One of the informal rules of personal finance is that the cost of rent is supposed to eat up no more than 30 per cent of your gross monthly income. In Toronto, 50 per cent is a more realistic threshold.
Rents are high and rising fast in Toronto. LowestRates.ca recently updated its look at how much it costs young adults to live in the city and rent for a single person came in at $1,672 per month on average, up more than $300 from a year ago. Average rent was calculated using figures for one-bedroom apartments and condos, bachelor apartments and two-bedroom condos shared with a roommate.
Other costs considered in the analysis included phone and internet, down slightly in the past year, and transportation, which was flat. Overall, the cost of living for a young person came in at $2,740 per month, or $32,885 a year. That’s almost $400 a month, or 17 per cent, more than the previous year.
On a pre-tax basis, you’d need to earn at least $40,583 to make enough to live a young person’s typical life in Toronto. No, that doesn’t include saving money for retirement or for a house down payment. The LowestRates.ca analysis figures you’d need to gross roughly $50,000 a year to meet expenses and save aggressively.
All of this suggests a new theme in millennial personal finance: Can you find a job or arrange to tele-commute from a cheaper city than Toronto or Vancouver?
PERSONAL FINANCE COLUMNIST
The Globe and Mail, August 1, 2018