How a Canadian Working in London Does Money
Gillian is a 27-year-old, London-based financial journalist who has a disability.
So, Gillian, tell us a bit about your finances.
I am a financial journalist who earns the equivalent of $42,000 USD per year. I don’t have any student debt. I was quite lucky in that I did both an undergraduate degree and a masters degree. During my undergraduate degree I didn’t take out any student loans; I had a combination of scholarships and my parents’ help. I should also point out that this was in Canada, which I think is a bit cheaper, generally, than U.S. college and university experiences.
For my masters degree (which I did in the U.K.) I did get a student loan of about $20,000 CAD. I also received a partial scholarship. My parents helped me pay part of the loan off and I also paid some of it off myself, and five years down the road I do not have any student debt, which is quite good!
I also have about £2,000 in savings—I had about £4,000 a year ago but I had to pay for a new, expensive U.K. visa in December.
Retirement-wise, I just started contributing to my company’s pension security plan last year. It’s not a lot; I do about 3 percent and my company matches 3.15 percent. I don’t know how much is in there. Not a lot, I think; about $4,000, or £2,000.
In Canada, because I have a disability, I have a Registered Disability Savings Plan, which was opened a while ago. I contributed to it, my parents contributed, and the government actually matches what you put in, which is quite good. I think I have about $36,000 in that, but I have not checked it recently.
I’m curious about retirement. You are Canadian and you are working in London, so you’ve got two different cultural perspectives on retirement than many of our U.S. Billfold readers. Do people in Canada or in the U.K. plan for retirement in the same way that the U.S. does?
It’s something I think people my age don’t tend to think about in general. I think that’s common across all young people, no matter what country! In the U.K. there has been this push by the government to get more people contributing to their retirement, and they have introduced an opt-in, auto-enrollment system. It’s being rolled out gradually. The goal is to get retirement savings up to 8 percent, which is not really enough for people to retire on, but at least it’s better than what most people have.
From a financial journalist’s perspective, right now the U.K. annuities space has had a big upheaval. It used to be required that you bought an annuity at a certain point, and that is no longer a requirement. People can take their pension as just a pension pot, basically, and do whatever they want with it. So people are saying, you know, “everyone will spend it on big vacations” and end up relying on Social Security or end up destitute.
In Canada, I don’t really know. It’s been almost six years since I lived there but I’ve talked with the pensions people at my work and apparently it’s relatively simple to transfer my pension to Canada if I move back.
Tell us about your living expenses. You told us you are living in one of the most expensive cities in the world, which I did confirm (it’s the third most expensive city according to The Telegraph), so how much of your money goes towards the cost of living?
My boyfriend (who’s English) and I have been living together for about two years, and we live in a one-bed flat. We’re in Zone 2, which is relatively central for London—there are about six zones—and our rent is a little under £1,300 a month just for the flat. Adding everything else in, including the rental, electricity, internet, council tax, and our food bill, it comes to £1,800 per month.
I think that comes out to a little more than half of our take-home pay, or it did when my boyfriend was working but in December he quit his job (with about six months in savings) as he’s transitioning to a new career. So it’s been tighter recently for us as he’s been temping and doesn’t have steady work right now. In general, we actually do pretty well compared to a lot of people, but you do sometimes feel the squeeze. It’s also meant that it’s a bit difficult for us to save much for things like a house deposit or a nest egg if we decide to move back to Canada, which is looking more and more like the long-term plan.
Housing costs are the biggest issue. Rental costs have skyrocketed in recent years, and we’ve been very lucky in that our rent hasn’t increased dramatically.
I’ve heard this from many people; everyone says rent just keeps getting higher.
And buying in London is absolutely ridiculous. I have some friends in London who make a lot more money than we do and who also have family members who are helping with the deposit, and even a 1,000-foot home costs about $600,000 (which is on the low end for London!)—and that’s normal. There’s no way, with our salaries, that we’ll ever be able to buy in London, unless house prices crash.
London’s where everyone basically parks the money. Whenever there’s any unrest in other countries, London real estate is where people prefer to put their assets. They buy property as a “safe place.”
I was expecting you to say “London is where money goes because of industry and innovation,” and then you said London is where money goes because it is safe! That’s fascinating, and it makes a lot of sense.
The U.K. is a very investor-friendly place, and in many ways a tax-dodging place as well. People who are non-domiciled in the U.K. only have to pay a small amount of U.K. taxes, so it makes a lot of sense financially for people to buy things like property in London.
