By Ryan Velez
Data from the United States Census Bureau says that the average household income as of 2014 was $73,298, well below six figures, but still meaning that a family can live with finances in this orbit. However, Celebrity Net Worth reports that one family in New York City is still struggling to get by with an income six times the national average. How can this happen? The article in question breaks down where the issues come from.
The chart, initially provided by Financial Samurai, explains that the New York family consists of two lawyers in their early 30s who both make $250,000 annually and have two children, ages three and five. Despite their large annual take, their savings end up at a relatively small $7,300.
The largest cut into their earnings is taxes which, while not a true “expense,” eats up nearly half their $500,000 gross income at $185,600. The second highest expense they have is their mortgage, coming in at $60,000 a year broken down at $5,000 a month. The third highest expense is one that many families struggle with each year—childcare. While childcare is expensive in many places, in New York City, it is among the worst, costing them $42,000 a year.
Granted, many of these expenses are necessary ones that the family can’t really do much to circumvent. However, when we take another look at some of their expenses, there are opportunities to curb their spending. For one, their three annual vacations cost a total of $18,000. Granted, the law is a stressful field, and a vacation may be needed. However, cutting this down to potentially one a year could be money that would go into their savings.
Another potential area of savings is the family’s charitable donations. Charity is a noble thing to do, especially with people of means. However, the family’s $18,000 may be a bit excessive considering their issues with savings. Cutting this in half means that they can still do their part to help while adding $9,000 to their savings each year. Notably, the family also has two cars, which mean two car payments in a city where a car isn’t really needed. If the family just kept their BMW and left their Toyota Land Cruiser to the side, they could save $4,000 in car payments.