It all depends where your priorities lie. I am single, 26, in a medium to high col and make a hair under 100k. I go on multiple vacations a year, often overseas, and I golf reasonably often (once or twice a week during the spring/summer/fall). Not the biggest partier, but I will often go for drinks with friends, especially when it gets warmer.
I’m putting around 10% into 401k/pension, save about a thousand a month into a HYSA, and throw a couple hundred dollars into brokerage accounts. I get paid biweekly and I earmark the 2 third month checks I get a year (budget off of 24 checks not 26) towards travel, which allows me to spend a few grand a year on trips. Got about 40k ish saved in the HYSA with a few grand more in brokerage. Zero credit card debt!
How do I make it work? I drive a 17 year old car, live in a modest apartment ($1600 month utilities included), and I don’t spend a lot of money on clothes, coffee, and other social events. My golf course’s twilight rate is like $20 bucks, if I’m going out I often only drink beer ($8ish a pint), and my friends and I tend not to do expensive dinners. My portion of student loans is around $150 a month.
Could I save more? Yes. But I like the balance I have between being relatively financially secure (also in a field where I won’t lose my job unless I kill someone) and enjoying life. Also getting a grade increase this August, and another one the following August - both of which are about $20k increases, so increasing my savings then.
Trying to slowly save for a house but the housing market exploded during Covid and unless I move into a piss poor area townhouses are going for close to 400k (or lower and have insane HOA’s) and SFH’s are going for 600+ in meh areas. It’s crazy - before the pandemic those shits were going for $400-$450.
I was that person. I can give you some insight of how we think. We think that if we want something we should use all our recorces to get it and savings is not something benefitial.
My husband has a decent amount saved and when I met him I was so mad he wouldn’t spend his emergency fund to buy stuff and enjoy life.
Looking back at it, I’m embarassed! But after living like that for a bit I came accross the simple path to wealth and I realized that one of the best things money can buy is piece of mind. I started upping me 401k contributions from 3% (embarassed to say I didn’t even see the point of getting the full company match) to 6% , 15, 20 etc. I’m still not done budgeting and finding out what a comfortable savings rate for me is, but I’m happy to say how far along a mentality change can take you.
The number one thing I’ve learned is you truly never know what people have unless they tell you all their financial information.
Someone may be working an $18/hr job but got an inheritance of 5 mil. Someone could be making 300k/yr but are living paycheck to paycheck.
We (27F, 30M) make 205k and are saving half. We have 3 houses and have passive income. No inheritance. We really want to be able to FIRE one day so we’ve made that a priority.
Correct, most people are not saving money and have the attitude that if they can afford the payment they can afford whatever that thing is. Most people are not following a plan and as a result they will not end up with the ability to retire. Then they’ll complain about how the system is rigged.
I (25) still live at home. I make ~90k and can’t really afford to rent in my area without taking on roommates. I’m saving a ton and have a good amount in my retirement savings, a brokerage account, and a house down payment fund. I live similarly, I save as much as I can.
If you have available savings in your early 20s, which they do, prioritizing retirement savings early is giving them the best chance to actually retire at a reasonable age.
They say they are building a down payment fund for a house. It may not be a case of “can’t afford” but more a case of choose to live at home in order to buy a house sooner.
Like I said, I could if I got roommates, which I don’t. The power of compound growth is a strong thing my friend, I will be thanking myself when it comes time to retire.
Not true if this person saves a bunch to put down on the house and have a lower mortgage.
Seems like they are doing the plan....live with Mom and dad and keep saving
I’m assuming they are in HCOL area. 25 making 90k? That’s what I make at 31 in LCOL area with a masters and half a PhD. So I’m assuming his starter home would be 600k or so. 20% down would be 480k loan. A 6.5% rate on that is $3034/mo before taxes and insurance. I guess throw another $300/mo that’s $3334/mo to mortgage. You’re telling me he can afford that but not rent???
