Going to be making double the money, what to do with it

[tsomnlie]

I 24M will be going from ~32k (minimum wage) to ~74k.

I recently secured a government job as a IT-02 and will be making more money. I’m just wondering what is the best course of action for it. I’m lucky enough to be living at home still without rent.

I invest 400$/month into a TFSA managed by Wealthsimple and it’s currently at 15k (14 k net deposit and 6.84% return) another 400$ goes to a savings account to build up a emergency fund. I have around 800$ in monthly expenses. So that leaves me with roughly 400 in spending money a month.

I have no debt at all.

Im just curious what to do with the surplus of money? Do I contribute more to my TFSA or do I open a FHSA since the plan is to purchase a home?

Edit: From Ottawa, Ontario area (figured a general location would help for COL)

Edit 2: correct it’s not 52k it’s 74k I guess looked at after tax salary

 

[havard]

@tsomnlie You will be surprised how much you lose to deductions (pension, union dues, LTD, taxes). You’ll probably only take home about 65% of what you earn. Get your first few paycheques under your belt before making any decisions, because you may be taking home less than you think.

 

[snakecatch99]

@havard You are 100% correct. My son started a job as a IT 02 this fall and his take home is just under $1,800 net vs $2,884 gros.

 

[sharolhelm]

@snakecatch99 I can confirm, I make about $1,800 take home as an IT-02

Edit: $1,800 bi-weekly

 

[cla3114]

@snakecatch99 Man we are getting fucking robbed lmao. I don't even check my gross anymore cause it legitimately causes me physical pain.

 

[wow]

@cla3114 You think you’d feel robbed when you hit your 35 years with the top tier pension plan?

 

[sportfishingjunkie]

@wow Or until you need major (or even minor) medical care and don't have to spend what would be $100s of thousands in the States for people without coverage...

 

[jackwoo]

@sportfishingjunkie Can attest to this. One small surgery and a couple stitches. 2 days in the hospital. $130,000 USD

 

[cla3114]

@sportfishingjunkie What medical care?

 

[cla3114]

@wow Oh man I should have been more clear. I was thinking just about income taxes. Have no idea how those other deductions work since I've never worked in government.

 

[k1mmico]

@cla3114 Federal employees pay almost 10% of salary towards their pension. There are also deductions for union dues and a supplementary death benefit to consider, in addition to the usual CPP, EI, and tax deductions.

 

[keeley120]

@k1mmico But the small amount we pay to death benefit means we have double salary tax free as defacto life insurance. And the unions have access to cheap life insurance too. Not cheap if you're young, but way cheaper if you're older. I plan to switch away from TD when the premiums are similar.

Plus the pension is quite good. And it's not like the employer is going to go out of business any time soon, and if they did, we'd have bigger problems.

All in all I feel like the deductions are worth it for me.

 

[k1mmico]

@keeley120 Yeah, I agree. I'm not complaining at all - I'm very happy with our overall compensation package. A lot of people don't realize how much we contribute to our pensions, though.

I'm lucky enough to have the pre-2013 pension, as well. I'll have 30 years of service at age 55 and can comfortably retire at that point. It's a great deal.

 

[keeley120]

@k1mmico I'm newer, but I can leave at 60 with 32.5 years of service myself. My wife has a provincial pension, she can leave at 55, and I'll be 57.5 with 30 years. So I could live off savings if I'm lucky to do so. We'll see how things look and if I'm ready or not then.

 

[jc]

@wow Yes because CPP is a very small part of what we are paying.

Income tax
Sales tax
Property transfer tax
Property tax
Bag fees
Municipal hospitality tax
Federal luxury tax
Provincial luxury tax
Sin taxes
Carbon taxes
Etc etc etc.

 

[angelbaby1977]

@jc Government union pension is a decent bit more on top of CPP lol

 

[wow]

@jc I’m referring to his Federal Gov pension. CPP is something else he would get too when he retires

 

[hasina]

@snakecatch99 Yeah you get into that 30% tax bracket plus deductions very fast.