She does not pay for utilities, groceries, or other household supplies right now. A renter should also have tenant insurance and that can range from $20 to $50 per month.

She commutes to work and spends $200 per month on public transit that could be reduced if she lives closer to work. But she may not be able to borrow her brother’s car anymore, and that could increase ride-sharing or car rental costs.

She should make a reasonable budget to figure out what she and her boyfriend can afford. They have similar incomes so they could probably agree to split their expenses equally, but that is something for them to figure out.

Should they have a joint bank account and have all their income and expenses go through it? Or should they maintain their own accounts and contribute equally to a joint account for joint expenses? For a young couple that is dating, there are benefits to maintaining some financial independence.

Something to be particularly mindful of when moving in with a partner is what would happen if things don’t work out. If you split up, you may need to or want to move out. But you may have a lease that you have committed to. Some leases allow you to sublet to a new tenant. Brittany should be sure she has a bit of an emergency fund saved up.

I would be inclined to open a TFSA for her savings rather than an RRSP. Neither retirement saving nor home ownership seem like priorities in the near term, and her income is relatively low, so RRSP deductions may not be as beneficial as they could be later.

I would also focus on paying down her student debt, which will become more expensive as interest rates rise. This may be a priority to consider before moving out given her parents seem to have given her a bit of a heads up to their moving plans.

I appreciate that she and her boyfriend like going out to restaurants. She even refers to it as a hobby of theirs. They may need to consider trade-offs if they move out on their own so they can still have some money to save each month.

Results: She spent a bit less. Spending in week 1: $452.25 Spending in week 2: $414.50

How she thinks she did: By doing these two weeks, Brittany was able to see just how much of her paycheque was going to food and hobbies.

“I really enjoy it and it is sustainable for now, but that’s because I don’t pay rent!” she said.

Looking forward, just as the adviser said, she’ll consider the trade-offs she’ll have to make. “It might mean just cooking more at home and cutting those outings a bit if we’re serious about finding a place,” she added.

Take-aways: The first major takeaway for Brittany is to really take some time to understand how much, exactly, she can budget and save.

“I had totally forgotten about all the other expenses (about) living independently-ish in the city,” she said.

This includes utilities and transportation costs, as Heath pointed out.

“We want to live closer to the city, but the current place where I work is in Etobicoke. We may have to compromise on a condo closer to there, or I may have to relocate my job because transit will be a lot without my brother’s car,” she added.

While Brittany doesn’t want to think about a potential breakup, it’s still something to consider, she said, especially because so much money will go into a shared rental.

“We are looking basically at $1,000 per person, and that’s if we’re lucky,” she said. “It would be a lot if we got there, basically found out we were struggling and became annoyed with one another to the point of breaking up.”

Brittany knows that rent prices are going up, but she still wants to take a bit more time now to think about it.

“I had a deadline of April, before summer, to move in, but I might need to hold off a bit until I can get all my work in order,” she said.