How to Save a Five Figure Down Payment (And What To Do After That)

DesiraeGoals, Saving, Strategies7 Comments

How to save a five figure down payment if you're trying to buy a house.

In order to buy a house, you’ll likely need to know how to save a five figure down payment, and that’s if you’re in an affordable housing market. With a minimum (Canadian) down payment of 5% of the house purchase price, even a $200,000 house will require a minimum down payment of $10,000.

(The required down payment jumps to 10% on the portion of your purchase that’s over $500,000, and if you’re eyeing a $1,ooo,ooo house, you’ll need a 20% minimum down payment. This post is more for us over here in the under-$500-k price range.)

That’s why it didn’t surprise me at all that one of the biggest questions I got over the past week, after announcing that The Boyfriend and I officially bought a house, was “Can you talk more about the whole down payment thing?”

Which yes, yes I can.

I’ve already written about how I ramped up my savings to help fund my house down payment #goals, but I wanted to expand on that piece and add some more current perspectives as a Person Who Actually Did Buy a House.

Here are some dos – and don’ts! – I learned while saving up a five-figure down payment for a house in the past year.

DO: Know how much you spend and save

I may go to my grave saying this, and if not everyone is doing it by then, put it on my tombstone: Tracking my spending was critically important in how I managed to save a five-figure down payment.

Related: How (And Why!) To Start Tracking Your Spending

You can do it in a spreadsheet like I do, or connect your accounts to something like Mint or You Need a Budget, but knowing where your money is going is always going to be step one. How will you know where you can find an extra $200 to throw towards your goals if you don’t know where that $200 is going in the first place?

Plus, you might even be able to find $200 extra in your monthly money plan without even noticing it’s gone if you eliminate stuff like recurring payments you don’t even use anymore.

DON’T: Abandon your other goals

If you’re a human, you might be tempted by the siren song of your other savings goals when you’re trying to find extra money to throw towards your house goal.

I say this from personal experience, because I am also a human being.

“Who needs to retire, really? That’s $600 whole dollars a month I could put towards my down payment.”
“Emergency funds are for suckers. Gimme that $200-a-month savings for my house.”

To be exceptionally clear, do not do those things! (Also, I did not do those things!)

Those savings contributions are ones that you probably put in place after careful, level-headed consideration in order to take care of future-you. New, house-crazed you needs to take ten big steps back and not touch those contributions.

If you really need to raid an existing savings contribution, the best advice I can give you is don’t touch your existing retirement or emergency fund savings. If you’re saving for other, less ALL CAPS IMPORTANT goals? You can feel free to redirect those savings if the house is your priority.

But please: Don’t stop saving for retirement or emergencies just to buy a house. You can’t eat your house in retirement, and I guarantee you there will be house emergencies too.

DO: Prioritize your goals

In order to be a paragon of financial virtue and not totally abandon your retirement #goals, it helps to know how to manage and prioritize multiple savings goals, all at the same time. (In fact, my personal opinion is that this is the only way to survive your 20s with your finances intact, but whatever.)

To do that, you kind of have to get real about what really matters to you, and what needs to come first (and second, and third, and…) on your list of savings goals.

Related: Manage Your Money Like a Pro – Even if You’re “Not” One

When I realized housing was my #1 priority for the past year – and that it came with a hefty savings goal attached to it – here’s exactly what I did.

  • I took stock of all of my monthly savings contributions.
  • I made myself a deal: if I left my retirement and emergency fund contributions intact, I didn’t have to feel guilty about not increasing them for the next year.
  • I scaled back on a few of my other savings goals (ahem, king sized bed).
  • I tried to get my “money available to save” number as high as I could by increasing my savings rate.
  • I threw everything in that “money available to save” category at my house down payment goal.

DON’T: Think you can’t make more money

You guys know I’m hesitant to recommend side hustling to everyone and anyone, but here’s what I will say.

When I started saving for my part of our house down payment, I was staring down a $20,000 savings goal, and I had about ten months to go from $4,000 to $20,000.

Even with all of my savings adjustments, and reprioritizing my goals, my monthly contributions weren’t going to get me all of the way there. (By a long shot, if I’m being perfectly honest.)

But I set the goal anyways.

Here’s the thing: Your income is not a fixed, known quantity.

Just because you’re making X now, doesn’t mean you won’t be making Y later. If you know you’ve got a gap between what you want to save, and what you can realistically save now? It will make you a whole lot more open to noticing money-making opportunities when they come around.

In my case, they came around from a blog, but they can come from just about anywhere. Neighbourhood kid needs a tutor – or a babysitter? Dog next door needs a walk when you get home from work? Got a special skill you can freelance out to some peeps?

Those opportunities might be the difference between buying a house on your own timeline, not just your salary’s timeline.

DO: Know what you’re going to do with extra money

Side hustling is not the only extra money that comes into a person’s life, you guys.

There are tax refunds. There are work bonuses. There are overly generous grandparents on your birthday.

If you have a big goal in mind, like saving a five figure down payment? It should be at the top of your list when unexpected money hits your account.