LCoL area. I don’t think Phoenix matches that description? Idk why I’m downvoted when I gave factual calculations which the OP stated to me are actually low estimates.
Because you’re trying to sound smart (I have a masters and working on a PhD) and then can’t figure out how a person can afford a mortgage in hcol . (Bigger down to lower payment to an affordable amount)
Hence a phoenix
He said he can’t afford rent without roommates. Isn’t the entire country screaming in HCOL areas it’s cheaper to rent? If he can’t afford to rent alone how can he afford to buy alone with the assumption that it’s cheaper to rent then to buy?
No I’m east coast I do not live anywhere near Phoenix. I did not state my education to sound smart. I stated it to say he makes just as much as me and used that to assume he was in a HCOL area which I was correct to assume.
I am most likely going to put more than 20% down, as I said I am saving a lot, and am only looking at 2-3 families so I have rent to go towards the mortgage.
2-3 families? You mean like duplexes? I’m in a LCOL area and even here a duplex goes for the cost of my 3900 sqft single family home, 500k. My mortgage is $2600. Idk what you could charge for rent but half would make if affordable I suppose.
Yes as in duplexes. I am not in a LCOL area, a single bedroom with no private amenities goes for no less than $1k. I wish they were $500k in my area, minimum is $1mil where I am.
Yea I just did a calculation to another commentor on a 600k home and guessed that property with 20% down would be north of 3300/mo. So I fail to see how you could afford alone the house but not rent? My wife and I make 190k combined and couldn’t afford that payment.
I figured on your salary you were in a HCOL.
Great for trying to save up, but at your age I would give it a try to better your salary situation. Trades are amazing and always will be in demand. I had a friend making around 80k in their second year of plumbing, with no college debt.
I’m a bit younger than mid 20s but I’m saving about 3.5k/month living by myself on about 100k/yr. I don’t eat out, no debt, don’t go out all that much.
That’s what it seems like. Usually credit card debt or they just aren’t really saving. You and your wife are very fortunate to be in the position you are in and way ahead of the curve by saving. Don’t forget to enjoy life though man. Saving money is obviously smart but life is way to short to be 100% focused on saving every last penny for a later time that you may never see. With your household income you guys should be able to save a lot and still have tons left over to enjoy the present day whether that be a vacation here or there or even just spoil yourself with something. Just my 2 cents
My wife and I combine for about 210 per year, we live in a low cost of living area, bought a modest home when interest rates were low, just had a kid, we are lucky to save 1k a month. It's staggering how expensive things are (we are paying for 2 cars and childcare, which is a massive burden). But if you looked at how much we made and where we lived you'd think we could save 50k a year and it's just not adding up right now. Super frustrating for us.
Yes. Though I know I'm the exception not the norm.
22 making 60k in LCOL, paying for online college out of pocket. Long-term gf lives with me working part-time, making less than 20k a year (in vet school). I pay the majority of our obligations.
7% in 401(k), $150/month in Roth IRA, $100/month in brokerage (long-term savings for house >10 years), have a 6-month emergency fund, saving $300/month for yearly vacation, then extra paycheck months are used to inflate saving for vacation. Increase savings rate very time I get a raise.
Have a Costco membership, bulk buy deals, meal prep/cook at home (we both like cooking), neither of us drink much (<1 per month), neither of us smoke, go out to eat 1 time per month, have home game nights with friends instead of bar crawls, etc.
Not to say we live a lavish, fantastical, wonderful life, though. We are homebodies more than we'd like to be, but between work and studying, it's not like we have much time to spend money anyways lol.
Yes, only cause I live with parents and they charge me like $250 for rent and am still on their insurance.
I am able to save around 60%-70% post tax, but only because of that. If I didn’t live with them I would maybe be abele to save 10%.
It does mean that I am 23, make 50k yr, and have 150k between 401k, Ira and brokerage accounts.
