4 People, 1 Salary: How I Save and Splurge on $60,000

Real BudgetsThere's a reason why guests look in the medicine cabinet.

Not you, of course. Other guests.

It's human nature to want to get a peek at how other people live. (Reality TV, anyone?) It helps us to feel as if our mistakes aren't all that unusual—that our best efforts are good enough to keep up with the crowd because everyone else makes them too.

Today, however, we'll be engaging in another kind of look-see ... into other people's budgets.

Four brave souls have bared all (of their budgets) to show us how real people of different ages and financial situations budget to fit their lifestyles. All of these LearnVesters earn about $60,000 per year, and each one has reported his or her budget in percentages, which have been color-coded in accordance with the 50/20/30 rule. The rule recommends that you allocate 50% of your budget for essentials (housing, transportation, utilities and groceries), 20% toward financial priorities (retirement contributions, savings contributions and debt payments) and the remaining 30% for bonus (read: fun) lifestyle expenses.

We also asked Katie Brewer, a CFP® with LearnVest Planning Services, to review their budgets, so we can see how these folks are acing their finances—and where there's room for improvement.

Jeanette, 37, Writer and Private Chef

JeanetteI'm a married mother of two preschool-age children who works roughly 30 hours a week while my husband works full-time at a law firm. I contribute approximately one-third of our family's household income toward covering the mortgage, utilities, our kids’ expenses, retirement and college savings, and all of my personal expenses. My husband contributes the bulk of our emergency fund and retirement savings.

My part-time, flexible schedule has allowed me to play a hands-on role in my children's earliest years—something that both my husband and I value. His salary compensates in the areas where I contribute less or not at all, including healthcare, car and home insurance, savings and travel. Once the kids require less of my time, I'll likely shift to working more in order to contribute more.

We'd love to be saving more, so I spend very little on clothes and personal items. We also travel much less than we did before we had kids, in part because it's more difficult, but also because it's more expensive now that four of us require airline tickets. If my income increased, that's where I would spend more!

Katie Says: It's great that Jeanette's family has managed to keep their fixed expenses low, and that the couple has started to save for retirement well ahead of time. It's not explicitly financial, but I'm also glad to see that she's found a great work-life balance. One thing that I would tell Jeanette: If you want to travel, start saving for it now by setting up a separate savings account and contributing to it a little each month, with the goal of taking a relatively affordable trip.

RELATED: 6 Money-Saving Summer Airfare Secrets

Isaac, 24, IT Consultant

isaac4I live in Washington, D.C., which is a city of boozy brunches, happy hours and other professional functions that can dig a serious hole in your wallet. This happens slowly over the course of a few weeks, but $10 here and another $12 there add up, and then you're left dipping into that ever-so-small savings account to buy lunch for the rest of the week. In D.C. you have to be careful not to party yourself out of house and home!

I get paid once a month, so the first thing that I cover is all of my "Must Pay For" expenses, including rent, cell phone, utilities, student loans and life insurance. Then I tackle my "Should Pay For" expenses, such as two large grocery trips (each costs about $100) and my $8,000 of credit card debt. My goal each month is to put $800 toward that debt, but I only pay off $400 of it when I get my paycheck, in case something comes up and I need that money. I hold onto the other half until the next pay period, and then I'll put whatever I haven't spent toward the credit cards. Otherwise, I'd just end up paying unforeseen expenses on a credit card, continuing the vicious cycle of debt.

The last group of expenses are "Would Love to Pay For" things. Most of this is the cost of enjoying life in the city—happy hours, eating out, shopping, parties, sporting events, concerts, cabs. The hardest part about budgeting for these expenses is that they change every month, but I try to take out about $200 in cash up front for them. If I go through that money, I may dip into the second half of the funds for paying off the credit card debit or the $300 that I have reserved for unforeseen expenses in my savings account.

Katie Says: Isaac is doing a great job keeping his essential expenses under 50%, despite living in such an expensive city. And although it sounds like he's having a lot of fun, his dining spending isn't too bad. Plus, I'm impressed that he's found a way to really distinguish between wants and needs at such a young age. One thing that might help him stick to a tighter budget is to set up two checking accounts: one for essential expenses and one for fun money. There's just one rule: The fun money account can't be replenished until the end of the month.

  • http://life.littlekujodesigns.com/ Patti McHugh

    I think the author got the 50/20/30 rule mixed up in the article above. The linked article says it’s 50% essential expense, 20% financial priorities, and 30% lifestyle choices.

    • LearnVestJacqui

      Hi Patti!

      Thanks for the catch, you’re absolutely right! We do recommend you spend 50% on essential expenses, 20% on your financial priorities and 30% on your lifestyle choices.

  • Anne

    It would help to know how much each of these people/ families are earning and what their goals are in terms of retirement!

    • AnaPascal

      The title of the article says they are all earning around $60k.
      I don’t know what that means for the woman who is married – does she make 60k, and then her husband makes whatever he makes? or do they make 60k together and she’s showing how they budget as a family?

  • Workin gal

    Your headline is misleading. This woman is not raising a family on $60,000. As she indicated, their family income is more like $180,000 (she said her $60K = 1/3). That’s not helpful information for most people–gee, how can we possibly afford to live on $180,000?

    • Rach

      is this 60,000 after taxes? So they all make about 90,000?