My favourite rule of thumb for this is to allocate 90% of this money towards your biggest goal, and spend 10% on whatever-the-eff you want. Maybe that’s a big ol’ Starbucks card top up, maybe it’s a fancy-pants Lego set, but whatever it is, you get to buy it guilt-free.

As long as the other set percentage (90%, or 70%, or whatever you’d like) of that money gets put away ASAP, in an account dedicated to your down payment goal.

Related: The Case for Multiple Savings Accounts

So what do you do after all of that is done?

The greatest part of this whole process is that I seriously doubt there will be a time when knowing how you can balance and prioritize your different savings goals won’t be a hella valuable thing for you to know how to do.

Especially since as soon as you hit your down payment savings goal, you’ll need to do it all over again to re-allocate that money you all-of-a-sudden get to save for other things.

Now that we’re moving in a few months, and staring down a spreadsheet full of closing costs, new appliances, selling costs and various wants for the new place, both of our savings goals got thrown in the air and resettled in totally new and distinct ways.

That king sized bed is so back on my list, friends.

For the next few months, instead of throwing my highest savings contribution towards our down payment account, that honour is now split between my closing costs account, my “big house purchases” account and my retirement savings.

Because for the record, and I will say this until the end of time, I didn’t just up and abandon my retirement savings through all of this.

Your girl does not have a work pension. Retirement savings are a non-negotiable for me.

The exact dos and don'ts you need to save a five figure down payment in just over a year.

What else are you doing to save up a down payment on a house? Do you have any more tactical tips you want to share? Leave ‘em in the comments!

Five Things To Do Before Buying a House

DesiraeLessons Learned, Lifestyle, Spending54 Comments

Five things to do before buying a house, especially if you're a first-time buyer.

Looking for a list of things to do before buying a house? I’ve got you covered based on my own personal experiences, because fun story: we just bought a house!

And yes, almost everyone guessed this already from my not-so-cryptic tweets about taking money out of my EQ Bank savings account, and about having big news, and literally every DM I sent screaming about buying a house… but whatever.

We did it!

This is probably definitely the biggest money thing that has ever happened to me, so you know I’m not just going to leave it at that. This isn’t an Instagram post of our keys, after all, and I have So Many Thoughts about this whole process – plus, I want to share how we did it, what we learned and what made the whole thing stress-free-ish and easy-ish.

Here are the five things we did before buying a house that I think made the entire process way easier, and that I would recommend to literally any other first-time buyer. Plus, these to-dos were fun. (Mostly.)

PS. This post is a 2,400-word monster, so like… grab a coffee.

We Spent Ages Creeping Open Houses

It was two years ago, almost to the day, that I first convinced bribed The Boyfriend to spend a Sunday afternoon trekking around to open houses in our suburban neighbourhood.

We had already discussed our timelines for buying, so it was entirely understood that we weren’t going to jump at a house if we liked it – especially since I think I probably had about $3,000 in my house down payment savings at the time, if that.

Honestly, even given a bit of trepidation that we would fall in love with a house and then be piles of sadness that we couldn’t buy it yet, we had so much fun.

We live in a suburb that was built up in phases, so we got to quickly identify which models of house we liked, and which ones were just never going to work for us. Tiny, closed-off rooms and cramped entryways? No thank you. Two-car garage and master bathrooms? Yes please.

(Yes, we’re luxurious monsters, but in our defence, we live in Ottawa and the real estate dreams are still alive in the suburbs here.)

It was this process, which happened over literally two years whenever I saw a few houses I thought we would both like, that helped us narrow down the areas we wanted, and what we wanted to find there. We knew which models of houses we liked, we had extensive conversations about which features of a house were must-haves for each of us, and we knew which renovations we were willing to take on – and which ones we really weren’t.

As a bonus, we also got to know the local market, and watch which houses would sit on the market at a specific price, and which ones moved quickly. Now, I’m not claiming to be some kind of expert by any stretch of the imagination, but having a general sense of what houses sell for in your neighbourhood is a very good thing – and it seriously helped us out in several ways.

Including, but definitely not limited to, forecasting our future budgets.

We Did Extensive Budgeting

Once we were on the same page about our combined must-haves list, and we had a sense of our numbers, the budget spreadsheets came out in full force.

Specifically, I wanted to make sure we were future-proofing our budget to handle things we both see in our futures in best-case and worst-case scenarios. That includes things like temporary job loss, maternity leave and the Dread Pirate Daycare if we are blessed with expensive tiny humans children.

Sure, we could afford a massive place with our dual-income, no-kids lifestyle, but my real questions were more like…

  • “Will we still be able to save 10% of our pre-tax income for retirement when we have a $1,200 daycare bill?”
  • “How can we scale back to accommodate the massive drop in income if one of us takes parental leave for a year?”
  • “What if one of us loses a job?”
  • “OK, seriously though, will I still be able to go to the pub / buy lattes guilt-free when all of this is going down, or are we going to be house paupers?”

So I ran the numbers, aka my favourite thing to do ever, and worked it out. We could afford to cover the mortgage, all of the bills, all of the insurance and all of the emergency-house-fund savings, even in our worst (and best) case scenarios. Without that reassurance, I never would have been cool taking our next step.