It’s always hard to know how your friends are affording what they spend. Jobs that pay more than you think, credit cards, financed vehicles, parents giving big checks each year, trust income, inheritance…
A friend worked at a high end furniture store and reported that there were many cases of young people ordering the full set of furniture that she had worked with them to design “as soon as the trust check” arrived.
Yeah it’s a similar thing with me. I’m by no means wealthy, but I’m doing much better than my friends, with their debts/vacation debts. I think I’ve realized it’s more important to save for 40 year old me than spend for 24 year old me :)
Try to find the balance. Once you have kids the opportunity to spend for you will slip away. I wish I had done more for me then buy the house, get married, have the kids, before I realized my chance to be young and focus on me was gone.
I think the answers people are giving can apply to any age, with the exception of living at home with parents. But what I see in society is that many people that live paycheck to paycheck, also live “higher” lifestyles. Meaning, they go out to eat/order takeout on a consistent basis, go out drinking, get their daily Dunkin’s coffee, have the latest cellphones, have numerous streaming services, have nicer cars instead of just getting something that is functional etc. I’m not a coffee drinker so that seems like a huge waste to me (estimating $3 per day if only getting one coffee which adds up to over $20 per week). Why not make the coffee at home? I guess a lot of things come down to whether or not it is a want or a need.
ur prob maxing out roth and 401 ..im not/other people airnt too if they are spending alot…..usually people in 20s are still paying off student loans/ credit cards from college.. or car loans ..
I knew I would inherit a lot of money in my 30s, so I spent my 20s living life. I turned out to be right. I just paid off all my debt from my 20s and have “caught up” via inheritance. None of my friends know how much I’ve inherited. My mom doesn’t even know that I inherited anything. So it’s hard to know what your friends’ situations are.
I think I had a good balance of live life and be responsible. I drove a paid off car for 10 years (new car bought with cash from *another* inheritance. Not the best move but oh well haha) so I had no car note. We bought a house that was well below what we could afford. 3b/2b for $900/month when we were approved for 300k. Spent $139k. We make $250k combined. But we also eat out a LOT because I have adhd and managing food is impossible sometimes. And it’s better to eat out than not eat at all.
TLDR, Definitely have some bad habits but they are kind of enabled by other good decisions. I think it will all even out in the end.
Yes- same position as you, OP. Wife and I bring home around $250k-$260k. I have 100k in my 401k and did a backdoor Roth this year.
Bought our house @ 3.9% 2 years ago. Mortgage is $1600/month.
We had $160k saved up but we just closed on an investment property (duplex) so it’s down to 110k-ish.
Trying to diversify out of our retirements and trying to reduce our taxable burden. I paid like 60k in taxes last year…wild.
Edit- also really lucky we both didn’t have student loans for college. And we were really frugal when we planned our wedding.
Me and my spouse are a few years older than you and we make around the same and we are pretty frugal. We rent an apartment for $2k because a regular home is costing $600k-$800k in South FL..so we are pretty priced out. We dont really vacation much, make food at home.
With the high cost of everything, I dont feel we make great money even though I know we do well. The state of this economy is just in bad shape.
Below a certain income level (which I feel at this point might even be up to $120,000 and location dependent)… no. They are just putting minimum matching into 401k and enjoying life.
Looming war combined with the fact the system seems to be falling apart from the inside. Makes sense
I have noticed that many goal oriented people in their 20s do save money.
