Our spending can vary dramatically from month to month. Early on in our relationship, we analyzed every penny coming in and going out and got a good handle on what our baseline spending is. We established good frugal habits and were living within our means.
Then we got to a point where it was no longer productive to worry about whether one of us had gone out for lunch 2 or 3 times in the month. As long as the spending was generally within the boundaries that we set for ourselves, and if big expenses were known and agreed upon, it was better to let the details slide and not worry about them.
So we likely won’t be posting monthly spending updates here. Also, consistency is not my strong suit (creative bursts are more my style), and the thought of analyzing our spending each month and getting behind and feeling guilty doesn’t appeal to me.
But there is something to be said for sharing how we spend our money, especially the big ticket items and how they have changed over time.
Currently, the monthly breakdown is roughly:
- $2k for housing
- $2k for living expenses
- $1k for daycare/preschool
- $500-600 for health care (our portion – work pays most of this)
Housing – $2k/month
We live in a high cost of living area in a small house. We purchased our single family home at the bottom of the market in late 2010. Our property value has appreciated significantly since then (we are lucky in so many ways there). When my aunt from a lower cost of living area of the US heard how much we had paid for this tiny space, she just about fainted. But the dollars are in the land value, which for years has been higher than the building.
$2k/month includes taxes and insurance, and a little extra we throw in to pay down the principal faster. It does not include utilities or our budget for maintenance and upkeep – that is included in living expenses.
Living Expenses – $2k/month
From utility bills to food and gas expenses to plane tickets, these run about $2k per month, which we consider a reasonable amount. We have these pretty much set at this point, but we may break down these costs further in a future article.
Childcare/Preschool/Camps – Dropping from $1.7k to $1.1k/month!
We are incredibly lucky here. We have a tremendous amount of support from our parents and it saves us a ton of money. We chose to live close to my family when we moved back to the US together, and having support from our parents was a huge factor in choosing to have a child in the first place – as well as in our choice to try for a second (little did we know, ha ha ha).
Even with grandparents, child care is expensive. For the last two years, we have had one spot in an in-home daycare for the twins. One of them would go to my parents’ each day, and one to daycare. Our oldest also would go to my parents’ in the afternoon after preschool – they would pick him up at 1 or 2 and take care of him until we got home from work.
With all this help, you might not guess that last year we paid about $20,000 for childcare:
- $13k per year for one spot in an in-home daycare ($50/day, $1000-1150 per month)
- $6-7k per year for half-day preschool and summer camps ($485 per month plus more for optional after-school activities, and similar amounts per month for summer camps)
An aside: When we lived in Bolivia, my salary was $6k per year, and that was a solid middle class salary. Now we pay more than that for part-time care for one kid. (Andrés says, “Let’s move back, we’ll be able to afford quality childcare!”) Cost of living is higher here, but is it any wonder people look to come to the United States for higher wages?
Currently we are undergoing a big shift in our childcare expenses. Our oldest is in kindergarten, and we are able to cover his after-school care between Andrés and grandpa in the afternoons. This is where the big savings are.
We have shifted the twins to 3 days a week of half day preschool and two days of in-home daycare. The cost per month is about the same as having one full-time spot in an in-home daycare. They also get about the same amount of social time with other kids instead of just grandparents, but it’s a little more structured and gives my mom some newfound time off in the morning. In our new schedule, on Mondays and Fridays, one twin goes to daycare and the other with grandma; on Tuesdays, Wednesdays and Thursdays, both twins go to preschool, and get picked up by grandma at noon.
So our new monthly budget for childcare is going down from about $20k per year to more like $13k per year. We’re still paying some serious cash, but it should help us put more money into our…
Our remaining income goes towards our retirement accounts and investments, including our rental property, which has depleted our savings significantly – we are hoping to rebuild that now that we have costs wrapping up and rental income coming in again. I would also like to try to increase our 401k contributions in the coming months, hopefully maxing out at least one of our accounts in 2020.
There you have it! A brief overview of where our money goes in our new monthly budget.