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How one couple lives on 55% of their income

Tangerine (Advertorial) logo Tangerine (Advertorial) 2017-06-12

Tara and Peter are newlyweds of one-and-a-half years. He's an engineer and she's an accounting student and bookkeeper. They've always been open about money, which has led to great financial success and the ability to live on 55% of their income each year.

Getting off to a good start

Tara and Peter started talking about money 7-8 months into dating. They felt it was a crucial part of their relationship, and it allowed them to move in together after dating for only 9 months. At the time, both of their incomes were relatively similar, since they were both students.

They rented a place that was affordable, and they split their expenses 50/50. Over the years their money talks have included what the other is comfortable with when it comes to picking a place to live, debt, credit cards and balancing the budget. Their views on money are incredibly similar, and they're both extremely uncomfortable with debt.

Getting serious about saving

After about a year of living together, they decided to start combining finances. Peter had just graduated with a masters degree and started making significantly more money. The couple decided to open a joint bank account for living expenses, with each person contributing to the account based on the same proportion of their income. After 5 years together, they're still doing this. The leftover money they have goes into personal savings, their discretionary spending accounts, and their joint savings.

Why do it?

Once Peter graduated in 2011, they continued to live a frugal life and were saving about 30% of their income each month. By 2014 they had committed to living on 55% of their income. When I asked them why they decided to start living like this, Tara responded that they never intended to do so, but rather fell into it and found a number that made sense. They didn't experience lifestyle inflation when Peter graduated, because Tara was still a student. As a result, they've continued to live a relatively frugal life. Once they realized they were living off so little, they kept pushing themselves to save more. In 2015, they lived on 40% of their income and socked the rest away into long-term savings.

Tara and Peter built their savings habits early on — even when they were in school, they were contributing to their RRSPs (called RSPs at Tangerine). As students, they tried to save as much of their income as they could, sometimes 10-20% depending on the month. They learned to live on less and be mindful of how much things were costing them. At one point they purchased a new vehicle together and financed it. The payments were expensive, as was the maintenance, and they became uncomfortable with how much the vehicle was costing them. So they did something not too many people would do: they sold it.

Determining what's important

Over the years they've determined what's important to them. They didn't want to demolish their RRSPs to buy a house, so they committed to saving more for a down payment and supplementing it with a portion coming from their RRSPs. Tara and Peter own a rental property in Edmonton and are in the market for a second property in Calgary.

“It's always been about living within our means," Tara said. “We don't carry a balance on our credit card, we love buying things second hand on Kijiji®, and we keep our house simple and minimal. We only buy what we need and spend where it counts." Sure, Tara and Peter have more money now compared to when they were students. They may drink nicer wines and go on better vacations, but their day-to-day lives have remained relatively unchanged.

In the short term, they are looking to buy a second property and enjoy vacations once per year. Long term, they plan to have kids, start their own businesses and one day enjoy a great retirement.

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