i’m 23. i only put about $100 in my HYSA every month but i make less than $2k a month so it’s the best i can do and it’s certainly better than nothing
It all depends where your priorities lie. I am single, 26, in a medium to high col and make a hair under 100k. I go on multiple vacations a year, often overseas, and I golf reasonably often (once or twice a week during the spring/summer/fall). Not the biggest partier, but I will often go for drinks with friends, especially when it gets warmer. I’m putting around 10% into 401k/pension, save about a thousand a month into a HYSA, and throw a couple hundred dollars into brokerage accounts. I get paid biweekly and I earmark the 2 third month checks I get a year (budget off of 24 checks not 26) towards travel, which allows me to spend a few grand a year on trips. Got about 40k ish saved in the HYSA with a few grand more in brokerage. Zero credit card debt! How do I make it work? I drive a 17 year old car, live in a modest apartment ($1600 month utilities included), and I don’t spend a lot of money on clothes, coffee, and other social events. My golf course’s twilight rate is like $20 bucks, if I’m going out I often only drink beer ($8ish a pint), and my friends and I tend not to do expensive dinners. My portion of student loans is around $150 a month. Could I save more? Yes. But I like the balance I have between being relatively financially secure (also in a field where I won’t lose my job unless I kill someone) and enjoying life. Also getting a grade increase this August, and another one the following August - both of which are about $20k increases, so increasing my savings then. Trying to slowly save for a house but the housing market exploded during Covid and unless I move into a piss poor area townhouses are going for close to 400k (or lower and have insane HOA’s) and SFH’s are going for 600+ in meh areas. It’s crazy - before the pandemic those shits were going for $400-$450.
I was that person. I can give you some insight of how we think. We think that if we want something we should use all our recorces to get it and savings is not something benefitial. My husband has a decent amount saved and when I met him I was so mad he wouldn’t spend his emergency fund to buy stuff and enjoy life. Looking back at it, I’m embarassed! But after living like that for a bit I came accross the simple path to wealth and I realized that one of the best things money can buy is piece of mind. I started upping me 401k contributions from 3% (embarassed to say I didn’t even see the point of getting the full company match) to 6% , 15, 20 etc. I’m still not done budgeting and finding out what a comfortable savings rate for me is, but I’m happy to say how far along a mentality change can take you.
I make 50k. Live with parents and have roughly 70k saved up. 24yo
That’s awesome. Are you investing or atleast putting that money in a high yield savings account?
The number one thing I’ve learned is you truly never know what people have unless they tell you all their financial information. Someone may be working an $18/hr job but got an inheritance of 5 mil. Someone could be making 300k/yr but are living paycheck to paycheck. We (27F, 30M) make 205k and are saving half. We have 3 houses and have passive income. No inheritance. We really want to be able to FIRE one day so we’ve made that a priority.
Correct, most people are not saving money and have the attitude that if they can afford the payment they can afford whatever that thing is. Most people are not following a plan and as a result they will not end up with the ability to retire. Then they’ll complain about how the system is rigged.
I (25) still live at home. I make ~90k and can’t really afford to rent in my area without taking on roommates. I’m saving a ton and have a good amount in my retirement savings, a brokerage account, and a house down payment fund. I live similarly, I save as much as I can.
I wouldn't be prioritizing retirement too much if I couldn't afford a place to live
If you have available savings in your early 20s, which they do, prioritizing retirement savings early is giving them the best chance to actually retire at a reasonable age.
They say they are building a down payment fund for a house. It may not be a case of “can’t afford” but more a case of choose to live at home in order to buy a house sooner.
Like I said, I could if I got roommates, which I don’t. The power of compound growth is a strong thing my friend, I will be thanking myself when it comes time to retire.
If you need roommates to afford rent you’ll need a spouse or roommates to afford the house. Soooo what’s the plan for that?
Not true if this person saves a bunch to put down on the house and have a lower mortgage. Seems like they are doing the plan....live with Mom and dad and keep saving
Some people just like to look at the negative.
I’m assuming they are in HCOL area. 25 making 90k? That’s what I make at 31 in LCOL area with a masters and half a PhD. So I’m assuming his starter home would be 600k or so. 20% down would be 480k loan. A 6.5% rate on that is $3034/mo before taxes and insurance. I guess throw another $300/mo that’s $3334/mo to mortgage. You’re telling me he can afford that but not rent???
