So my wife and I are expecting our first kid here shortly and want to get our finances in check. We went through our budget for the past few months and were astounded by how much we actually spend. I need some suggestions on what we could cut or do to level set before the new added expenses of a kid come into play. Here is the breakdown:
Me, 33, 100k salary, contribute 2k into joint savings for expenses, rest into 401k/HSA/Roth monthly
Her, 31, 71k hourly, contributes 1.4k into joint savings for expenses, rest into retirement
Our monthly expenses are the following:
Mortgage/taxes/insurance: 2500 (6.5% rate)
One car loan: 600
Spotify: 23
Sirius: 38
Internet: 65
Car insurance: 155
Pet insurance: 30
Life insurance: 55
Netflix: 19
Hulu: 15
Gym: 82
Gas for cars: 300
Water: 90
Electric: approx 200-250
Total around 4200. This doesn’t even include any groceries/eating out (eat out/takeout once or twice a week), discretionary spending, any other miscellaneous bills, car maintenance, new kid stuff, etc. so after months end it always hits 6k expenses sometimes 7k, which is what we contribute to our acct but don’t want to stop 15-20% investing into retirement accts. So we really aren’t even saving that much at month’s end and I don’t feel like our spending is that crazy. We could cut out some subscriptions but those are small numbers and my wife’s car is paid off so we just have mine which is 11k left at 3.9% rate which falls off next summer. And not to be arrogant but we are higher earners for our age and college educated. How does the common man make it anymore? Even if my car was paid off, we then add in the monthly expenses of a baby. Need some suggestions – I’ve already told my wife we need to cut down on groceries and some other discretionary minor shopping trips. But, with my list above nothing seems ridiculous besides maybe the 4 paid subscriptions. And we bought a pretty modest house which was 320k so just 2x our yearly combined salary and we live in a lower cost of living area (Cleveland). The mortgage was 2.35k but shot up to 2.5k after property tax hike that angered all the residents in our city. Shine some light on me financial experts, I need it, this is not my area lol.
And to add, we have approx 300k across retirement accts and currently 27k in cash. And my MIL is retired so she volunteered to do any babysitting while we work or are away and she lives close by.
What could we possibly cut to save more when starting a family?
byu/beanman214 inFrugal
Posted by beanman214
16 Comments
Cancel Sirius. Or at least start the process. When you go to cancel it they’re going to give you auch better rate than $38. I think I pay $5-7 anytime they raise it I start over.
Sell your gas vehicles and get 2 or 3 year old electric vehicles.
Put in low flow shower heads and faucet aerators.
Only clothes shop at thrifts.
Buy all the baby stuff like cribs and toys second hand.
I would have a back up plan on childcare. If you read the r/mommit, baby bump, or other parenting subs, there are a lot of stories where family promised they would be super involved and then end up not being reliable for one reason or another.
Overall, could you live on one salary for a year? Does your state and employers have any paid leave?
You also don’t necessarily need to spend much on the baby (other than child care). The only things that should be new are the car seat and crib mattress. Everything else can be obtained for cheap or free since babies grow out of their clothes and toys extremely quickly the first few years.
For food, if you cut out eating out and processed foods, that will probably help your grocery bill. But you shouldn’t just rely on your wife for that. Especially since she could be out of commission during pregnancy (nausea, fatigue, etc), postpartum (recovering from a major medical event), and even for a long while after (babies often only want their mom’s and it’s a struggle to cook, grocery shop, etc. when a baby only wants to be held)
Also, you said you had $27k in savings. Is that your emergency fund? If you’re spending $7k a month, your emergency fund should be at least $42k to $54k.
What you probably should cut is somewhere in the $3k of additional spend after the $4200 you detailed out.
You skipped the food and discretionary numbers so can’t get too specific.
Yes, life is crazy expensive now. We can’t change that, so focus on what’s in your control. First off, I’d pay off the car instead of paying interest when you have $27k cash, wasting $450 a year on interest. You’ll rebuild that savings in a few months. The only time it’s worth keeping interest based loans when you have the funds is if those funds are invested yielding a higher return (after capital gains tax) than your interest rate.
Next, make a spreadsheet and track literally every dollar going in and out of your accounts. Do it for 3 months, you’ll see where alot is wasted. Casual work lunches become a couple hundred, snacking or cafes can be another hundred, so on and so forth.
Lastly, me and my wife are going old school fixing things until they die. No feeding consumerism where things only last 12 months. We’re sewing, fixing electronics, doing basic car maintenance at home, DIYing house renos, growing veggies, and basically anything else we can to save extra money and also not be wasteful.
Disposable diapers cost a fortune. I suggest investing in cloth diapers for at home time. Use disposables only when you are out and about for convience. I know, they are work but the savings will be substantial.
Second hand baby clothes will also save a lot. Babies grow so fast, they only fit in some clothes for weeks. Not worth the brand new price.
Buy a large box of cheese cloth. It works well for reusable wipes. Wash along with the diapers.