Asking the bank for hundreds of thousands of dollars in debt.

We Got Pre-Approved for a Mortgage

After I hit my down payment savings goal (big ups to my savings rate) I knew I wanted our next step to be getting pre-approved for a mortgage together.

See, here’s the thing: The Boyfriend owns his townhouse right now.

The plan was always to sell his place and then buy one together, for a number of different reasons. The big catch was whether the bank thought we could afford the place we wanted, because if they didn’t, we didn’t want to go through the cost and hassle of moving just to get something we weren’t totally happy with.

And OK, yes, I did just walk you through the gigantor process I used to figure out whether we could afford this much house.

And yes, The Boyfriend kept reminding me that if I, with my 50% savings rate, was convinced we could afford it, no bank in their right mind would deny us a mortgage. But I wanted to be sure, OK?

Because real talk: moving is expensive.

Like, more expensive that you can even conceptualize until you’re in it. There was no way either of us was on board to buy and sell our house again in five years, so we wanted to get the place we wanted to stay – especially since The Boyfriend already owns a home.

So on a sunny Tuesday morning, we strolled into the bank for what I think was one of my favourite dates with The Boyfriend, ever.

We were prepared with every document the bank needed, we were already on the same page when it came time to talk numbers, and the entire process was ultra-smooth. (The woman helping us even commended us on being exceptionally prepared, and told us we could teach a class on this, which is probably up there among the best compliments I’ve ever received. I was giddy. She also doesn’t know about this blog.)

They approved us for our full budget, and reassured us that we could carry The Boyfriend’s current mortgage and the new place, no problem. They even gave us the wink-wink advice that if we really were going to buy a place to stay there for a long time, we could go $10,000 to $20,000 over our current budget, no problem.

Which like, was good to know! But spoiler alert, you know we stuck with our budget.

PS. We didn’t shop around for a rate because The Boyfriend currently has a mortgage, and it has a fairly competitive rate – which we know because we did our research. The savings of switching for a slightly lower rate wouldn’t have made the penalty to get out of the current mortgage worth it, so we chose to stay with his current mortgage provider. If we were doing it from scratch, I’d definitely use a mortgage broker or at least compare my rates online.

We Used a Realtor

So with our pre-approval, and the tacit permission that we could afford to buy first, sell later, I took to my MLS-creeping with renewed vigour. Literally the day we got pre-approved, I saw a listing that I hadn’t noticed before, and showed it to The Boyfriend.

“This place looks great, eh?”
*hands over listing on my phone while we’re watching TV*
“Yeah, let’s go see it.”

So I emailed the listing realtor to ask when the open house was, because the listing was vague on dates.

If you’re thinking “Wait, why didn’t you email your realtor to setup a showing?” just wait.

This gets so much better.

The listing agent, obviously, emailed back to say we should do a private showing, so like, cool. Let’s do that. We set one up for Friday morning, aka three literal days after we got pre-approved for a mortgage.

To prepare, I sent a frantic DM to my friend Andrew, the mastermind behind Family Money Plan and my go-to on all things housing. He paid off his mortgage in six years, so he knows a thing or two about houses.

He calmed me down, and prepped me with a list of questions to ask the listing realtor so that I would be able to update my obsessive comprehensive budget forecasts for this specific house. If you want to get that list, which had the listing realtor flabbergasted that I was so prepared, you can download it here at Andrew’s newest project, The Millennial Homeowner.

(Literally my favourite thing is surprising people with how prepared I am when they don’t expect me to be. On my list of hobbies, that is really far up there.)

So we finish up the showing on Friday morning, me with my notebook full of questions about how much the utilities cost, The Boyfriend excelling in his role as skeptic (because I can’t be chill to save my life, and we 100% planned that).

We get into the car in the driveway.

Me: “I think we should buy it!”
The Boyfriend: “Me too. I guess we should call Helene.”

And that, friends, is the story of how we got a realtor.

We saw the house, liked it, knew we wanted to make an offer, and went straight to Starbucks to call our in-our-heads realtor, who did not know she was our realtor or that we were buying a house. She’s a close family friend, so we texted her that SURPRISE, we want to buy a house today and can you help us?

That was around 11AM, and by 3PM, we were back at the house doing a walk through with her. She had done up all of the paperwork for us to put in an offer, and pulled up multiple comparable listings from the past year to see what we should pay for the place. All we had to do was listen, discuss and sign, and boom: we had a conditional offer to send to the sellers.

After that, things kicked into high gear, and we really saw the value of having a realtor. She handled everything with the selling agent, texted us to let us know that the offer had been accepted, dropped everything to take a look at The Boyfriend’s townhouse and help us make a plan for listing it, and set us up with a real estate lawyer and house inspection the following week.

I’ll be honest: This past week, with fulfilling all of our conditions and getting an entire three-bedroom townhouse ready to list, has been a wee bit stressful. If we hadn’t had someone handling the logistics, details and legalities of the house purchase? I can’t even come up with a catchy phrase for how stressed out I would have been. It is beyond words.

So please allow this illustrative gif to do the talking for me.