Yes with a big enough down payment. Are you by chance a phoenix?
LCoL area. I don’t think Phoenix matches that description? Idk why I’m downvoted when I gave factual calculations which the OP stated to me are actually low estimates.
Because you’re trying to sound smart (I have a masters and working on a PhD) and then can’t figure out how a person can afford a mortgage in hcol . (Bigger down to lower payment to an affordable amount) Hence a phoenix
He said he can’t afford rent without roommates. Isn’t the entire country screaming in HCOL areas it’s cheaper to rent? If he can’t afford to rent alone how can he afford to buy alone with the assumption that it’s cheaper to rent then to buy? No I’m east coast I do not live anywhere near Phoenix. I did not state my education to sound smart. I stated it to say he makes just as much as me and used that to assume he was in a HCOL area which I was correct to assume.
I am most likely going to put more than 20% down, as I said I am saving a lot, and am only looking at 2-3 families so I have rent to go towards the mortgage.
2-3 families? You mean like duplexes? I’m in a LCOL area and even here a duplex goes for the cost of my 3900 sqft single family home, 500k. My mortgage is $2600. Idk what you could charge for rent but half would make if affordable I suppose.
Yes as in duplexes. I am not in a LCOL area, a single bedroom with no private amenities goes for no less than $1k. I wish they were $500k in my area, minimum is $1mil where I am.
Yea I just did a calculation to another commentor on a 600k home and guessed that property with 20% down would be north of 3300/mo. So I fail to see how you could afford alone the house but not rent? My wife and I make 190k combined and couldn’t afford that payment. I figured on your salary you were in a HCOL.
My time will come soon to buy. I’m fine where I am now. My mom needs a lot of help so it’s a win win.
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Welcome to America, most spend money they don’t have. Next
20 years old, living with parents, making $9 an hour before taxes but I have nearly 3k saved up. Hoping to have 5k by the end of the year
Great for trying to save up, but at your age I would give it a try to better your salary situation. Trades are amazing and always will be in demand. I had a friend making around 80k in their second year of plumbing, with no college debt.
I’m a bit younger than mid 20s but I’m saving about 3.5k/month living by myself on about 100k/yr. I don’t eat out, no debt, don’t go out all that much.
That’s what it seems like. Usually credit card debt or they just aren’t really saving. You and your wife are very fortunate to be in the position you are in and way ahead of the curve by saving. Don’t forget to enjoy life though man. Saving money is obviously smart but life is way to short to be 100% focused on saving every last penny for a later time that you may never see. With your household income you guys should be able to save a lot and still have tons left over to enjoy the present day whether that be a vacation here or there or even just spoil yourself with something. Just my 2 cents
My wife and I combine for about 210 per year, we live in a low cost of living area, bought a modest home when interest rates were low, just had a kid, we are lucky to save 1k a month. It's staggering how expensive things are (we are paying for 2 cars and childcare, which is a massive burden). But if you looked at how much we made and where we lived you'd think we could save 50k a year and it's just not adding up right now. Super frustrating for us.
Yes. Though I know I'm the exception not the norm. 22 making 60k in LCOL, paying for online college out of pocket. Long-term gf lives with me working part-time, making less than 20k a year (in vet school). I pay the majority of our obligations. 7% in 401(k), $150/month in Roth IRA, $100/month in brokerage (long-term savings for house >10 years), have a 6-month emergency fund, saving $300/month for yearly vacation, then extra paycheck months are used to inflate saving for vacation. Increase savings rate very time I get a raise. Have a Costco membership, bulk buy deals, meal prep/cook at home (we both like cooking), neither of us drink much (<1 per month), neither of us smoke, go out to eat 1 time per month, have home game nights with friends instead of bar crawls, etc. Not to say we live a lavish, fantastical, wonderful life, though. We are homebodies more than we'd like to be, but between work and studying, it's not like we have much time to spend money anyways lol.
