Food and rent eat into young professionals’ disposable income

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With inflation at its highest level in almost 40 years, Canadians are feeling the financial strain. In a six-part series this summer, The Canadian Press is reaching out to people at different stages of their lives to see where they’re hit hardest. This story details the experiences of young professionals.

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Every time Afua Deborah fills her grocery cart, it’s a shock to the system.

“It’s crazy to see the price of, say, broccoli double, or something really menial, like green onions double or triple,” she said.

Like many Canadians right now, grocery shopping is putting a strain on 28-year-old Deborah’s wallet, especially now that she no longer lives with her parents.

The food inflation rate, which reached 8.8% in June compared to the same period last year, continues to exceed the broader rate of 8.1%.

Deborah, who lives in Toronto and has worked as a front-end developer for two years, said rent is the other major variable eating away at her income and ability to save for big goals like buying a home. This is after she reduced a lot.

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A July report by real estate market research firm Urbanation Inc. found rents in the Greater Toronto Area are rising rapidly, with falling vacancy rates in the second quarter pushing the average rent up to $2,533. , an increase of 5.9% compared to the first quarter.

Housing prices are also rising in other cities. The average rent for all Canadian properties was $1,885 in June, an increase of 9.5% per year, according to Rentals.ca.

As for easing discretionary spending, Deborah is reducing her outings to restaurants and bars, and doesn’t even care about concerts, noting how often they get canceled.

“Instead of ‘Let’s go, here, here, here’, it’s more like ‘OK, let’s go and share something.’ Maybe I won’t buy a second drink,” she said.

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“Or, you know, I could have friends over and we’ll share Uber Eats or something that just seems a little more conscientious.”

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Traveling is something she had hoped to get back into, but is hesitant because airfare and accommodation have become more expensive. Continued airport delays are another factor that influenced his decision.

Daily transport has also become increasingly tricky.

“It’s sad. It’s sad to be dealing with the fact that this town that you were born in and raised in is becoming less and less livable,” she said.

It seems that no matter how careful professionals in the 22-34 cohort are with their money, many are still struggling to navigate the current economic climate, especially when trying to enjoy life’s pleasures. as a young person and to prepare for the future. .

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“People find it impossible to balance everything – it costs a lot more to just exist,” said personal finance expert Danica Nelson. “People are trying to figure out how to do more with less.”

Inflationary pressures have even pushed some young professionals out of the country, especially as wages are lagging.

The average hourly wage rose 5.2% year over year in June, compared to 3.9% in May and 3.3% in April, according to the most recent employment data from Statistics Canada. This is still well below the rate of inflation.

Jen Chae, who grew up in Toronto, is a marketing professional in the fintech industry and has been working and living abroad for several months. She now lives in Switzerland, where she said she made a lot more money and was able to save more than she did working in the city where she grew up.

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“Not to mention that the work-life balance and overall work culture is more relaxed than what I experienced on Bay Street, even though I’m still in the same financial services industry.”

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Chae said she couldn’t have maintained the lifestyle she had without the help of her parents when she was in Toronto because her salary didn’t keep up with the cost of living.

“If wages had been higher and the cost of living had gone down in Toronto, I probably would have stayed happy there instead of going overseas to work,” Chae said.

To get through inflationary times like this, Nelson said budgeting was imperative.

She also advises young professionals to build “sinking funds,” which are pools of money set aside for different, and often larger, expenses. Each month you put money into one or more funds to use for a later date.

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Additionally, she suggests returning to some of the inexpensive activities of the early days of the pandemic, whether picnics, walks or bike rides, to save money while maintaining a social life. .

With the potential for a recession looming, Nelson encourages young professionals to bulk up their emergency savings accounts or start one if they haven’t already.

Despite all the current economic malaise, there is a segment of young professionals who aren’t too worried.

Toronto portfolio manager Charlie Digalakis said the current economic climate has certainly ‘got (his) attention’, particularly high gas prices, but he feels confident in the decisions he has made. amidst the trifecta of galloping inflation, high house prices and rising interest rates.

“I think I’ve budgeted really well during this time. And, you know, if I have to keep dipping into some of my expenses that aren’t necessary, then I’ll keep doing that,” he said. .

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