Step 1: Know Your Monthly Expense

I define financial freedom as not having to wake up for work and still be able to afford my basic daily expense. If I have extra money left over, I can go travel but that’s not included in my basic daily expense.

So step 1 of achieving financial freedom is figuring out what is my basic daily expense. For that, I can either calculate it as a weekly amount of a monthly amount. A monthly amount makes more sense because majority of the bills we pay are monthly.

To estimate your monthly expense, you can use the Budget Calculator from the Canada Mortgage and Housing Corporation, any similar budget calculator you can found online, or just use a spreadsheet (that’s what I used because its easier to work with the numbers afterward).

So from my calculation, between me and my wife, our monthly expense is $3520:

Housing: $2000
Grocery: $500
Transportation: $430
Telephone: $90
Dining: $500

Total:$3520

Housing: $2000
We currently don’t own a property and have no plan to do so in the near future. This is not because we don’t want to own one but because of the pure Seller’s market in the GTA. The housing price is not supporting the fundamental of the GTA economy so we’ve decided to wait and see. I’ll go more deeply into my analysis in a future post. As a result, we are currently renting for about $2000 all-in (utilities, internet, etc.) per month.

Grocery: $500
My wife and I usually cook at home to save on dining. We spend about $100 on grocery at our weekly grocery run and so far that’s enough for dinner and packing our lunch for work. I also do quite a bit of volunteering and often get complimentary dinner which really helped my expense on food. “Will Volunteer for Food!”
 
Transportation: $430
We have one car and that’s my primary mode of commuting to work. My wife commute by public transit (TTC) because our start time doesn’t match. On average, I spend about $300 on gas and she spend about $130 on fare (we calculated it is still a bit cheaper to not use the TTC Monthly Pass even after the available tax credit, I’ll write another post on that analysis).

Telephone: $90
I am very glad I still have a government phone plan with a major carrier from 7+ years ago. It might not be the best in the market but very good compare to current plan offered. $60 tax-in for 6GB of data but only 125 SMS (who still use text nowadays anyway, everything is on data now). I could get my wife onto that plan so she is just using a text-talk only plan and I hotspot her data when needed. She have wifi at work anyway.

Dining: $500
We budget about $500 for outside dining and buying lunch at work every month but actually never used half of that amount. I’ll keep this in for now.

Note: There are other annual or one-time expense (such as insurance, vehicle maintenance, clothing, etc.) that I’ll share in the next post. At first I was going to include them in the list above as an evenly distributed amount throughout the 12 months but that’s not financially correct because the actual money going in and out of my bank account will be wrong if I account it this way.