Couple makes $500K a year and isn't able to save money

They do live in NYC, which explains the exorbitant mortgage.

They spend over $54K just on daycare and kid lessons/sports.

While there is definitely some wiggle room here (18,000 to charity each year but only saving $7,300...oh right the contribution to charity...that is deductible!) it just shows what a black hole of expenses kids can be.

article: https://www.cnbc.com/2018/05/14/budget-breakdown-of-a-couple-making-500000-but-only-saving-7300.html?recirc=taboolainternal

They spend $23k per year for food for a family of 4? That's nearly $2k a month, or $500 per person. I know everything costs more in NYC (I once lived there), but what are they eating that costs so much?

My guess is their food budget includes either restaurants or some kind of upscale meal service like "Blew Aprin" or "Playted" [I will not give either company a shoutout because of their breederific famblee commercials]

I looked at their budget. 23K/year for food for 4 people??? That is insanity, especially when you consider that the kids are getting free breakfast and free lunch in school. I would presume that the lawyer moo is a bizzy mawm on weekends, and shops at Whole Paycheck all the time. The food choices in NYC! The fresh produce and fresh fish on Canal Street is abundant and cheap. Lots of the produce in those Chinese groceries is grown in neighborhood gardens or on small mom-and-pop farmlettes on Long island. There was a NY Times article on this. I trek down there when we're having friends over, and I'm looking for lots of fish and I don't want to break the bank.

If the kids are still babies, then $42k/year in childcare costs is normal in NYC. But 12k/year for kiddie incidentals?? Who pays for music, sports, etc...if they're not even in school yet?

They have date night every other week. That has to go, because they can't afford it.

3 vacations every year?? Another wasteful expense. They need to vacation in their own backyard. The Botanical Gardens, the Cloisters, MOMA, The Metropolitan Museum, they can explore all of these on school holidays without dropping 18k/ year. They keep a car in NYC. They could make day trips to the Jersey Shore, or Hunterdon County to go apple picking in autumn, they could do anything that would be cheap and fun.

Let's talk about the cars. They have 2 cars: a BMW and a Land Cruiser. Who the hell needs 2 CARS in NYC to the tune of $9600/year?? Then there is the gas, insurance, parking costs associated with this.

The 18k to charity has to go, too. They can't afford it.

$9500/ year for clothes??

I live in the NYC area. Yes, housing is expensive here. Our house was between 400k - 500k for a modest 3 bed, 2 bath Tudor. Our property taxes are $13k/year. Anywhere in the Midwest, our home would sell for under 200k.

But it's all relevant. We have a goodly good 6 figure income, not 500k, but up there nonetheless. 50% of our AFTER TAX income goes straight into the investment fund. But then again, date night is once a month, and it's kept to under $100 for the evening. I shop at Shop-Rite or at Asian grocery markets, or immigrant markets where the food is excellent, flavorful and prices are reasonable. We drive older American cars that are paid for, and aren't showy. I buy good quality clothing, and wear it for many years.

But 2 Manhattan lawyers need to keep up with the Joneses. I've seen their type all my life.

I agree with everything you said Peace. They could pick and choose a bit more (one vacation instead of three, give up donating and no activities for their kids until they are in school and free up the daycare money plus they could save the difference. The wiggle room could become their savings. I see this more as an allocation issue and the inability to distinguish between wants and needs.
What happens if one of them becomes unemployed? It doesn't sound like they have a month of expenses saved.

I've heard the only people who can afford nice: cars, food, clothes, vacations, retirement and a house are the rich. Most of us are lucky if we can afford one or two of these things. And having kids takes the place of at least two of these things.

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Peace
50% of our AFTER TAX income goes straight into the investment fund. But then again, date night is once a month, and it's kept to under $100 for the evening. I shop at Shop-Rite or at Asian grocery markets, or immigrant markets where the food is excellent, flavorful and prices are reasonable. We drive older American cars that are paid for, and aren't showy. I buy good quality clothing, and wear it for many years.

But 2 Manhattan lawyers need to keep up with the Joneses. I've seen their type all my life.

This is amazing! You're going to have a great retirement!

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deegee
They spend $23k per year for food for a family of 4? That's nearly $2k a month, or $500 per person. I know everything costs more in NYC (I once lived there), but what are they eating that costs so much?

That is a lot of eating out. I eat out about once or twice a month, and the rest of the time I cook. I don't cook cheaply, because it is my hobby and I enjoy working with obscure ingredients. I still don't manage to spend $500 on food in a month.

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freya
I've heard the only people who can afford nice: cars, food, clothes, vacations, retirement and a house are the rich. Most of us are lucky if we can afford one or two of these things. And having kids takes the place of at least two of these things.

A few years back, there was a NY Times article about American millionaires. There are literally millions of households in the USA where the averge wealth is around 1.5 - 2 million dollars in investments and savings, not including the family home. These are average Americans working normal jobs who saved, invested wisely for slower but stable growth, and didn't spend wantonly. The people interviewed stated that even their family and neighbors do not know what they're worth because they don't publically flaunt their affluence. The irony is that most of them have/had kids, yet still managed to do this.