How We Make It Work: Raising a Family on $75K Outside Portland
A new father discusses how he and his wife's spending and saving habits have changed since they knew they were expecting.
It’s a question that’s often on the minds of anyone who’s ever looked at the high cost of raising kids today: how do parents make it work? Well, we wondered too. Which is why we’re asking parents around the country for a peek into their financial lives: what they earn, spend, save, and invest as well as what financial headaches they face, what tricks they’ve learned along the way, and what, if anything, they have figured out. Will the answers we receive get the a-okay from financial advisors? Not always. Are they honest looks into families trying to provide for their kids? Absolutely. Here, Paul, a 33-year-old married father of a 4-month-old daughter who lives outside of Portland, OR., discusses how he and his wife handle their spending, bill-paying, and manage to put a little bit away in their first year as parents.
I’m an account manager at a small advertising firm. I make $65,000 a year. After taxes, my take-home pay comes in about $46,000. After insurance, which I count myself as fortunate to have, it drops down to about $36,000. My wife is a stay-at-home mom and a part-time graphic designer. All-told, she makes about $12,000 a year. After expenses and write-offs and such, her income comes out to just under $10,000. So that brings us to about $46,000 combined income after taxes.
It’s been a tight year to be honest. We always budgeted to an extent. But it was never a down-to-the-pennies sort of thing. We allotted money to certain buckets, but never watched everything week-by-week and month-by-month before. When we knew we were expecting our daughter, we had to reorganize and reprioritize everything. It made me realize we weren’t spending wisely or taking account of what was or wasn’t a necessity. When a baby is in the picture, you realize how much superfluous shit you were spending.
We live in a 2-bedroom apartment. Our rent is $1,100 a month. It’s nice. Having that extra room really comes in handy.
We now keep a very strict budget. Our food expenses, which includes meal planning for my wife and I as well as the baby food, comes in at roughly $250 per month. Coupons are our friend. We make big batch meals for the week. Casseroles. Salads. Things like that. We only go out to dinner on special occasions and almost never order take out. That’s a big luxury we did away with when we had our daughter.
Our bills? Internet and cell phone cost us $150 per month; we have Netflix, which is another $11. Renter’s insurance is $17 per month. And I have a Honda Accord that I’m still paying off, which goes for $200 per month. Gas — I have a pretty easy commute — comes to $120. I have a local gym membership, which is $24 per month. We drive to work. We drive to the store. We drive to church. That’s about it.
We had to put a lot on the credit card a few months back for an out-of-pocket medical expense we weren’t anticipating. So, we’re now working it down. Unfortunately, we’re paying the minimum at the moment. That comes to about $54 per month.
I use this app called Digit. It looks at my spending habits and sneakily takes money — $4 here, $10 there – and throws it into a savings account. It’s surprisingly useful, considering I’d never do such micro-saving on my own. I thought it was totally silly at first, but it’s a really nice thing for peace-of-mind.
Babysitting and daycare, right now, are not things we spend on. I don’t know if they ever will be. Our daughter is four months old; my wife or I watch her all day every day. And thankfully my mother is only an hour and a half away. She comes over every other weekend and stays for three or four days at a time. It’s a big help.
I contribute a few hundred dollars a month to our rainy day fund if I can. But, considering we have debt right now, that’s not a possibility. The account does have about $5,000 in it, however.
We have some very small investments. I put away about $500 per month into a high-yield savings account for my daughter. I also have a 529 account for her. That runs me about $100 per month.
I peek at this saving for college calculator way too often and it makes me feel terrible about my contributions. But this is only year one. We’ll get better and contribute more as the years go on. Hopefully, our careers kick up and salaries increase. This is just the start.
So far, the biggest things we’ve removed are dinners out. We used to eat out once or twice a week. Now, we’re whittling that down to three or four times a year. Same with take-in.
We make more precise choices about how we buy the everyday items. For instance, we started buying toiletries on Amazon a few months back, which is surprisingly cost-efficient. I never knew how much we were overspending on shit like deodorant and soap and face wash and toothpaste by buying it at the drug store before we starting Prime-ing everything. Saving on things like that, especially items that we’ll always have to buy, make a huge difference.
I’m due for a year-end bonus this month, so I’m expecting to pay off some bills and put the rest in savings. That’ll definitely take some pressure off. But, all things considered, we’re doing just fine. And we make sure to tell ourselves that on a regular basis.
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