Slow pitch right down the middle -- how should we budget $100k income?

[brandino29]

My wife and I officially crossed the $100k combined salary mark a few months back. As a years long reader of MMM, I know inherently that this is plenty of money to live large and save. For some reason though, we are having trouble making it work.

My plan in the very near future is to do a 12 month look back, categorize every dollar we've spent and figure out where we're going wrong, in the meantime, just a very basic, softball question for the MMM experts...

What should a household budget with total income of $101,500 look like for a family of 5 (3 young kids that require daycare)?

[Greyweld]

It will be hard to know how to answer this without some basic info on your big expenses, due to high variance in cost of living in an area.

Minimally, what are you currently spending on rent or mortgage, car payments, other loan payments, and daycare? Other line items can be more flexible, and knowing these will give insight into whether your variable expenses or your fixed expenses are too high.

Also may help to either state your city or at least give an idea of whether the area you live in is low, med, or high cost-of-living area.

[erutio]

Yeah we need more info.

But if you're both employed, you should aim for maxing both 401ks and IRAs (either roth or trad), thus saving approximately 48k total, and live on the remaining 53.k yearly. 

[MDM]

Here's something that is probably not correct, but gives you a place to start and add/subtract as appropriate for your situation.  See the case study spreadsheet if you'd like to make the calculations easy.

Paycheck frequency:	Annual	Annual
Paycheck Items	Earner #1	Earner #2	Annual
Gross Salary/Wages	$50,750	$50,750	$101,500
Pretax Health/Dental/Vision Ins.	$2,000	$2,000	$4,000
Healthcare FSA	$2,500	$2,500	$5,000
FICA base salary/wages	$46,250	$46,250	$92,500
W-2 Box 1	$46,250	$46,250	$92,500
Roth 401k/403b	$18,500	$18,500	$37,000
Net paycheck before tax	$27,750	$27,750	$55,500
1040 Total Income	$46,250	$46,250	$92,500
1040 AGI			$92,500
Other Specific Investment Types	Annual	Annual	Annual
Roth IRA	$3,800	$3,800	$7,600
Payroll Taxes	Annual	Annual	Annual
Social Security	$2,868	$2,868	$5,735
Medicare	$671	$671	$1,341
Income Taxes
Federal tax	$639	2018, MFJ, std., 3 dep	$639
Total income taxes	$7,715		$7,715
	Monthly
Add Health + Daycare reimb.	$417	0	$5,000
Income before other expenses	$3,765		$45,185
Monthly Average Expenses		Comments
Rent	$1,000		$12,000
Home/Rent Insurance	$20		$240
Car Insurance	$100		$1,200
Charitable contributions	$100	Input to Item. Ded.	$1,200
Child activities	$50		$600
Childcare	$1,000	Input to Child Care credit	$12,000
Christmas/Holidays	$25		$300
Clothing/Shoes	$40		$480
Computer (paper/software/etc.)	$20		$240
Dining (Lunch/Dinner/Etc.)	$100		$1,200
Gifts (not charitable contributions)	$20		$240
Electricity	$100		$1,200
Entertainment	$50		$600
Fuel/Public Transport	$50		$600
Gas/Oil for heating	$150		$1,800
Groceries	$500		$6,000
Hair Care	$25		$300
Household; Maintenance	$50		$600
Internet	$60		$720
Life/LTD Insurance	$100		$1,200
Phone (cell)	$50		$600
Sports/Recreation	$50		$600
Travel/Vacation	$50		$600
Water/Sewer	$50		$600
Non-mortgage total	$3,760		$45,120
Total Expense	$3,760		$45,120
Total to invest	$5		$65
Summary:
"Gross" income	$8,458		$101,500
Income taxes	$643		$7,715
After-tax income	$7,815		$93,785
IRA+401k/403b/TSP/457	$1,858	$1,858	$44,600
Living expenses	$4,093		$49,120
After-tax investable	$5		$65

Filing Status	2	1=S, 2=MFJ, 3=HOH
# Dependents	3
# Children <17	3
# Children <13	3
# Children for EIC	3
	Adult #1	Adult #2
Age	35	35
Full-time student?	0	0
AGI	$92,500
Std. Deduct.	$24,000
Act. Deduct.	$24,000
Pass-thru deduct.	$0
Taxable	$68,500
1040 Tax	$7,839
Dep. Care credit	$1,200
Non-refund. CTC	$6,000
Tax after n-r credit	$639
Net Tax	$639
Charity	$1,200
Item. Deduct.	$1,200
Version	V11.18

[Catbert]

Frankly, I did a quick review of your spending it really looks fine.  You're really living on 45K.  When you compare that to MMM 25K* and add in rent and child care you're pretty much the same overall. 

Yes, there's things you could cut back on a bit (e.g., cut your own hair, squeak a bit more out of food) but nothing big.

*relying on memory of his annual spending.

[terran]

Frankly, I did a quick review of your spending it really looks fine.  You're really living on 45K.  When you compare that to MMM 25K* and add in rent and child care you're pretty much the same overall. 

Yes, there's things you could cut back on a bit (e.g., cut your own hair, squeak a bit more out of food) but nothing big.

*relying on memory of his annual spending.

Unless I'm missing something I think you're looking at MDM's suggested sample budget, not the OP's budget :-).

[brandino29]

Here's something that is probably not correct, but gives you a place to start and add/subtract as appropriate for your situation.  See the case study spreadsheet if you'd like to make the calculations easy.

Yowzas. This is what I needed to see and maaaan are we way off base. We've got work to do.

Will report back after getting a chance to go through that and put in some actual numbers.

[Goldielocks]

If your budget is approximately correct, you are doing great!

Close to 50% savings rate despite 3 kids, child care, etc.
No car loans, student loans or other.
Maxing out all registered savings vehicles.
Charitable donations as large as your dining budget (For me, this plus entertainment, and clothing for adults is where I look to whenever I start to think I should cut back on donations..I have a ratio I try to maintain)

As someone pointed out, there may be some flex in the budget, but it closer to $400 than $3000 per year.... and raising kids requires some budget flexibility, too.

Speaking of which -- do you have all the medical deductions / extra expenses / school fees  etc covered, do you think?   I was surprised how much a little here and there for the kids will add up.

OOH...  ETA -- @MDM , this is your sample budget, and you are doing Great!

[Catbert]

Frankly, I did a quick review of your spending it really looks fine.  You're really living on 45K.  When you compare that to MMM 25K* and add in rent and child care you're pretty much the same overall. 

Yes, there's things you could cut back on a bit (e.g., cut your own hair, squeak a bit more out of food) but nothing big.

*relying on memory of his annual spending.

Unless I'm missing something I think you're looking at MDM's suggested sample budget, not the OP's budget :-).

Oops!  You're right.  I guess that's why it looked good.