I would also track grocery spending to get an idea if you can cut that somewhat as well as eating out.
How does the common man make it… we don’t! I make 42k as a single person, I have a college education but in a rural area that means next to nothing. I have no subscriptions, buy bare necessities, have a mortgage house was 35k in 2011, student loan and vehicle payment. Because the common man can’t make it I have some credit cards that had to be used to cover unexpected large home repairs and health costs. I have a retirement that a previous employer contributed to and now work where I will get a state retirement. Btw I’m 39.
So what could you cut.. a lot. Do you have savings apps, use sales and time purchases. Do you hire out services, learn to do them yourself. Don’t buy anything new that can be bought used or repurposed. What free resources are available for entertainment in your area? Library’s, free shows and plays. Shop around for every service you have, phone, internet, etc.
I’d drop Spotify and turn on the radio, and rotate (pause subscription) Netflix and Hulu so you’re paying for one each month. Cut back on eating out. Maybe just once a month.
Prep food on the weekends. I usually boil and peel a dozen eggs, make some whole wheat pancakes, and get a pasta dish made a divided for lunches.
Sometimes after dinner I will prep for the next night’s dinner. Like maybe I choose up all the stuff for stew and all I’ll have to do is set the crockpot in the morning. Or maybe on Thursday night I make dough and sauce and top a pizza and all that has to be done Friday is take the plastic wrap off and pop it in the oven.
Electric bill is rather high for 2 people. How large is your house? Maybe it needs insulation? We’re a family of 7, and that’s what our electric bill is while working from home. What I’ve noticed is that the computers put out quite a bit of heat.
I’m inclined to say that you’re in good shape. You could shave a subscription maybe, get the Sirius price lower etc.
My advice would be to audit the grocery bill. Prices are skyrocketing, and people waste sooo much money on food (I worked in a grocery store for years, trust me). Getting a handle on it now will serve you well when you’re up against a toddler snack budget.
Your budget is too vague. You need to know your numbers to really get a handle on a budget. You knew some numbers, then at the end just threw the rest in there as some topics. Well, that’s why your money is going all willy nilly. Know where your money is going, then you can start figuring out where to cut from.
Eating out twice a week is too much if you really want to save. Cut down to the cheaper Netflix plan that’s $7.99.
I agree you are both high earners but you need to be prepared at any point for one of you to lose your job or otherwise be not working for whatever reason. Health reasons or job loss come up for many reasons, so never take your jobs for granted and be prepared to live on much less.
Spotify and Sirius really seem like duplication to me. What benefit are you getting out of having both services? I would also look into a cheaper gym, especially since you probably won’t be going much immediately after the baby comes.
Otherwise, you’re going to have to cut discretionary spending, go to cheaper grocery stores/store brand products, and cut retirement contributions. Not to be rude, but my wife and I have almost the exact same bills/housing expenditures, and we make a combined $120k. We have minimal savings and contribute 5% to retirement because that’s all we can afford.
You have $50k over us that you can utilize to support yourselves and the baby, as long as you both continue to work, and your MIL is willing to do the bulk of childcare when your parental leave is up. Reassess how you’re spending that money, and I’m sure you’ll find “nice to haves” to cut down on to afford baby needs.
I heard about monochrome.tf as a free alternative for Spotify! It’s a web app but you can turn it into a shortcut on your Home Screen. Could also try running Spotify from the brave browser, which is good at stopping ads! I’d also get rid of Sirius tbh!
I use stremio for my streaming— there are guides on Reddit. About $36 a year and it’s everything you could ever want.
You should see if you can bundle the car, pet, and life insurance if you aren’t already!
And I would trade in the car payment for a slightly older hybrid. I got my 2024 Lexus for $28k and I haven’t filled up my gas since February 😬! That’s with hybrid work schedule.
Also… could be a good time to ask about a raise?
“How does the common man make it?” I hate to break it to you but the common man is not putting 15-20% into retirement accounts. That is truly where all of your disposal income is going. Which is great but you might want to redistribute funds to have a cushion for emergencies and unexpected expenses (what if your baby can only drink a certain kind of formula?), especially since you have the means to do so. Your child will need their own health insurance and car insurance will increase as well. One or both of you could be on unpaid leave for awhile to take care of your newborn which will affect your income. I do suggest starting a savings/ investment account for your child. And you didn’t list any hobby spending but you could always decrease spending in that area if applicable.
Congratulations on the little bundle on the way. They are already on solid footing given all your savings and planning efforts. It is hard to answer this question when there is so much missing data (i.e. groceries, eating out, discretionary spending). I recommend taking a step back and trying to get all of that information on paper before deciding what trade-offs you want to make in terms of cuts.
Cut out your streaming subscriptions? You’re unlikely to have the time or mental energy to enjoy them once your baby arrives. What to replace them with? I enjoy downloading audiobooks for free from my library. The bonus is you can listen to them while you are busy doing chores.