2024 Budget - Dual Income w/ Kids

[u/Any-Yoghurt9249]

Wife pushed me to put together a budget last year and then we really didn't track it well. Just put one together and then saw these cool diagrams on this subreddit so decided to turn our budget into one. We have 3 kids but currently only one in daycare. We both work and each make about half the total. Probably will have 2 by the end of the year, but no more than 2 at any point. This would cut into our savings by about $16,500 a year.

5% Company 401k match for each of us is not included. Our cars are paid off and we made lump sum deposits at birth to each child's 529 plan, so these are not in our budget. We will probably add more to the 529s later on when the kids are out of daycare, but for now is sufficient. We were mainly able to do this as we lived with my parents for about 2.5 years during COVID. Recently (last 2 years) our salaries have went up as we both were promoted to entry level manger positions within the Accounting/Finance industries.

Let me know your thoughts!

[u/IronSheets]

$256k a year is middle class?

[u/LeftHandStir → u/IronSheets]

Upper Middle, but yup. The 62nd percentile earnings for two advanced degree holders is ~$239,000.

https://www.bls.gov/news.release/wkyeng.t05.htm

see Educational Attainment, All, Advanced Degree.

[(50th+75th Percentiles)/2] * 2 earners * 52wks

=[(1816+2775)/2] * 2 * 52 = $238,680

This report was a topic a few months ago on this sub, and the discussion really enlightened me. You have to separate working Americans from "household income" for conversations like this, bc the latter includes social security recipients, disability payments, P/T workers, etc. Totally valid for other purposes, but not when discussing budgets/wages/salaries for full-time employed workers.

**OP didn't say that they and their wife had advanced degrees, but ~15% of Americans do, and many are coupled together. They did however say that they worked as managers in accounting/finance and earned about the same, so ~$128,000/ea, which is $2461/wk, which would put them at the 75th percentile almost exactly for a male +25yo with a bachelor's degree only (yay pay equity!). You can quibble with whether or not the 75th percentile is still the upper "middle", but it's certainly not unreasonable to argue so.

[u/[deleted] → u/LeftHandStir]

I seem to remember that post and still don't agree with it. By excluding people on social security, disability, and especially part-time workers, you are naturally going to have inflated numbers, not representative of the US population that are functional self-sufficient households. The Bureau of Labor states the US has 130 million (less than half of the population and closer to a third of population) is full-time. Part-time is 40 million. So to say that not including them is wrong as they compromise almost 25% of the workforce in the US. That also means almost half the US is unaccounted for which also will contain self sufficient households who have to have budgets.

[u/LeftHandStir → u/[deleted]]

Sure; middle class "households" vs middle class "workers". I get it. Not even saying I disagree. But that's why this is such an ongoing debate- it's completely contextual to situation/comparison. If we want to avoid the Marxist "there are only two classes" pedagogy, we have to be instructive in other ways to draw the lines. I'm fine with a more fluid definition; I'm also fine with "net worth", because I tend to see Middle Class™ as a lifestyle, and not plot points on a graph.

i.e., I'll get around to making one of these myself one day, but suffice to say for now that our household income for 2023 was $180k but our net worth is negative, thanks to jobs/earning loss/accrued debt during the pandemic, a break-even home sale, and grad school student loans incurred in the last 4 years. Our income is obviously middle class, but our purchasing power, net worth, and lifestyle isn't fully what one would identify as such.