Are You Spending Too Much On Housing? | Refresh Financial
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Are You Spending Too Much On Housing?

 Are You Spending Too Much On Housing?

If you're in the market to purchase your first home, you might be wondering what percentage of your income should be going towards your housing costs. Traditional thinking is around the 25% mark, with some experts suggesting anywhere below 30%. The problem with these figures is that in some cities in Canada, it’s almost impossible unless you're making a mint. So, what is a healthy percentage in Canada and are you spending too much on housing?

City By City

- In more expensive cities like Toronto and Vancouver, spending 40% of your income towards housing costs is about as good as you can get with an average salary. If this figure sounds scary to you, it's because it is. 40% of your income doesn't leave you a whole lot of wiggle room. You still need to pay your bills, feed and clothe yourself, cover transportation costs, and finally try to save for the future and enjoy your life. Something's gotta give, right?

So, how do we make that 40% figure seem less scary? We find ways to cut down on other areas of life:

Transportation

- Try to focus your home search in an area close to work, school and anywhere else you have to go regularly. This way, you can get rid of your car altogether and save on insurance, gas, maintenance. If you can't part ways with your vehicle, you can at least use it less by walking or taking public transportation to work.

Food

- Cut back on eating out, and buy cheaper groceries. You'd be amazed how much cutting back on your food costs can actually save you. It's also surprising how much you might enjoy lower-cost food. It'll require some creativity in the kitchen, but luckily we have all the recipes in the world at our fingertips.

Entertainment

- You might be used to a life of hitting the clubs at night and having a pint with your buddies at the local pub after work every day, but it may not be something you can afford as often anymore. If you want to own a place in the city of your choice, you're going to have to make sacrifices, and the first place you can cut back is the area of entertainment.

Clothing

- You may have to reconsider splurging on that designer suit once you're deep into your mortgage payments. Canada has a great thrift culture, and you can grab just about anything second-hand with minimal effort.

Cable Television

- Scrap your cable television subscription. You can stream just about everything online now. For the few things that you can't stream, head over to your friend's house. Most cable users nowadays use their cable subscription for a minuscule amount of television consumption, getting the majority of their entertainment from streaming services like Netflix or Amazon Prime.

What are your priorities? Do you want to own your own place or still be able to have a sushi dinner every week? Is hitting the pub with your friends whenever you want more important than becoming a homeowner? These are the questions you need to ask yourself.

What would you choose to cut back on to be able to afford your first home? Let us know in the comments!

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I’ve done pay day loans in the past but didn’t know a whole lot about credit until recently. So I checked into my credit score. I was very disappointed to find that I had a 0 credit score as I have never had or needed any credit cards or lines of credit. I knew I wanted to buy the house I live in so I knew work was needed, but I never thought it would be as easy as purchasing REFRESH!!! I bought it in June of this year, waited or 2 months and was approved for my first credit card. I was so excited. It gets better!!! Then I waited 5 months, and would you believe it. Only 5 months after purchasing refresh my credit score was strong enough to finally get approved for my first brand new car with no down payment, low biweekly payments, no cosigner, and no car trade in. My bank also tells me if everything stays good I will own my home within a year. After years of thinking there was no hope I am only months away from owning my home. THANKS REFRESH!!!! Please share this story with everyone you can! ”

Emily, Truro, NS