To do before buying a house, to make sure you don't end up crying under your desk with a bottle of wine.

Since we’re hoping to only go through this process once in the next 30 years, not stressing out about learning all the details of How to Real Estate Without Screwing Yourself Over has been one of the best decisions we could have made.

If you’re looking for a great Ottawa realtor, Helene Hutchings gets my unconditional seal of approval for preventing any crying-under-my-desk-with-wine episodes.

We Had Savings

You know what’s helpful when buying a house?

Money.

In the past week alone, we’ve put down a $3,000 deposit, paid $500 for a house inspection, bought three cans of paint to fix up The Boyfriend’s townhouse for listing, and drawn up a budget for all of the things we need to pay for in the next three months before and while we close on the new place and move. That’s not counting the money we’ve spent on renos over the past two months that we did knowing this day was coming.

Gulp.

You can read all you want about closing costs, and do every calculator in the book, and prepare as much as you want, but when it comes time to add everything up in real life, you’ll be 100% less stabby if you’ve got at least some of the money ready, outside of your down payment.

PS. We’ve Had All The Talks

As a small aside, since I know a lot of you are wondering and have cautioned me about this before, we’re both going into this fully aware of the legal and financial ramifications of taking on a purchase like this before having a big party and promising to love each other forever.

Your girl wouldn’t spend hundreds of thousands of dollars without doing that, you know me.

TL;DR: Five Things To Do Before Buying a House

Because this post was a behemoth, and you’re a total champion for reading all the way through, here’s a recap of exactly what we did, and what I would do again in a heartbeat, to make buying a house as stress-free as possible.

  1. Creep open houses with reckless abandon. Seriously, it’s a really fun date, even if your date is a friend you bring along to look appropriately skeptical. Grab a coffee and go creep some houses that are open.
  2. Figure out your budget, in all scenarios. Don’t just rely on what your budget can accommodate now, unless you’re reasonably sure you won’t have major life changes in the future (and lol don’t ever be sure about that).
  3. Get pre-approved for a mortgage. If you can get all of the paperwork filed, filled out and stamp-of-bank-approval-ed before you find a place you want to buy, you’ll be able to fulfill your financing condition way faster.
  4. Use a realtor. Unless you plan on making a lot of real estate purchases, or you have the time, patience, confidence and inclination to DIY this purchase? A realtor is probably worth the money you’ll spend working with them, and if you’re just buying, you don’t even pay for them. The sellers do.
  5. Have savings. That means above and beyond your down payment, too, because that money is already spoken for by the actual house. Closing costs are no joke, friends.

Is a house in your future – or have you purchased one in the past? Let me know what helped you prepare, so that readers can learn from your experiences too! (And if you’ve written about it on your blog, for goodness sake, leave a link! More advice is a good thing when it comes to housing, IMO.)

When is $150 More Than $150?

DesiraeGifts, Lessons Learned0 Comments

As part of RBC's #Make150Count campaign, I asked: when is $150 worth more than $150?

So I talk a lot about money (duh) but today, I want to talk about a very specific amount of money.

$150.

If someone handed you $150, what would you do with it?

If you’re not that inspired by that question, try this one: What could you do with it?

That’s the question RBC has been asking young Canadians – specifically, 3,000 of them – as part of their #Make150Count campaign. Better yet, they’ve actually been putting up the $150, no strings attached, for those young people to go and act on what they could do with $150.

Pro tip: if you’re between the ages of of 16 and 25, and you’ve got a great idea about how you could make $150 count? Get in touch with RBC on Twitter, Facebook or Youtube with your idea, and they might just hook you up with the money to make it happen – the campaign is still going on!

Reading through the stories, there were a few that stuck out to me, above and beyond the general awesomeness that was inspired as part of this campaign. (Photoshoots to boost self-esteem! Seasonally-appropriate footwear for people who couldn’t afford it! The list goes on.)

While all of the stories are heartwarming and clearly generated more goodwill, happiness and positive impact in their community than the original $150 could have without their involvement, there were some projects that turned the money into literally more money, to have an even bigger impact.

You guys know I’m all about investing in yourself, and in your biz if you have one, but I’m also a huge fan of investing in your community. When you combine the money side with the unique skills and connections you have, you can create an oversized impact beyond what you might have by just giving money.

Here’s an example to help you see what I mean, based on one of my absolute favourite stories from RBC’s Make 150 Count campaign.

The coupon that could

This guy used the $150 to offset the cost of free-range, organic eggs from a vendor at his local farmer’s market. He did it by putting out a coupon, and 20 people ended up buying eggs at a reduced price.

So not only did the farmer get support for his mission to help create a sustainable, ethical source of food for his local community, that original $150 support ended up generating even more income, and got more people involved in supporting the farmer and his chickens.

Also, have you ever had locally raised, free range eggs? I’m not kidding, put that on your bucket list, they’re amazing. (And if you’ve never talked to the farmers at your local market, they’re pretty amazing too.)

Here’s one more example, just to really drive the point home (and also, I loved this story too.)

