Meet a guy who's addicted to saving.
He's a 26-year-old Ottawa resident by the name of Rob Nettleton and he's an example not just to his fellow members of Generation Y, but to anyone who wants to save money but can't figure out how. Even if you're not as disciplined as he is, you can still learn from the story of how he graduated with $18,000 in debt and now has savings of roughly $32,000.
"Some people say I'm older than my age when it comes to saving," Mr. Nettleton, a writer at a communications firm, said in an interview. "It's always been something that has been very important to me because I come from a lower-income family. I watched my parents struggle with debt and I told myself it was something I would never allow myself to do."
Let's look at Mr. Nettleton's rules for successful saving. First, he avoids waiting until the end of the month to pay all his bills. "A lot of people that I know struggle with the concept of 'Where did my money go?' when bill-paying time comes around," he said.
His strategy is to pay his bills gradually, rather than all at once. He puts half the money needed to cover monthly bills such as rent, cellphone and Internet into a savings account after receiving his first paycheque of the month. He then uses his second monthly paycheque to cover the remaining amount of his bills.
A second rule is to limit the money he spends on eating at restaurants and drinking in bars. Gen Y is known to have a taste for this kind of lifestyle, but Mr. Nettleton avoids it as much as possible. He brings his lunch to work every day except Friday, when he treats himself to a sandwich at a coffee shop near his office.
When he socializes at a restaurant or bar, he tries to eat beforehand and order just a single drink. "Nine times out of 10, I'll have people over to my place or I'll go over to their place. If we're drinking, I'll pick up a couple of tallboys at the liquor store – that's $9, whereas I'm paying $7 or $8 for a glass of something at a restaurant."
Another rule is to make saving and investing automatic. With the help of a financial planner, he set up a program that currently directs $200 into his tax-free savings account every month, and another $200 into his registered retirement savings plan. Still another $200 or so goes into his emergency fund. "The timing of that money coming out is very strategic," he said. "If you get it taken out the day you get paid, you'll never know it's gone."
One more rule is to live modestly. He shares an apartment in downtown Ottawa with a roommate and spends little on technology and gadgets. Mr. Nettleton has limited himself to a relatively recent iPhone 5 and a MacBook that's four or five years old.
Some frugal people come across as tediously self-righteous, but not Mr. Nettleton. "It's not something I'm smug about at all," he said of his savings regimen. "It's become somewhat of an addiction for me." Recognizing this, he pushed himself to spend money this summer on a trip to Norway, a long-time dream. He economized by using Airbnb to rent a room in accommodations where he was able to use a kitchen and eat his meals in.
One other exception to his otherwise uncompromising saving routine is his daily visit to a coffee shop. "I can't live in a world where I can't have my daily coffee," he jokes. "Giving up coffee would be giving up a piece of happiness that I really cherish each day."
At some point, Mr. Nettleton would like to buy a house. He figures that his TFSA will be the basis of his down payment and wants to leave his RRSP for retirement rather than dipping into it using the Home Buyers' Plan.
Longer term, he wants to retire and live off the income from his investments. He says he's discussed this with his financial planner and the goal looks reachable if he keeps saving aggressively as he is now for the next 40 or so years. Owning a house and having kids may complicate things, but this savings addict is off to a great start.
Meet Rob Nettleton
Parents: Dad a retired factory worker, mom works as a cook in a diner.
Education: Journalism degree from Carleton and a diploma in marketing and professional writing from Algonquin College.
Job: Writer for an Ottawa communications firm.
Previous work history: Multiple part-time jobs through college and university, including student union president and retail positions in furniture, grocery and bookstores.
Home: Shares an apartment in downtown Ottawa.
Savings strategy: Put away about 20 per cent of each paycheque.
Total savings: Approximately $32,000.