This new Canadian makes $35,000 as a hospital cleaner. He wants an emergency fund in case rent goes up. How can he start?

Millennial Money is a weekly submission-based series that provides financial advice to millennials. Read the full series here.

At 39, Luis has finally landed a full-time job after moving to Toronto from the Philippines five years ago.

“It’s been a long time coming, but finally something opened up for me,” said Luis, who earns $35,000 a year as a hospital cleaner.

Luis lives with a roommate in a basement apartment in Regent Park, splitting the $1,600 rent.

When Luis moved to Canada, he discovered the cost of living was higher here. It’s why he’s extremely frugal and lives “humbly,” trying to save money by eating all meals at home or preparing food for work. “I only buy things on sale,” Luis said.

Thankfully, his job at the hospital comes with benefits, and living in Regent Park allows him to walk to work so he doesn’t need to pay transportation costs.

However, I constantly worry about rent increases.

“I am afraid our building may sell or I may be in a situation where rent is very expensive,” Luis said. “Right now I cut costs because I can walk to work and don’t need to take too much transit. I’m a bit worried, but I aim to save at least $1,000 or so a month.”

On rare occasions, Luis will meet up on the weekends with friends he met through an immigration sponsorship network, having potlucks or hanging out at the mall.

“I go window shopping at the Eaton Center with my friends. That doesn’t cost money as I walk there. Maybe we’ll get Popeyes or pizza but usually try to spend as little money (as possible) as I want to save,” Luis added.

So what are his goals? To build a sense of financial security. With his frugal attitude, Luis has saved around $10,000 and paid off all debts. “I want to continue to have a fund for emergencies,” he said.

With this in mind, we asked Luis to share a week of spending to get a better idea of ​​his situation.

the expert: Jason Heath, managing director at Objective Financial Partners Inc.

Luis is a newcomer to Canada, having moved here from the Philippines about five years ago. He has had to cut a lot of corners just to make ends meet. That is the reality for a lot of people in the Greater Toronto Area earning minimum wage or close to it.

His playbook is a good one for those in a similar situation.

His rent is modest, he lives close to work so he can walk there, he meal preps and eats all his meals at home, and he minimizes his discretionary spending. He is currently saving $1,000 per month and has a $10,000 nest egg accumulated.

His concern about having to move and pay higher rent is valid. If his landlord sells and he has to move, his rent from him could certainly be higher to go elsewhere. But now that he has a sizable savings account, he may want to consider investments with a higher potential return.

He should open a TFSA account for his saving and investing. Assuming he moved here in 2017 and has never contributed to a TFSA, he would have $35,000 of TFSA room based on his years of residence in Canada. He could keep some of the funds in a savings account or similar low-risk investment, and allocate some to higher risk but higher return options like stocks.

Over the long run, he may be able to earn a six to eight per cent return from stocks depending on the fees for the investments he chooses. From year to year, stocks can be up or down, but stocks generally go up about two-thirds of the time.

Luis may not be able to buy real estate in Toronto anytime soon but, if he saves diligently and invests prudently, he can still be a wealthy renter.

He is wise to worry about the risk of higher expenses like rent increases but should also consider the risk of lower income.

The employment insurance system provides a degree of protection against job loss, but disability insurance is the best way to insure against a disability causing a decreased income.

If he has disability coverage at work, he should check it out to see if there are any options for his coverage level like different income replacement rates.

Results: I have spent less. Spending in Week 1: $108.50 Spending in Week 2: $88

How he thinks he did: “Just like every other week,” Luis said.

With modest expenses, Luis is proud of his spending. “It’s not a splurge, but I still make delicious food and am happy about my life.”

Takeaways: The major takeaway for Luis is the sense of affirmation knowing that he’s doing the right thing.

“A wealthy renter? I never looked at it like that, ”Luis said, adding that he always thought that his lower income put him in a dangerous place. “I want to recognize my accomplishments, including the $10,000 I saved, and so that was great to see.”

In terms of worries around rising rent, Luis is hoping to quickly open a TFSA so he can invest “even a little,” which can help build up more cash flow if he needs it in an emergency.

“Just knowing about those bank accounts is so helpful! I do want to make sure I am using my savings wisely.”

Another thing Luis will also do now is check his coverage plan at work. “I work at the hospital and generally I think this coverage is quite good,” he said.

“I always have to remind myself that I do have benefits and insurance, and I don’t need to feel that worried.”