July 23, 2024
44 S Broadway, White Plains, New York, 10601
THE MONEY MINDER

‘Really trying to live within our means’: I make $127,000 but feel I’m not providing enough for my family. Am I on track, or should I be doing more?

Hi Money Minder,

So, I’m 31, making around $127,000 a year. My wife stays home to look after our two-year-old son, and we’re thinking of having another kid soon. Right now, I’ve got about $140,000 stashed away for retirement and I put away $20,000 every year for it. We’ve got a safety net with two months of emergency savings and I shell out about $800 a month for student loans. Luckily, in five years, the Public Service Loan Forgiveness (PSLF) program will kick in and relieve me of around $40,000 in loans.

Our mortgage, including property tax, is about $1500 a month, but thankfully, no car payments. We’re really trying to stick to our budget and live within our means. Still, I can’t shake this feeling that I’m not doing enough for my family. Does it sound like I’m on the right track? I just feel like there’s always more I could be doing to provide for them.

– Family Guy

Response from THE MONEY MINDER:

Hello There,

Congratulations on maintaining a balanced approach to managing your finances while prioritizing your family’s needs. It sounds like you have a solid foundation in place, with a satisfactory income level, substantial retirement savings, and a manageable mortgage. Your commitment to adding another child to your family is admirable.

Given the details you’ve provided, it’s clear you’re already doing a lot to ensure financial stability. Your annual retirement savings of $20,000 and the fact that you’ve accumulated $140,000 in retirement funds by the age of 31 puts you on a favorable trajectory towards long-term financial security. Additionally, the fact that your wife can stay at home to care for your child is a significant investment in your family’s well-being.

However, your concern about not having enough emergency savings is valid. Two months’ worth of expenses is a good start, but aiming for three to six months’ expenses can provide a better buffer against unexpected events. You might consider reallocating a portion of your annual retirement contributions toward bolstering your emergency fund until you reach that target.

Regarding your student loans, the PSLF program will undoubtedly relieve a substantial financial burden in five years. In the meantime, since you’re paying $800 monthly, ensuring that you’re on track with the qualifying payments is crucial.

Living within your means is a significant achievement, especially without car payments, which gives you some flexibility. It might also be helpful to keep an eye on potential increases in expenses with the addition of another child. Budgeting for these future expenses now can relieve some of the stress and help you feel more prepared.

If you still feel you need to do more, consider looking into additional income streams, such as side jobs or freelance work that can be done around your primary job and family commitments. Even a small additional income can help boost savings and provide a greater sense of financial security.

You’re already doing an exceptional job of managing your finances and planning for the future. Remember, the sense of wanting to do more for your family comes from a place of care and responsibility. Keep striving for balance, and remember that being there for your family emotionally and physically is just as important as financial contributions.

Best regards,
THE MONEY MINDER

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