A bake sale that turned $150 into $2600

One young woman (how old do I sound right now) used the $150 to sponsor a bake sale her sorority ran for Ronald McDonald House in British Columbia. It’s a cause that’s close to their hearts and that they’re really involved in, and they get to see the impact their fundraisers have when they volunteer and host events for the families staying there.

Since she knew the money could go further than simply donating $150, she used the funds for the bake sale, and got the word out to the greater university community. When all was said and done, the bake sale raised $2600, all of which went to Ronald McDonald House – pretty cool, right?

How can you make $150 count?

I know a lot of us are busy.

OK, all of us are busy.

But if there’s one thing that this campaign reminded me of, it’s that with a little bit of ingenuity, and a little bit of time, you can leverage the dollars you have available to support your community into something that creates an even bigger impact – just by getting a little bit more involved.

So the next time you have $20 to give you a cause you support, stop to think for a second about how you might be able to make that $20 go even further. Sometimes that won’t be the case, and the money is the best way of supporting the community – but you might be able to leverage that $20 into baking ingredients that raise $40 at a bake sale, or into craft supplies for custom crafts you can sell to raise $60.

This post was brought to you by RBC, but all opinions are my own!

The Real Truth About How I Save Half My Income

DesiraeBudgets, Lessons Learned, Saving53 Comments

How I've managed to save half my income - and how you can too.

It’s one thing to set a goal to save half my income, but actually doing it is an entirely other story. Here’s a (brutally honest) look at exactly how I’ve managed to hit my savings goal over the past few months – because I’ve been consistently hitting it every month since October.

Well, OK, not in January, because January was bananas, but even then I hit a 48.5% savings rate, which is not what I’d call a failure by any means.

Related: Here’s How to Handle Not Hitting Your Money Goals

Anyways, it’s exciting, and awesome, and has been a huge giant boost to my savings goals and my timelines to hit those goals, which is why I did this whole thing in the first place.

Pro tip: It’s way easier to stick to a financial goal if you know why you’re doing it in the first place.

But I’ve also learned a lot from the year I spent not hitting my goal, and that experience helped me really pinpoint the one change that helped me consistently save half of my income.

It’s my income.

It’s not frugality, or that time I tried to make my own coffee using paper towels as filters (lol never do that) or getting rid of everything I love spending money on.

It’s definitely income.

I earn enough that 50% of my income is my comfortable spending point.

When you earn too little, it’s hard to push past a certain point without hating everything. There are so many articles – seriously, so many – that tout the benefits of having a roommate, and taking public transportation, and a zillion other frugal things. At some point, though, you can’t really frugal your way into a bonkers savings rate if your income isn’t high enough.

Don’t get me wrong, frugality and compromise on your expenses matter a lot, and both can be huge in terms of hitting your goals and living within your means. You’ll probably also want to be frugal while you’re rocking an entry-level salary, or launching a new business, just to make your monthly money situation work.

But there’s only so much you can cut out of your budget, and if you’re doing all of those things but hoping to upgrade to slightly nicer digs, or a bigger Starbucks budget, or ordering an app and a main once in a while?

That’s OK. I wanted those things too, so when my income went up, I got them.

In fact, I probably spend at least $800 more per month than I did a few years ago, because my expenses rose as I took on new commitments that I had been itching to take on, like a car and a dog and a house in the suburbs. (Yes, I’m boring af, but I like what I like.)

Those things happened when my income was high enough that I could comfortably afford them, and to this day I maintain that having laundry in my own house is way up there on my list of best-things-to-ever-happen.

It sounds like a classic case of lifestyle inflation, because it is.

But then, I got to a point where I was over-the-moon happy with my life. I love having a dog, and living with The Boyfriend in the suburbs, and my monthly budget is almost entirely on autopilot. I spend about the same amount, give or take $100, every month without even trying.

So as my income went up after that point – my comfortable spending point, a term coined by Our Next Life – so did my savings rate. I didn’t feel like I needed to spend more, so I just… didn’t. And trust me, there is a laundry list of things I intentionally don’t spend money on, like fancy clothes or going out to bars, because I’m just not about that life.

But at the end of the day, when it comes to maintaining a high savings rate, the real trick has been my salary. It’s enough to allow me to live the way I want and still save a big chunk of my income without feeling totally deprived.

That said, I had this salary before I started consistently hitting my savings goal, so it’s also not the whole story. Even with all of my planning and budget awareness, my comfortable spending point used to be around 60% of my income.

Enter, side hustles.

I have more than one stream of income.

The really big change in my ability to hit my savings rate came in October, when I consistently started earning money from my freelancing clients and my blog.

Yup, Half Banked makes a wee bit of money every month, and I write for some pretty amazing clients in the financial space on a freelance basis. (If you think we should be working together, check out the details here.)

I have a lot of Thoughts about side hustles, including the fact that I know I’m pretty lucky to be able to pursue one. I’m healthy, I’ve got oodles of formerly-free time to invest in my business, I’ve got one heck of a supportive partner who gives me tons of time and space to work, and I happen to love the work that I do.

That’s why I’m always careful when I think about pitching people on “just start a blog!” or “just monetize your skills!” It’s worked out for me, and I love it, but it’s a lot of work, and not all that easy or accessible for everyone.

