If you’re just starting out, do this and you’ll be ok. Who around you is living the lifestyle I laid out here? Do you think they are making at least $100,000? Are you? Not using credit cards is half the battle, but making sure you are saving enough is the other half. When you try to live a lifestyle that doesn’t match your income you end up in financial trouble. Either they aren’t saving enough, or they are using credit, or most likely both. So that leaves me wondering how is everyone affording this lifestyle? Unfortunately it’s one of two ways, or both ways. Heck, the costs could even be considered on the low end of things. A little bit of lifestyle inflation in there but not a whole lot. To me this is the life of a pretty typical American. So that ups the expense in almost every single category. There are a lot of things missing from this list that people around me enjoy everyday.Īnd they only have two kids, lots of families have more than two kids. There are no big medical expenses or student loan payments. There are no boats, or expensive clothes, or fancy trips. Another thing that’s not on the list is giving. It also assumes a stay at home mom, or older kids. But it’s not the big time extravagance that you would think a six figure income would provide. They have two newish cars, kids in sports, a family vacation every year, a fully funded retirement account, cell phones, restaurants, entertainment, savings, and more. Try as we might to budget for all these things life likes curve balls.) The brakes go out on your car unexpectedly, someone needs some dental work that’s not covered, or you have to work late so you need someone to watch the kids.
Includes nights out as a family, occasional lunches from work, etc)
Granted they have two car payments and are contributing nicely to their retirement fund. Home Owners Association: $300 annually (almost everyone in the Phoenix area pays an HOA, $300 per year is on the low end.).Here the city handles the gas, other places it’s handled by the electric company) City bills: $1,200 ($100 per month, includes trash, water, and gas.Car Insurance: $2,100 ($175 per month for two cars).Cell Phones: $1,800 ($150 per month) (Try Tello Mobile, Cricket Wireless or Mint Mobile).Cable/Internet: $1,200 ($100 per month) (Try a service like Sling TV or just cut the cable and get rid of this!).Anything you typically buy on a trip to the grocery store. Groceries: $6,000 ($500 per month, includes food paper products, cleaning supplies.Car Payments: $7,200 ($300 per month per car, two cars).We are down to $66,400 and we haven’t even started paying bills yet! Health Insurance: $5,000 ($208 per paycheck, 24 paychecks per year).Income Taxes: $13,600 (includes FICA, state and federal income taxes, and deductions for health insurance premiums and 401k contributions.
Just a typical American family earning a good living, right here in my home state. I’m imagining a husband, wife, and two school aged kids. Let’s take a look at what this really buys you these days. When I was in highschool I would have thought $100,000 was living the high life! No worries about money when you are making 6 figures, right? I mean, come on! That’s a ton of money! It sure seems like this family wouldn’t have any money problems. Let’s say a family of 4 earns $100,000 in Arizona. Even if you keep track of every dollar, log it in a spreadsheet, or use an app to keep track of your spending, your budget can get away from you very quickly if you’re not careful.
If we lay out a budget full of things we are told we “should” be doing it comes to a lot of money. I’m often floored by just how much money it takes to keep a family moving forward these days.