And then they don’t live there, so there are all these new-build flats that are being put up, and they’re sold off-plan to people who are in Asia and Russia and elsewhere, and rarely put on the local market. People will buy them unseen and keep them in their portfolios without living there. You’ll look at a building and there will only be a few lights on, and it’s a huge building.
In a few years, the prices will go up, so they’ll sell the real estate at a better-than-normal return and earn 10 or 20 percent on it. But I should also point out that it’s not just investors who have made London housing expensive, restrictive local planning permissions and not enough housebuilding for a fast-growing population has also contributed to the costs.
If only I had enough money to buy an apartment, not use it, and sell it!
So if you’d like to talk about it, I’m curious about the additional costs of your disability.
I have cerebral palsy, and that’s a disability I’ve had since I was born. I was raised to not let it hold me back—my mum is a physiotherapist, which is really quite convenient, but also she wouldn’t let me make excuses about what I could or couldn’t do—so it’s not something I find myself held back by, except for the external access issues.
I’ve had jobs all the way through growing up. I started babysitting when I was 12, I taught swimming lessons when I was 15, I worked in our national park, and then I ended up doing journalism. In each case, there were maybe a few areas where I had to have accommodations, or ask for help. I’m not in a wheelchair, and I don’t use any walking aids, but stairs are difficult for me and my balance is not great. I haven’t really had problems with fatigue yet, or times when I couldn’t get out of bed and do the jobs.
It was more interesting when I finished university and moved to London. In Canada I had a car and I could drive places, which makes life a lot easier, whereas in London, you have to walk places and you have to take public transport. London’s Underground system, having been built in the 1860s, I think, some of the oldest stations, isn’t the most accessible. For me to get around in London, it takes more time and effort than it would for someone who doesn’t have my limitations, in terms of using stairs and things like that.
When I started my job, about four years ago, my editor and I decided that if I did not travel during rush hour, and instead travel a little bit before or after, that would be best. That worked out really well, but I ran into another problem with another editor later on who did not realize I had that accommodation. One day this editor pulled me inside and said “You know, people think you’re taking the piss. I’m noticing you’re late.” I got quite upset at that; it had taken me an extra 20 minutes to get in because there had been some big trucks blocking the accessible way, so I had to walk around.
I don’t generally tell people that those are the things that make it harder for me, but he also hadn’t bothered to ask about the difficulty of getting in. Which I think is typical of people who don’t have disabilities and don’t realize the extra difficulty that many of us face in terms of access to work, transport and often just everyday life activities that many people take for granted. Afterwards at work we were able to talk more about accommodation but it’s still something I feel quite shy about bringing up—although I’m getting better at advocating for myself.
Then my company started to experiment with flexible scheduling and working from home, and now I’m able to work from home two days a week, which is really good. It saves me from walking and being tired.
In terms of extra costs, I’d say that I should be having physiotherapy regularly, as in monthly or bi-monthly to keep me flexible and to not have pain. A few years ago, after university, I didn’t go as often as I should have because I didn’t have the money. Now that I have the money, I do pay—and I go privately, because while the U.K. has the National Health Service I also have private insurance through my workplace and the paperwork/speed of access to treatment is a bit faster that way for me. So they pay for part of the costs and I pay the rest out of pocket. I also have a massage about once a month, which helps my muscle spasms.
I’ve also had things like leg splits, which are really expensive—around £1,200. My parents insisted on helping me pay for those and that was very much appreciated. For everything else I use the NHS, which is free at the point of access and funded through mine and everyone else’s taxes. I’m a big fan of nationalized or publically-funded health services and the ability to supplement it with private health insurance.
For transport I’m quite lucky, in that if you have a disability in London, you get a Freedom Pass which means you get transport for free. I don’t have to pay for transport, but I also end up paying for taxis when I need to go somewhere that isn’t easily accessible, so I feel like it ends up evening out.
I’ve been lucky enough, so far, to not have to take a lot of time off for my disability, but I do think it’s something you always consider if you have a chronic illness or disability. What you would do if you could not work—I don’t think our modern, capitalist society is very good at providing for those who are unable to work due to illness or disability and that’s a bit scary and informs how I look at work and my personal finances. I’m okay now, but down the road—I don’t think I can sustain living in London forever. I might have to move out, get a car, get a scooter, move back to Canada, do something to make it easier for myself and allow myself to keep working. I put a lot of pressure and stress on my joints as my walking patterns are not correct and so it’s something I’ll have to deal with in the future—I’ll probably have to take early retirement so that’s why I have things like the RDSP set up.
Photo credit: Nick Page (cropped)