But….

It is 100% the reason I’m able to hit my savings rate goals. I’d be lying if I said it wasn’t, and my savings have not been funded by frugality alone. (Lol again, remember that time I tried to make coffee without a french press? Yeah, those days are over.)

It seems disingenuous to pretend that I’m not relying on my side hustle income to help fund the things I want to do, since I 100% am. I’ll probably end up talking more about it, if only because my knowledge of how freaking helpful it is will at some point trump my unease over recommending it to everyone, since I know it’s not always an option for people to take on that kind of commitment.

But if you can? It’s something you should strongly consider, and something I wish I had looked at more closely earlier.

I have very clear plans in place for my money.

Let me be so clear on this: earning more isn’t the only answer.

I’m so grateful for both my experiences starting my career on a low salary, and my experiences trying-and-failing to hit my money goals. Both of them forced me to take a hard look at my spending, cut back on certain categories of purchases, really look at which ones I value, and track my spending to make sure I kept myself accountable.

I know a lot of people who make more than I do, by a long shot. Some of them are amazing with their money, but some of them likely have less in savings than I do, or are wildly less careful with their money than I am.

It’s nothing against them, since no one is born knowing how to handle their money.

But whether you’re making $11 an hour, or $1000 an hour, it’s incredibly easy to let money slip away without really knowing where it went, or using it intentionally to do the things you want to do. In fact, I’d argue that’s pretty much the default money setting for a lot of us, given my personal experiences!

Having a plan for your money is so important, and it’s why my side hustle money hasn’t gone straight to PetSmart to upgrade all of my dog’s toys and gear. (You guys know how I feel about that dog.)

Nope, it’s (almost) all going to one of three places.

  • 25% goes into a savings account to pay taxes on it.
  • 20% goes into a savings account to fund investing back into Half Banked.
  • 50% goes to my highest-priority savings goal.
  • And yes, 5% stays in my account to fund my latte habit.

I figured out what that highest-priority goal was using the Bankroll Your Goals system, which you can find out more about right here. And in case you’re like ugh, this is just another PDF download, it’s also exactly what I used to rearrange my savings goals when I finished my house downpayment savings goal in January.

That’s right, I’ve got a new top savings goal!

That’s right, it’s top secret (just for now you guys, you know I can’t keep secrets to save my life.) But it’s getting funded like crazy, thanks to my side hustle, and I’ll be able to hit it in no time.

And yes, I spend less than I make.

This probably doesn’t even need to be said, because the title of the article was pretty clear that I spend about 50% less than I make in any given month.

But getting into this habit isn’t something new, and it’s definitely not something I’d want to be starting on my current income if I hadn’t had plenty of practice.

I started saving money automatically as soon as I had a steady paycheque, and while it wasn’t a ton of money, it was something. If you have dreams of quitting your job to travel the world, or buying a house, or taking a year off to have kids, then your very first step is to start spending less than you make, whatever that looks like for you.

You can start with as little money as you want – $10 a month? $20? – but here’s what I want you to do rightnow. Go set up an automatic contribution from your chequing account to one of your savings accounts for that amount of money, and have it come out of your account the next time you get paid. (If you’re self-employed, send the money to your savings right now instead!)

You can always pull the money back out if you end up needing it, but here’s the real magic: Once it’s in your savings account, and it’s in there to help you fund whatever your big dream is? You’ll probably do whatever you can to make sure it stays there. Over time, that monthly contribution will grow into something pretty impressive.

So how can you save half of your income?

Here’s the Cliff Notes, for those of you who might have skimmed to the end. I got you fam.

  • Figure out your comfortable spending point, ideally by tracking your spending. How much feels like “enough” to have the life you want? Stick to that spending level as your income rises.
  • If it’s an option for you, look into building other streams of income. They can be a huge boost to your savings, and help you hit your goals way faster – but they are a ton of work, so they might not be a fit for everyone.
  • Put a plan in place for any “extra” money that comes your way. Whether it’s a raise, or a bonus, or side hustle income, you should know how much of it is going to each one of your goals – and yes, that includes spending.
  • Start spending less than you make, even by an extra $20 or $50 a month. Save what you can by setting up automatic contributions, and if you don’t miss that amount, set up another one to save even more.

That’s really it. And yes, a lot of these things take time, and might not change overnight – but when I look back at the past year and a half, they really are the big things that got me to the point where I could save half of my income.

Do you have a lofty savings goal you’re working towards – and a big “why” behind why you’re saving the money? Tell me about it in the comments – and let me know what steps you’re taking to make it happen! You might just inspire someone else to do the same.

How to Spend (or Save!) Your Tax Refund for Maximum Happiness

DesiraeLessons Learned, Saving, Spending24 Comments

Hundreds – or thousands! – of dollars is about to hit the bank accounts of tax-filers everywhere over the next two months. That’s right, it’s tax return season – and it’s time to make sure that you spend (or save) your tax refund for maximum happiness.

Pre-S: Still haven’t filed? Check out Simpletax, the tool I use + love to file my taxes.

