Would love advice. Partner and I are spending about 125k/yr total together (all in, incl rent, health, gifts, travel, etc). Mid 30s. No kids but will in next couple years. No debt. Total income between us of 350k. High cost of living/high taxes. So total we save about 80k/yr. I’m glad we’re saving but I feel 125k is too high in these years where we should we saving for kids, future needs etc. I know theres tons of personal considerations in here so not looking for “is this too much or not” cont
Also double income, no kids, in Los Angeles and we spend FAR in excess of 125k year. More like 350k/yr. still also save about 250k/yr. But a lot of that spend goes to mortgages that we will eventually recoup in equity if/when we sell.
In short, you’re fine - live your life. You will most likely continue to make increasing amounts of money since you’re at McK. If you focus entirely on saving money and don’t have any fun along the way, you’ll burn out way faster and bail on the high income. If instead you spend a “bit” more of it, you might convince yourself to stick with it for longer, which likely maximizes your net.
Exactly.
As others mentioned, a breakdown of spending categories would be helpful. Husband and I are in NYC, make around $300k combined and we spend around $75-$80k annually. This includes a teen kid and two cats—those expenses surprisingly add up! Most of my clothes are designer and we use credit card points to plus up our vacations.
Need a breakout of your expenses right now
Coach
We would need a breakout.
That seems super high. Have you broken down your annual expenses? I lived in a HCOL city until about 6 months ago and, together, my partner & I spent between 60 & 70k every year. I can’t even imagine how we would have doubled that.
100% agree
Coach
Please show your expenses. That’s pretty crazy for no kids.
We were DINKs until December (had a child). We had been spending $110-120K/year in Chicago.
Main drivers here were travel at $35K/year (4+ big trips/year), rent at $42K ($3.5K month in a non extravagant apartment). Add in eating out once per week, and other misc expenses and we were at ~$9K per month all in.
Now that we have a kid our expenses are going up about $1.5K per month, due to rent and random baby/shopping needs.
I wish we were spending less, but travel is extremely important to us, so we think it’s worth spending more there vs. living in a super nice condo or have a really nice car (for example).
We make about $500K/year pre tax. So even after our spend we are able to save $150-200K per year, which puts us on track for our goal to retire around age 50 with $5-6M
Seems incredibly high
Yeah 125k sounds high. For reference, my bf and I also live in HCOL place and spend around 70k, including rent, one car payment, garage parking, vacations, gifts, etc. We do watch what we spend tho, eat at home mostly, and not very into luxury goods (no fancy bags/watches).
Utilities 150/month (only pay for electricity & internet), insurance 80, cell phone is paid for by company, don’t have cable - just have Netflix and amazon prime which we share with family. We really don’t buy much stuff (also small apartment so no room to put anything lol). Maybe average 150-200/month on clothes/amazon
How much is your rent?
That’s similar to rent in NYC for a decent one bedroom. The only difference is that you probably have some expensive car payments with that monthly spend. I would look to save at least at much as you spend each month, especially at that income.
About 100k probably between the 2 of us. MCOL. Double income no kids. We don’t buy luxurious items like expensive watch but I do like nice clothes and we travel a lot. Unpopular opinion but I would rather travel and have fun while I’m young and full of energy than save aggressively
We lived in LA, pre-covid, and spent around $100k total on income of $310. Super easy to spend that in LA, we lived a pretty basic life with zero luxury goods. However, since committing to FIRE we’ve taken steps toward lowering that number- including movin to LCOL (kept remote jobs). Our 2020 spend was around $50k and we will also eliminate the CA tax bill going fwd. ~20k per year.
I know it’s not very helpful Bc not everyone can up and move, but since we’re on the topic of FIRE I think it should be an important consideration. That extra $70k per year is going a huge way towards our retirement and investments.
Where did you move to?
OP I think you’re good, live your life. We have a little lower HHI, save about 100-110k/yr including company match and spend about 120k for two people in a HCOL area (no kids, but a 15yr mortgage and expensive hobbies).
My advice would be to really plan and model your future retirement needs, track back to how much you need to save to achieve that accounting for inflation and taxes, then get back to a saving target per year. Hit that target and the rest is yours to spend with no qualms. No use dying with $15M+ in the bank IMO.
wow my wife and I make 400k total in DC and we spend around 60k per year, with 25k of that being charity. can't even fathom what it takes to get that high
Streaming, reading, video games, and outdoor stuff can generally be pretty cheap hobbies. Especially since they work at Bain, travel is usually with rewards points and food during the week is covered with work. This isn’t even mentioning that they might just be tired on the weekend and don’t care about doing too much.
but would love reactions to the 125k. We live reasonably and don’t have expensive habits but feels so high to me. What are other folks’ total
all in costs in comparable COL / scenarios?
Coach
I don’t think % are the best. The average joe making 60k a year(or less) might only be able to save 5% while someone making 300k could easily save 50+ %
This is 60-65k each per year to be super clear. Not 125k each.
Youre spending 10k per month. You really can’t live cheaper? Where’s your money going?
Sounds like your having fun. Enjoy it.
Also double income, no kids in early 30s in HCOL (DC). Our annual expenses are about 70k combined. With most of our expenses due to rent and food. There's still plenty we can cut (cable) but we are still able to aggressively save. Definitely look at your expense breakdown by category.
Maybe I’m missing something (or don’t completely understand CA), but you’re saying you pay 145k in taxes per year on a 350k income (350-125-80=145)? That’s over 41%.
That seems way to high to me. We were just a bit lower on HHI last year and paid around 23% for a state with no income tax. I’d suggest looking at your taxes and HOW you’re going about your savings to see if you can save a bunch more money there. If you’re going to not save as much, at least make sure you’re spending it on you and not the gov 🙃
I’d also say, at your income level it’s worth researching tax shelter strategies, as it seems like you’re paying a lot. We pay about 16-17% of our gross income in taxes, and take advantage of all the ways (max out 401ks, HSAs, solo 401k for my side hustle, etc.) to reduce that amount.