[Jacqui]

Quick question… 20-30% savings rate… with kids… 2 and 4 years old… how?

More in depth – how do you budget for birthdays, Christmas, etc?

And what are you cutting out? Also, do you count contributions to 529s as part of your 20-30%?

I think so but I’m not sure.

I’m in Choose FI with kids but I feel like this group gets more experienced responses.

We both worked salaried positions with 60-80 hour weeks so second jobs aren’t an option right now.

[Brad]

1) Automate. Invest first. Not last. Pay yourself and then budget with the 80% you kept. 2) 529s can wait.

They make loans for college.

Not for retirement.

Focus on getting your Army of $$$ built.

Then focus on kids.

[Bill]

Spend less or earn more. The median spend for a middle class American household is around 70k.

If you are spending more than that, make that your target.

Half of all Americans are living below that median spending level so it should be an easy number to hit.

If you post what you are spending as well as in what categoríes, you’ll get much better responses on what you can cut

[Sylvia]

Not sure if this will help but I am a member of a local Fb buy nothing group- there are always toys and things for young children (clothes, shoes, sippy cup type stuff etc) maybe that can help cut child related expenses.

As for birthdays and Christmas, I also shop fb marketplace (I got 50 Barbie’s last year for $40) for like new toys.

I go through my entire budget to see if there’s a cheaper way to accomplish that item.

I find it takes iterations and trying stuff.

[Noa]

Avoid lifestyle creep and invest more and more $ as your salaries increase.

Live near a good public school.

Combine bday parties (our kids bdays are 10 days apart so it works).

Once they are in public school it gets easier.

[Michele]

I think it really varies. When my kids were that tiny, we were making a lot less, but they also have low expectations.

We still do one birthday present per kid, and we did a lot of free activities – like playing in the park and library visits.

What area are you looking to cut down on?

[Jessica]

The way we save for holidays, birthdays, and trips is we use an Ally savings account with buckets for each.

I have it timed where a couple days after paychecks are scheduled to hit, a certain amount is transferred from my checking account to each of those buckets.

[Naomi]

We actually don’t do presents for bdays – we throw a party for them but don’t give them presents.

We keep a pile of gifts they don’t like/want/need to regift to others.

For Christmas we did only four presents until 5th grade or so based on the idea of “one want, one need, one wear, one read.”

Two years we traveled for the holidays and did no presents.

We also participate in buy nothing groups for clothing and books. Plus the library.

I don’t think we hit that savings rate but we are saving.

[Jenny]

Automate your savings，if your goal is 20%, set that aside then live on the rest.

Once the 80% is gone, no more spending. It can be as easy as that.

[Lauren]

Not that I do this myself, but if there are grandparents etc., *you* probably don’t have to ever get your kids birthday/Christmas presents.

I feel like we have pretty modest holidays, but my kids (2 and 5 now) still get at least twice as much as they need or can reasonably have accessible at one time without making a giant mess every day.

[Eric]

4 kids here. Not investing 20% is ok. You can always put more back later.

They will only be young once.

[Ira]

We don’t consider our contribution to 529 as part of our savings (but part of our net worth).

Set aside an amount that you feel comfortable with (if you choose to set any amount).

We don’t budget for birthdays and holidays.

We can look at our budget and decide how much we would like to spend.

We cut out the amount of money that my husband and I spent eating out to a much lower amount from our general budget.

[Jodi]

Do you have an idea of all the things you are spending money on right now?

I have kept a detailed budget through the years but with our busy schedules (both working 40+ hours and 2 kids in activities) I wasn’t as diligent with the follow through of actually tracking our spending.

I downloaded rocket money and it quickly became evident where our money was going and we could cut back.

Also, started out at a Dave Ramsey die-hard, so we have no debt other than the house…

that helps A TON.

[Sean]

It’s always they same, fortunately or unfortunately. It’s just making income sufficiently higher than spending.

So it’s either cutting costs more or increasing income more.

Don’t know what your jobs or incomes are but straight salary and 60-80 hours a week sounds horrible unless the income is just insane.

[Elizabeth]

I do NOT count our 529 plan contributions in our savings rate because those account balances aren’t part of what we consider towards our FI number goa

[Erin]

Our savings rate is only 20% right now, but no one has kicked me out of the group!

We built a sizable stockpile before kids, so we’re still on track for a 55 retirement.

Childcare is a serious, but temporary expense.

To ease the costs of kids – buy nothing group (!!!), shop the sales, second hand clothes, for birthdays we try to do experiences since family members usually buy toys from Amazon.

[Sam]

You can do your own accounting however you want. I think the 529 is a case where the simplicity of a single number as a savings rate isn’t enough to capture everything.

What are you hoping to accomplish with the savings rate number?

Simple math for years to retirement?

A gauge of how well you’re living within your means?

Something else?

The basic idea of a savings rate as far as planning for retirement is particularly useful if your longterm expenses and pre-retirement income will be relatively flat, but saving for and paying for college is fundamentally not flat over the long term.

If you’re using your savings rate to try to do simple math about how many years to retirement, I probably wouldn’t count 529 contributions.

If you really want long term consistency (but it’s okay not to), you’d have to consider how you’re going to account for the future college expenses (e.g. to avoid double counting an expense or never counting it).

[Julie]

We budget $200 per kid for Christmas and birthdays. In comments you are responding a lot about unexpected expenses around kid wants but that sounds less like budgeting and more like tracking.

Budgeting creates a goal to limit dollars to a certain number based on your income and your goals.

If spending an unlimited amount on random things is a priority for your family, then maybe budgeting isn’t 🤷‍♀️ whatever works for your family.

[Linda]

I agree that 529 plans should not be in the mix right now. You need to save for yourself first which I know is hard to hear.

It is not considered part of your 20 to 30%. You’re in a tough stage right now.

Give yourself some grace but keep at it.

Hopefully you’re still able to do 15% but do what you can and as others have said, save first and spend what is left.

[Author]

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