I know, taxes and happiness don’t usually go hand in hand, right? But they totally can, especially when you’ve got some fresh cash to play with in your account. Thanks, taxes!

The tricky thing is, there isn’t one guaranteed way to make sure that money will make everyone happy. (And even if there was, you know the internet would find a way to argue about it anyways. You know we would.)

Your tax return plan for maximum happiness might look similar to mine, or it might be wildly different. Luckily, there are four big strategies that can up your happiness quotient this tax season, based entirely on the things that matter most to you and your money right now.

And yes, these things can totally change from year to year. As you’ll soon see, they definitely have for me, and will continue to in the future!

The “Duh”: Save it for retirement

In case you’re not super-well versed on how tax-deferred accounts work (that’s the RRSP in Canada, or the 401k and the Traditional IRA in the States), there is actually a reason every personal finance article ever says that the only “real” way to handle your tax return is to toss it back into your retirement savings account.

Related: The Millennial’s Guide to the RRSP

It’s because for most of us, a big huge chunk of our annual returns comes ℅ our contributions to tax-deferred savings accounts.

Basically, at their core, these accounts are a way to not pay tax now, and pay the taxes later when we’re done earning money.

When you contribute today, the government gives you back the taxes you paid on that money. Since you’ll have to pay taxes on the money when you take it out, you only really get the full benefit of the account if you toss those current-day taxes right back in to let them compound for the 35 years you probably have until you retire.

So if “doing money by the book” is your jam, you should get plenty of happiness out of sending your money right back where it belongs, in an Official Sense. Hit up that RRSP, 401k or Traditional IRA and watch your retirement savings grow, my friend.

The “Awww”: Send some to charity

This is by no means necessary, but if you’re suddenly flush with tax-return cash, one of the ways you can put it to good use is to send a bit of it to causes you care about.

Personally speaking, this became a lot easier for me when I sat down to define, in very clear terms, which causes that actually included. For a long time, I felt like I didn’t have a charity “thing.” I’d hop on any fundraising bandwagon, donate to just about anything that caught my eye, but nothing ever really stuck.

Until dogs.

These days, I know exactly which causes I will get involved in, from offering my time, to my cupcakes, to (some of) my tax return dollars. That kind of clarity has been hugely helpful in terms of making giving a consistent part of my budget, and an inconsistent delight when extra cash comes my way.

If you know there’s a cause that holds a special place in your heart? Sharing the tax-season love is a good way to spend that return, and earn yourself a major happiness boost in the process.

The “Yes!”: Accelerate your progress towards a goal

If I’m being perfectly honest – and why wouldn’t I, after all that I’ve admitted about doing wrong with my emergency fund, my car insurance and my credit cards – I haven’t deposited a single cent of my tax refund into my RRSP.

And yes, I got the bulk of my tax returns for the past few years thanks to my RRSP contributions.

For the past two years, my tax return has been 100% dedicated to helping me top up and accelerate my house downpayment savings account, which was a huge help as I tried to save $16,000 in just over a year. (Lol wut.)

If you have an aggressive savings goal, consider this a free pass to send your tax return directly to your goal’s dedicated savings account.

Related: The Case for Having Multiple Savings Accounts

If anyone calls you out on not doing the back-into-your-tax-deferred-accounts thing with it, here’s your response.

“I’m giving myself a bit of wiggle room so that I can hit my goal, on my timeline, without even thinking about raiding my retirement savings to help me get there. Because that would be way worse.

If they’re enough of a nerd to be scolding you about how you handle your retirement accounts, they’ll totally concede, because withdrawing from a tax-deferred account comes with a tax bill you would not believe.

The “Treat Yo’self”: Spend a portion of it, guilt-free

Even before I had done the work to outline what my goals were, or when I wanted to achieve them by, I was pretty good with handling my tax return. I’d usually put about 90% of it back into some kind of savings account, even if I didn’t have much direction for it.

Want to get direction with your savings goals, no matter what they are? Grab your copy of the Bankroll Your Goals worksheet ASAP.

But notice how I said 90%, not 100%?

Yeah. Let’s talk about that other 10%.

When I first started handling my own taxes, I was rocking a decidedly new-grad salary, and with that, I had oodles and oodles of tuition tax credits to claim. Could I have saved them for higher-earning years and gotten more tax back?

Probably, yeah. I’m no tax expert.

Did I claim as many as I could, and get literal thousands of dollars back when I filed my taxes?

Oh heck yeah I did.

My tax return that first year ended up being more than I took home in a month by a sizeable margin. I was pretty chill about it considering, but even 10% of that amount of money seemed like the height of luxury.

So after I had filed away 90% of my tax-season windfall, I spent the rest of that money like it was going out of style.

And I would encourage anyone to do the same.

If you’re saving the bulk of your tax return, and you’re living well within your means regardless of your salary, and you think a few hundred dollars could finally get you that insert-thing-you’ve-wanted-forever-here? Go get it. Or do it, or see it, or eat it, or whatever your thing you want to spend money on is.

I don’t even think I have to explain to you how that’ll score you a happiness boost, right?

