Can Amy and Jake afford a baby in the city?

In our Smart Money series, #MillennialMoney, we ask people living in the Greater Toronto Area to record every penny they spend in a typical week. Then, using tips from a financial adviser, we challenge them to cut their spending the following week so they can save more money. Will they fail or succeed?

They're both just 26 years old, but Amy and Jake are already the parents of a 10-month-old baby and a French bulldog. Their family lives in Toronto's High Park area, renting a place for $1,830 per month. They had to find it quickly - they were kicked out of their previous apartment when the landlord's daughter needed a place to stay after university.

With no debts, they have dreams of buying a home outside the Greater Toronto Area to start their family. But recently, Amy suffered health problems that prevented her from returning to work after the pregnancy. Now, they live on a single income of $70,000 - earned by Jake who's a software developer.

On top of the goal of buying a home within two to five years, the couple is also hoping they can start a Registered Education Savings Plan (RESP) for their baby. They say that they're not big spenders and make frugal day-to-day choices to boost their savings.

Breakfast and dinner are almost always made at home. For lunches, Jake takes leftovers to work but occasionally grabs a sandwich to go or heads to a restaurant with colleagues. Sometimes, with his stressful work schedule, he'll opt for a snack from the vending machine.

At home, Amy's schedule is also jam-packed. With the doctor's checkups, taking the baby to free playgroups, walking the dog and grabbing groceries, the errands can pile up.

On the weekend the couple has a bit more time to indulge their interests, such as geocaching - an outdoor activity using GPS to play hide-and-seek with containers marked in specific locations. The two want to move out of their expensive rental spot soon and hope a financial adviser can provide some clear direction on how to start.

We asked them to share everything they bought in a typical week:

The advice: Jason Heath, managing director at Objective Financial Partners, says it sounds like Jake and Amy are having a tough time financially with the decrease in income due to Amy's health problem and the added stress of a new baby, coupled with a new, more expensive rental. Here's his advice:

Living outside the GTA could have a big impact on their cost of living. There are surrounding suburbs and towns with considerably lower real estate prices. The potential commute into the GTA is a real consideration, though. There's a cost to that - both literal and figurative - especially when you're raising a family.

Amy's health problems highlight a real risk for them. They're paying health premiums, but don't appear to have life or disability insurance - they should get on that.

I'd also question the health premiums. They're paying out of their bank accounts, so this makes me think it's not a company or group plan, but rather an individual health insurance plan. I'd take a close look at what is being covered currently, and what could actually be covered based on the plan maximums.

The RESP is a great idea for their little one. That said, given cash flow is tight, and their child isn't even a year old, I'd maybe hold off for a while. RESPs provide 20 per cent government grants on your contributions up to $2,500 per year. But you can catch up on a full previous year in a future year.

They may not have a car payment now, but they will eventually have to budget for a replacement.

Despite the common advice to start saving for retirement while you're young, I'd really be focused on getting through these lean years with a newborn and hopefully getting Amy back to work and getting into a cheaper rental.

Overall, there are pros to the way they are living, Heath says.

The results: They actually spent more in the second week (but it was the holidays!) Spending in week 1: $611.16. Spending in week 2: $821.45.

What she thought: Amy and Jake say that despite spending more, they did "quite well" seeing as it was the holiday season - therefore gifts galore! "This week was a bit unusual for us leading into Christmastime with buying gifts for family, drinks for a Friendsmas party and extra gas for driving to our parents' houses."

Take-aways: Being a cautious pair, the couple says that Heath's advice helped affirm several things they were already hoping to do. First, they've decided to cancel their health insurance after crunching the numbers. Also, following the advice, they're holding off on the RESP contributions for the baby until they have more cash flow.

Another big change? They've moved up their timeline to leave Toronto. "We love it here, but it really doesn't make financial sense to live here anymore, especially now that Jake has five years of post-university work experience and can apply to a wider range of jobs in less expensive cities," Amy adds.

After doing the #MillennialMoney challenge, they say it was reassuring to find out that they're doing a good job of limiting their spending."It's nice to have an expert affirm things that we felt in our gut."

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This article was written by Evelyn Kwong from The Toronto Star and was legally licensed by AdvisorStream through the NewsCred publisher network.