MEET GRACE:
Late 20's
Recently purchased a home in a small suburban town with a lengthy commute to work in Toronto
Engaged to be married in the fall
Has an undergrad degree in a field related to her employment
Personal income in the $60 - $70 k range
Has mortgage debt
Partner Jason has some student debt
I spend a lot of time thinking about what the recipe is for financial comfort. Not the secret to being rich but instead what is needed for us, both individuals and as a society to feel comfortable and have the finances to build the life we want. I feel those ingredients are far more important than knowledge about money, budget worksheets, the stock market and or TFSA accounts.
Through my work, I have been trying to hone in on those mystery ingredients and Grace has gotten me a little closer. I first met Grace when I started researching economic inequality. She was my fourth or fifth interview. In all my interviews previous to Grace, individuals had expressed feelings of anxiety, frustration, ambivalence and avoidance towards money matters.
Not Grace – she expressed joy. I kid you not, she said “Finances are Fun” and she meant it. I could see she was being genuine by the level of energy she had used to talk about her efforts, what she was thinking about and planning. I was curious about what made her enjoy money matters and most importantly what made her successful.
It was very clear that Grace’s experiences with money were pretty average. She had not studied business or any financial related field. She grew up in an average family with sufficient means but not affluence. She did not have an allowance but was randomly given money from grandparents. She was always eager to earn her own money and be independent, and so Grace started working part time from the age of 13.
Throughout our conversation, Grace provided a deeper understanding of what had shaped her approach to money. She started out as a saver and that lasted until 1st year university. At 17, she went away to school and spent all her saved money. She was away from home for the first time and had newfound freedom. She very much enjoyed the hanging out with friends, going out for food and drinks and spending what she had built up from her years working part time.
After a fun and “reckless” year away, Grace went home for the summer. Here she realized that she did not have any money left to do the fun things her friends were doing. So she had to work hard to rebuild it. That was a good lesson in money management.
After completing school, Grace moved to Toronto and had to be completely independent financially. This was difficult as she was moving from Hamilton where her accommodation cost 25% of her new Toronto costs. This need to be independent combined with a large increase in living expenses created financial fear. She was scared she would not be able to make ends meet. She began saving out of fear.
Grace gradually shifted her approach to money. She stopped being scared she would not make ends meet and started working towards specific goals. This happened in part as her career started to progress and in part as she moved in with her partner Jason, so her expenses decreased.
In talking with Grace, it is clear she has a strong sense of direction. She knows exactly what she wants and is actively working towards it. She sees money as a tool or enabler of her goals and so manages it as such.
When asked what makes her so confident about money, Grace says, it’s her desire for control and her clarity around her end goals. Finances are something we have control over; we know where we are at all times. We generally don’t have surprises and if we do, we have buffers to deal with them. In terms of her goals, she wants to start a family and to retire with a nice nest egg.
So what are Grace’s mystery ingredients? I think 4 things make Grace successful:
Knowing what she wants – Being rich is not a goal for Grace but she is clear on what she wants out of life and this guides her financial decision making. She is now in the process of planning a wedding. Like any new bride, she’s excited yet daunted by the ridiculous wedding costs. In chatting about her wedding, she talks about how they have agreed on what is important to them and designed their budget accordingly.
Grace & Jason have splurged on a photographer but saved on flowers
Grace is on the local buy and sell group daily, looking for brides selling their wedding wares - most only used once
Grace & Jason are keeping decor very simple and purchasing used where possible. Items couples would typically rent, we have purchased second-hand, so we can re-sell afterward. "The day is not about our napkin colour, it's about marrying my best friend!!!"
Grace manages her money – In the same way that one has to manage a household; wash dishes after dinner so you have clean ones in the morning, do laundry so that you do not spend Monday morning frantically looking for fresh socks and underwear, clean up the kids toys so you are not forever stepping on those evil lego pieces, Grace manages her money. She knows exactly what she spends on a weekly basis and how she’s doing on that week’s budget. She is always managing and always balancing. It’s just the way it is, there is value in regularly managing our money. It is not a silver bullet but instead the compilation of the everyday actions that add up.
If Grace goes out for a nicer lunch early in the week, she may work to cut coffees for the rest of the week
If Grace really wants a new outfit, she will think about it first and figure out where to cut in order to make it work
Logistically, Grace and Jason have a joint account from where all collective expenses are paid. They also make sure to have money allocated for fun experiences so they get to enjoy the things they prioritize. In addition to this, both Grace and Jason have individual accounts including RRSP’s, TFSA’s and checking accounts from where any personal expenses are paid
Grace talks about money openly – Money is a natural part of Grace’s dialogue. Her and Jason talk about it on an almost daily basis. They have a handwritten weekly budget on their fridge as well as a couple of excel based spreadsheets. They keep a detailed tally of all revenue and expenses and adjust future plans to accommodate for any unexpected expenses they may have had to deal with. This is not a big sit down discussion but instead an inclusion in other topics of conversation – she will often say things like "I saw this cool wedding book online but it was a bit pricey. I think I’ll look around a bit and see if there are some better alternatives". Grace is also open with family and friends. This is important. As others become aware of Grace’s goals and what she is looking for, they can easily be part of the process and support her. Friends are more likely to suggest a hang out hike instead of a restaurant dinner knowing that she is in wedding planning mode. This helps her be successful
Grace makes mistakes and keeps going – Grace like all of us has learned a lot about money. She is not upset by the mistakes she has made. She recognizes that there were things that could have been better but that’s ok. She learns from these experiences and keeps going. After university, she learned that without savings she would not be able to enjoy what she valued
After a month of high bank fees and "reckless" spending on a girls' trip, Grace changed her bank account type to minimize the number of transactions she can make per month without added fees. Knowing she'll get charged discourages unnecessary spending, beyond what is need. Own it and move forward, I say!
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