So let’s recap: If you’re looking for a way to handle your tax return that will give you a big happiness boost, you’ve got a huge range of options, and some of them will be a better fit for you than others. You could play it by the book, give some of it away, use it to top up your goals, or spend a chunk of it guilt-free.

And those are only four of them! I’d love to hear how else you guys are considering using your refund this year, or which uses have been particularly happiness-inducing in the past!

PS. To get that return in the first place, you need to file your taxes. If you’re in Canada, I seriously can’t say enough good things about Simpletax, which is how I’ve filed for the past four years.

How to File Your Taxes Online in Canada

DesiraeLessons Learned, Resources, Tools8 Comments

How to file your Canadian taxes online.

I distinctly remember the first time I had to file my taxes online by myself.

I’d been graduated from university for almost a year at that point, and was working full-time. My mom, who rightly saw that I was (almost) a fully-functioning adult, was like, “Here are all your tax documents, and also my accountant isn’t going to file your taxes for you this year.”

Say. What.

I went straight to Google, since that’s how I make all of my important life choices (literally, it’s how I chose my robo-advisor and everything) and typed in “how do I file my taxes online in Canada”.

Out of all of the results, I picked one called SimpleTax, because it seemed like a reassuring name for a tax company.

You’re going to make this simple for me? Cool, I’m in, let’s do this thing.

So we did that thing.

And I had such a great, simple, easy experience that I’ve been filing my taxes with them ever since. Bonus: all of those past returns are literally at my fingertips thanks to their account history. I can download them anytime, which is so much easier than unearthing my tax shoebox.

Which no, I don’t recommend as a filing system.

To pay the easy-tax-filing forward, I’ve got everything you’ll need to know to file your taxes online in Canada right here. Because dear every millennial who’s currently freaking out about filing their taxes for the first time: it’s not that hard, I promise.

Step One: Recognize that you actually have pretty simple taxes

If you’re a millennial (like me!) and have a full-time job (like me!) and your financial life isn’t incredibly complicated?

Your taxes are going to be so easy.

Trust me on this, if you’re not full-time self-employed, if you don’t have a bonkers amount of taxable investment income, and if you have no dependents? You have all of the skills and knowledge you need to manage to file your own taxes.

Step Two: Find all of your documents.

Now, take this advice with a grain of salt, because I am the human who gets 80% through filing her taxes and is like “Shit, I totally don’t have ___________.”

There’s always something.

However, if you want to be extra-prepared, and knock out your taxes as fast as you can, you’ll want to get all of your key documents together ahead of time. Since I’m not a tax expert, I’ll leave making those lists to the tax pros, and you can consult this excellent PDF from Simpletax that lists everything you could possibly need to file your taxes.

And again, if your tax situation is pretty straightforward, you won’t even need half of those.

Step Three: Actually file your taxes online.

If you’ve ever seen a tax form, you know that – try as they might – they’re not especially intuitive or simple to use. That’s where Simpletax really shines. The interface is basically what you’d expect of a slick startup, except for taxes.

They walk you through everything, and all you need to do to find the forms you need to fill out? Search for them.

Here's how to file your taxes online in Canada, using a super-simple tool.

Seriously, this little search box is the tax assistant you’ve always wanted. From T5s to public transit to reporting your side hustle income, Simpletax has got you covered.

I walked through how you can file a simple, So-Millennial tax return in under ten minutes in this video, and literally three minutes of that is me being a goof on camera. If you think I’m exaggerating, or you want to see exactly how to file your T4, your charitable donations, your public transit receipts and your RRSP contributions, check it out.


PS. Yup, I totally wear glasses. Not a prop. (Lol can you imagine how awkward I would be with props though.)

Step Four: Sign up for MyAccount on the CRA website.

If you’re going for the extra credit, and you want to make life easier for future-you, signing up for MyAccount with the CRA is an amazing idea. It lets you do stuff like get your tax return direct-deposited into your bank account, and find important details about your taxes online for the next time you file.

Since I feel like everyone who reads this is all about the online tools, you should all probably go sign up ASAP. I mean, what else do we pay taxes for if not excellent online government services, right?

And I guess the in-person stuff is nice too. Love ya, healthcare.

Step Five: Pour yourself a drink, ’cause you’re done.

What?! Yeah. That’s literally it.

I remember the first time I managed to file my taxes by myself, and I’m not joking when I say I ran into my roommate’s room and made him high-five me. It’s one of those things that feels intimidating before you do it, but once you dive in, you realize it’s well within your skill level to file a tax return – which in turn makes you feel like a total money champion.

These days, and yes this is the nerdiest thing I’ve ever said, doing my taxes is actually something I look forward to every year. It’s a great way to take a look back on your money from the past year, and it’s basically just a puzzle with numbers. Who doesn’t love puzzles, right?

All of those warm, puzzle-loving feelings are channeled into my Simpletax account every year, so if you’re staring down tax season without an easy way to file? I got you fam. Well, Simpletax has got you, anyways, so what are you waiting for?

Get those taxes started!

Actual PS. This post was written in partnership with Simpletax, but all opinions are my own – as are the past four years of tax returns I’ve filed with them!