Is our spending reasonable?

[zombimansimp]

Not sure if this is the right sub. Just wanted an opinion on whether or not our monthly spending is reasonable or if we should work on cutting back more and if so where? We are a family of 3 with a 1 year old living in the Kansas City metro. I know the median income in the US is around $80k and we spend about $80k while making a little more. I don’t feel like we live a crazy nice lifestyle but feel like maybe we still somehow spend too much. I guess I’m just curious how anyone is thriving on less because it just seems really hard to do so and make things work on much less. But clearly people must be doing it somehow if the median is what it is. Anyway here is our budget:

Expenses/Spend:
Mortgage: $2200
Shopping/Clothes/Baby/Home: $1100
Groceries: $850
Dining/Alcohol: $650
Utilities/Phone/Internet: $500
Gas/Car Insurance: $450
Health Insurance: $400
Entertainment: $200
Miscellaneous: $200

Total Spend: $6,550

Remaining Income:
Taxes: $1300
Giving: $500
Saving/Investing: $1500

Total Gross Income: $9,850/month.

Edit: Thanks for the replies everyone. Sounds like shopping insurance and planning meals better is the best start. Also my wife and I both work 3-4 days a week and between days off and family have childcare taken care of. I have no idea how regular people pay $2k a month for child care.

 

[katty3333i]

@zombimansimp $1,100 in shopping seems high. Dining / alcohol seems high. $2k on dining alcohol and shopping lol

 

[lanman87]

@zombimansimp To have groceries at $850 and dining/alcohol at $650 seems high especially in Kansas City. We are closer to $1100-1200 in the Annapolis area MD.

 

[zombimansimp]

@lanman87 Thanks for the reply,

Yeah a good chunk of the dining is that my wife works in commission sales and ends up in situations where you regularly have a $15-20 lunch with a client and it really adds up.

The groceries I definitely think we can improve with better planning. We seem to have a lot of food waste more than anything.

 

[maggiebells]

@zombimansimp Pretty sure she can/should expense those lunches with clients...

 

[lanman87]

@zombimansimp So with food waste if you really wanna up your budget I’ve started to do anything I waste gets removed monetarily from next month’s budget. Threw away a $2.50 avocado?… well there goes $2.50 next month. I’ve started freezing more as well. Just in hopes I’ll actually eat it.

 

[kimgrogg]

@zombimansimp You're spending 1500/month on food/drinks for two adults (plus an infant who doesn't really eat much actual food)? That seems high, esp for a Midwest city. Our monthly food/dining out/drinks budget for our family of 5 in a bigger Midwest city than KC is also $1500 (which granted is moderately frugal for a family of 5). If you want to cut back, I'd probably start there (or possibly in your shopping/clothes/baby/home and misc and entertainment categories -- since those seem pretty vague, it's hard to know what all is in there and if it could be reduced. I suspect it could probably be tightened up, but to what extent is up to you.)

Overall it looks okay and I don't know if you need to reduce your spending (are you comfortable with how much you're putting in your retirement accounts? How much do you already have in savings/emergency fund?), but that's where I'd start looking if I were you.

 

[kimgrogg]

@zombimansimp It sounds like you are in a pretty good spot. I'd say you could tighten up some of your spending if you want to, but it doesn't sound like you need to. Kind of a balance at this point of how much your money is bringing you enjoyment now vs saving it for other things later, and only you can decide that.

 

[tch22]

@zombimansimp No childcare costs? If you end up needing daycare, you will need to cut costs on going out and shopping or that monthly cushion is gone. Looks to me like your budget needs to adjust from DINK life.

 

[zombimansimp]

@tch22 Honestly I think that best describes what prompted the post. We were grossing about $14k/month before having our kid but she cut back to 3 days a week and I cut back to 4 days a week after we realized that after taxes we were basically working to make maybe $1k extra a month if that once paying child care. We would rather both have more family time and stay at home. I can see how it will get easier in 6 years when elementary school starts. But till then here we are, I guess it comes down to that we have never really had to budget much before. We made just enough to have 30-40% margin on our preferred lifestyle and just not think about budgeting. But yeah I constantly think about it now, it’s that feeling of knowing you’re vulnerable.

 

[phil4508]

@zombimansimp Yeah, we were in a similar boat a couple years ago. Going from a healthy margin DINK budget to a tight budget due to kids is a hard adjustment. After 1.5 years of daycare my wife decided she’d rather stay at home full time. Our savings rate still isn’t where I’d like it to be, but I think that’s just the reality of the birth through kindergarten stage of parenthood. We had a good start before kids and will be able to play catchup after they’re all in school.

 

[tch22]

@zombimansimp Yes, we have two kids under 5. It's a tough adjustment financially from DINK life. We both work full time, but are lucky that we only need paid child care 3 days a week due to family nearby and my teacher schedule and my wife's work from home flexibility. That's cool that you have found a schedule where you can both work part time for now. That seems healthy for work life balance and keeping at least one foot in a career.

I can't wait for kindergarten to start $$$ wise, but will be sad when the stage is over too.

 

[judge2]

@zombimansimp I don’t see anything crazy here. Given that you know have kids, you might want to think about the cost of college or the cost of preschool and look into some term life insurance.

 

[phil4508]

@zombimansimp We're also in Kansas City and have a 4 year old and 1 year old and very similar income. You're about $100 over us in Shopping/Clothes/Baby/Home, $150 over us in Utilities/Phone/Internet, and $100 over us in gas/car insurance but the rest is almost identical.

Maybe the first step for trimming could be getting quotes for cheaper car insurance, phone plans, or internet? We're paying $50/month on US Mobile and $100/month for car insurance for two adults.

 

[zombimansimp]

@phil4508 This is really helpful, appreciate you taking the time.

 

[ashleighny2016]

@zombimansimp Yall are incredibly close to our spending, I think it's pretty reasonable. Months where we cook more we can have dining out down to about 200, but that's not always as we like eating out.

 

[randomallocation1]

@zombimansimp Yes this is all reasonable.