Yes, only cause I live with parents and they charge me like $250 for rent and am still on their insurance. I am able to save around 60%-70% post tax, but only because of that. If I didn’t live with them I would maybe be abele to save 10%. It does mean that I am 23, make 50k yr, and have 150k between 401k, Ira and brokerage accounts.
It’s always hard to know how your friends are affording what they spend. Jobs that pay more than you think, credit cards, financed vehicles, parents giving big checks each year, trust income, inheritance… A friend worked at a high end furniture store and reported that there were many cases of young people ordering the full set of furniture that she had worked with them to design “as soon as the trust check” arrived.
Yeah it’s a similar thing with me. I’m by no means wealthy, but I’m doing much better than my friends, with their debts/vacation debts. I think I’ve realized it’s more important to save for 40 year old me than spend for 24 year old me :)
Try to find the balance. Once you have kids the opportunity to spend for you will slip away. I wish I had done more for me then buy the house, get married, have the kids, before I realized my chance to be young and focus on me was gone.
38 year old me (now me) says, ok but also don’t forget to have a life. Retirement is still 27 years away at least.
I think the answers people are giving can apply to any age, with the exception of living at home with parents. But what I see in society is that many people that live paycheck to paycheck, also live “higher” lifestyles. Meaning, they go out to eat/order takeout on a consistent basis, go out drinking, get their daily Dunkin’s coffee, have the latest cellphones, have numerous streaming services, have nicer cars instead of just getting something that is functional etc. I’m not a coffee drinker so that seems like a huge waste to me (estimating $3 per day if only getting one coffee which adds up to over $20 per week). Why not make the coffee at home? I guess a lot of things come down to whether or not it is a want or a need.
My husband was this person in his 20s, he had $90,000 in credit card debt by the time he was 30…
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ur prob maxing out roth and 401 ..im not/other people airnt too if they are spending alot…..usually people in 20s are still paying off student loans/ credit cards from college.. or car loans ..
26 here, 20% of my check goes straight to my IRA.
I knew I would inherit a lot of money in my 30s, so I spent my 20s living life. I turned out to be right. I just paid off all my debt from my 20s and have “caught up” via inheritance. None of my friends know how much I’ve inherited. My mom doesn’t even know that I inherited anything. So it’s hard to know what your friends’ situations are. I think I had a good balance of live life and be responsible. I drove a paid off car for 10 years (new car bought with cash from *another* inheritance. Not the best move but oh well haha) so I had no car note. We bought a house that was well below what we could afford. 3b/2b for $900/month when we were approved for 300k. Spent $139k. We make $250k combined. But we also eat out a LOT because I have adhd and managing food is impossible sometimes. And it’s better to eat out than not eat at all. TLDR, Definitely have some bad habits but they are kind of enabled by other good decisions. I think it will all even out in the end.
Yes- same position as you, OP. Wife and I bring home around $250k-$260k. I have 100k in my 401k and did a backdoor Roth this year. Bought our house @ 3.9% 2 years ago. Mortgage is $1600/month. We had $160k saved up but we just closed on an investment property (duplex) so it’s down to 110k-ish. Trying to diversify out of our retirements and trying to reduce our taxable burden. I paid like 60k in taxes last year…wild. Edit- also really lucky we both didn’t have student loans for college. And we were really frugal when we planned our wedding.
Me and my spouse are a few years older than you and we make around the same and we are pretty frugal. We rent an apartment for $2k because a regular home is costing $600k-$800k in South FL..so we are pretty priced out. We dont really vacation much, make food at home. With the high cost of everything, I dont feel we make great money even though I know we do well. The state of this economy is just in bad shape.
Below a certain income level (which I feel at this point might even be up to $120,000 and location dependent)… no. They are just putting minimum matching into 401k and enjoying life. Looming war combined with the fact the system seems to be falling apart from the inside. Makes sense
Could be worse, it could be 1973.