Millennial Money is a weekly submission-based series that provides financial advice to millennials. Read the full series here.
At 26, Meesha has spent the majority of her life on the internet. Because of her use of apps like Instagram and TikTok, she’s become an influencer in the country. Between partnership deals she has and work as a part-time server, she earns around $4,000 a month.
But now she’s wondering, is this influencer a sustainable lifestyle?
“A lot of my work is being sent stuff and paid to promote it on my account. But that is n’t steady, ”Meesha said, adding that her income fluctuates quite a bit. “It’s why I picked up part-time serving jobs.”
Living in a popular area of the city, Meesha said she got lucky finding a rent-controlled unit five years ago. “I am lucky to live alone in Toronto for $1,200 rent,” she said.
As an influencer, her schedule is constantly changing, but she tries to work at the restaurant at least three times a week. As a result, she has a lot of freedom to make most meals at home.
“On days off I might get lunch or a coffee. Also some nights I may go out with friends, depending on how I feel. Usually I try to keep my bar spend to $50 a night or less,” Meesha added.
With the unsteady income, Meesha now wants to figure out her future. That includes figuring out if she wants to do more post-secondary school while still carrying $10,000 in student debt from her general arts degree.
“I’ve been slowly paying off OSAP, but I want to save enough to go back to school or at least take a two-year course to get a more stable job,” she said. “I can try to keep relying on my influencer work, but at the moment it isn’t enough to sustain my lifestyle.”
In terms of what to go back to school for, she has heard from friends that anything in digital or web design might be a good option, but those programs run in the tens of thousands of dollars.
“I only have around $500 saved up at any time, and with (influencer) payments I might be waiting months for pay,” she added.
We asked her to share a week of spending to get a better idea of her finances.
the expert: Jason Heath, managing director at Objective Financial Partners Inc. examines Meesha’s situation
Meesha balances her variable income as an influencer with a part-time gig as a server. Budgeting can be challenging for anyone who is self-employed and does not receive a regular pay check. That makes it important to save when you have a good month so you can make up for a slow month with those savings. It can be tempting to spend when you have money in the bank, so for some, setting up separate accounts can be a helpful technique.
If Meesha moves money into a separate account in a good month, that may help her avoid the risk of spending the cash. Because she is self-employed, she also needs to plan for the income tax that she will have to pay when she files her tax return. Once a taxpayer owes more than $3,000 of tax in two consecutive years, the Canada Revenue Agency will also start asking them to pay quarterly tax facilities as a prepayment of tax for the coming year. So, having a tax account could also help Meesha with her budgeting of her.
She should also be mindful of the $30,000 threshold for sales tax. Once you have more than $30,000 of annual self-employment income (over four consecutive calendar quarters), you need to register for, charge, and remit GST/HST.
Meesha is not carrying any credit card debt and is diligently paying down what remains of her $10,000 student loan, so that suggests she is living within her means. She admits to splurge on clothing sometimes, but being an influencer who promotes brands, I suppose that she comes with the territory.
A lot of Meesha’s budget goes to clothes, nails and bars, but on the flip side, she walks most places so does not have a car or spend much on transit or ride-sharing. We all have our indulgences, so it is your total spending that matters more than how you spend your money.
If she really wants to go back to school, Meesha may need to have a period where she works a bit more and spends a bit less to build up some savings. It could be a good tradeoff to build a career while she tries to maintain or build her influencer status. A TFSA is probably her best saving tool with a modest income. She should also be sure she understands the self-employment expenses that are tax deductible against her influencer income, including some of her rent, accounting fees, and possibly some of her meals and entertainment.
Her $1,200 monthly rent living alone is pretty good in Toronto, and she acknowledges that she is lucky. If for some reason she had to move, her rent could increase, so that is another reason to save for a rainy day.
Results: She spent more. Spending in week 1: $525 Spending in week 2: $1,964
How she thinks she did: “I am absolutely feeling relieved,” Meesha said. “It’s great to see that even though I feel like I’m in a state of chaos, I haven’t been going overboard.”
Seeing Heath’s advice regarding indulgences, she added that as an influencer clothing and nail purchases are part of her work. “It sounds silly to anyone that doesn’t know, but we basically work online and so it’s a big part of the job,” she said.
But while she is thankful for that opportunity, she also believes something more stable could be better for her financial future.
“Since work is so unsteady, sometimes I forget when and where payments come in and go,” she said. It’s why she’s going to take Heath’s advice, along with a huge leap of faith, to set up an account just to save for school.
“Going back would just give me the additional option, whether it may be a six-month crash course or school for two years,” she added.
Meesha is now looking into opening a TFSA as well to make sure that her money can keep growing.
“It’s amazing that we don’t learn these basics in school. Hope that it’ll change for the future.”
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