  • cash

    The goal for this website/blog is great but I have yet to find a well written article on this site. When I take the time to read an article on this site, I am always disappointed. The advice/stories are usually unrealistic and the “tips” are not practical or the usual run of the mill advice. The heading was misleading and I expected to read about a family of 4 living on 60k. Not family with two working parents earning good money or a 24 year old living off 60k. I think it is very easy for one person to “get by” on 60k, this writers on .here are living in a different world

  • Judi

    I really liked this article! I think they should should do a similar series with varying income levels and have it include the entire household budget not just a single persons salary

  • Amy

    Why are medical expenses labeled as lifestyle choices? These are only choices if elective.

  • http://www.facebook.com/julie.moore.104 Julie Moore

    I agree with Cash below. I am always disappointed with these articles. I am a frugal person and a good saver and feel that I could give more money-saving tips than the people who write them. I am looking for articles about how to raise a family on 60K or even 40K, which are the financial situations of a lot of people out there. The people you talk about are unrealistically ahead of the game.

    • Nightvid Cole

      I think your best bet is to keep your housing costs to a bare minimum – rent (do not buy) and yes, kids can share a bedroom.

      You can splurge a little in other areas and still be fine – but you have to be firm and say that paying even $100 more in rent is simply not an option and will not be considered.

      Also live close to work because commuting is incredibly expensive (gas + vehicle repair,maint, depreciation) and might also rob you of a chance to put in an extra few hours a week to earn more. Living close to work also has the added benefit of allowing you to drive a $2000 car, since having it in the shop for a couple days is a headache instead of a nightmare.

  • Alexandra McArthur

    Fantastic way to see how others are prioritizing their budgets. However, I was dismayed to see that only one of the individuals included charitable contributions as a part (albeit a small part) of his or her budget. No matter how much or little we make, it’s important to consider philanthropy as an important part of any budget.

  • Brittany

    I find a lot of your advice impossible to follow. I make a great salary, but six years of pharmacy school mean that I pay 25% of my net income towards student loans (that was before my recent job change and promotion– before that, it was 33%). Along with my husband’s medical school loans, we’re looking at $400,000 of debt.

    Our situation is not that uncommon. I wish you’d have more articles that tell us how to budget/save while also considering our massive amount of student loan debt.

    • Nightvid Cole

      Why don’t you up it to 33% towards the loans again (which you did before so you can do again)? Don’t you want to get out of debt?

      • Jose Eduardo Pimentel

        Actually, the payments could have even been bumped up over the previous 33%, by keeping the previous lifestyle.

        However, if an investment has a higher ROI than the interest on the loan, it’s better to only make the minimum payments and invest the rest. Could be risky, mileage may vary.

  • Kat R.

    Great concept for this article, but poor and misleading execution. I’m with Workin gal: the headline says $60K, but one of the families makes $180K (!!!!). On top of that, none of these people appear to own cars (note the miniscule percentages assigned to transportation)–but, according to the U.S. Department of Transportation, the average American household owns two vehicles. In other words, you’ve completely bypassed any example of a major expense that most American families face. I’m so tired of getting articles like this from LearnVest; the journalism is just bad. Will be unsubscribing after this.

    • dmZ

      It is unlikely that the girl living in NYC owns a car, and unless Issac lives in a suburb of DC or works somewhere without bus or metro access, he probably does not own a car either. It is also likely that Issac has a transportation subsidy through his job. I live in dc and have a bike instead of a car. I probably spend maybe $50 a month on transportation (more in the winter, less in the summer because I prefer to bike when the weather is nice).

  • Boo Radley

    Isaac says he only gets paid once a month but Katie, the financial planning expert, recommends only replenishing his fun money checking account when he gets his second paycheck of the month. Did she not read that he only gets paid once a month? This article could use a good editor.

  • dmZ

    I’m surprised Issac spends so much on DC housing. I make slightly more and spend probably $4,000 less on a one bedroom in the city.

  • Broken moldes

    What about those of us that only make 30,000 and are a single parent, oh and yes a male. How can i make it. That is what people are looking for, because I know there are alot of people like myself, looking for ideas of how to make it….please help us and our kids.

  • sam

    why does issac a 20 something single male need life insurance? seems like a waste of money there

    • mostlywentzel

      A lot of reasons. For starters, should he die, his family could be stuck with his debt. It doesn’t just go away when you die. Also, that money could help his family pay for a funeral. And finally, he likely has a smaller policy now, but would move up to a larger one later. Doing that, he’s less likely to need to submit to a medical exam for approval in his 40′s. It’s not a bad idea.

  • jpbrody

    Would be nice to make 60K a year! How about cutting that to 30K and tell how families, or even singles, survive and “thrive” on that amount.

    • Nightvid Cole

      Easy for a single on 30K – just live like a broke college student

  • liz

    I think it’s ridiculous to include health care in “lifestyle choices” rather than essential expenses. If I didn’t take care of my health care (including my $540/month health insurance premium and $300/month in out of pocket health care costs – not including dental) I wouldn’t be able to stay healthy enough to work due to a disability. Also, here is MA (and soon in the rest of the US), it’s REQUIRED to have health insurance. So, I make about $64K and total my health care is about 20% of my income.

    • Nightvid Cole

      I couldn’t agree more – in fact – a good case can be made that while healthcare is a necessity, at least a portion of housing cost is not a necessity because you can downsize or take on roommates.

  • Is there an answer

    I’d like to see the budget for 5 on income of 52,000.00 before taxes. I haven’t figured out how to afforded health care for the kids or pay for meds if needed.