How a Family of 4 Live on $160k in Richmond, Viriginia

Our fifth Money Principle is “You can do anything with your money but not everything,” and today’s edition of Home Economics is a perfect example of that.

After the birth of their first child, the couple decided that one of them should stay home with the new baby. They created a spreadsheet comparing all the different options, and in the end, today’s Home Ec writer returned to her job at the end of her maternity leave, and her husband left his.

They were financially in a good position to make the decision to become a one-income family. They own their home and have roughly six months of emergency savings. But it also means they’ve had to put some goals on the back burner. Right now, her salary covers all their expenses, but there’s not a lot left over to save at the end of the month.

Luckily, they’re in the privileged position that her employer is contributing 10% of her income to her 403(b) plan without requiring any employee contributions. While they might not be saving as much as they want, they are contributing something, which will compound and grow over time.

There are phases in our lives when there will be too many competing financial goals, and you’ll inevitably have to make some compromises. When I interviewed economist Corinne Low for the Family Money podcast, we discussed how families with young children often have to deprioritize retirement savings in order to afford day care. Her advice: Once you finish paying for day care, make sure to immediately start channeling some (or all!) of that money toward retirement.

Want to share your edition of Home Economics? Fill out this form or reply to this email, and I’ll send you a Google doc. I’m so excited that we finally published a Home Ec from Virginia this month! We’re still looking for entries from South Carolina, Rhode Island, and Oklahoma, as we work to publish editions from all 50 states.

Share your Home Economics

Age: 32
Location: Richmond, Virginia
Relationship status: Married
Age of partner: 33

About me: I’m the mom of a toddler, and I’m expecting another baby this month. I work a remote job in health policy research, and I’m the breadwinner of our family since my husband left his job as a mechanical engineer to be a stay-at-home dad while our kids are young.

All expenses are monthly unless otherwise stated.

Income:

Your job title/salary: Senior researcher, $160,000
Your monthly take-home pay (paycheck amount after taxes and other deductions): $9,793
Partner’s job title/salary: Stay-at-home dad (former mechanical engineer), $0.

Here’s a little more context about our income situation and our decision for my husband to stay home with our kids. While I was on maternity leave, I really wanted one of us to stay home with our son, rather than send him to day care. We both sat down and made a bunch of spreadsheets to model different scenarios (he works and I stay home; I work and he works part-time, etc.), and all the math seemed to point to me working and my husband staying home.

When our first was born, I had been in my job longer than my husband had been in his, and I knew I was up for a promotion when I got back from maternity leave. Generally, I was more satisfied with my job, and I had more flexibility and better benefits. My husband wasn’t as happy at work.
Partner’s monthly take-home pay (paycheck amount after taxes and other deductions): N/A
Additional monthly income (side hustles, part-time jobs, rental income, etc.): None at the moment. I used to do photography on the side.
Total monthly income: $9,793

Account balances:

Checking account balance: $3,375
Savings account balance: $1,500
High-yield savings account balance: $59,700 (3.10% APY)
Monthly contribution to savings account: Currently $0 because we did some house renovations in preparation for baby #2.
Retirement account(s) balance:
- My 403(b): $89,825
- IRA: $150,000. This is total for both me and my husband. Some of it is rollover from his old retirement account and some of it is mine from a former employer. We also have another IRA that we contribute to sometimes.
Monthly contribution to retirement accounts: My employer offers a 10% match regardless of what I contribute, which comes to $1,333 a month. Right now, we’re not making any additional contributions to retirement while we’re living on just one income.
Investment account balance: N/A
529 balance: My father set up a 529 for my son when he was born, but I’m not sure how much is in there.
Emergency fund balance: I consider our high-yield savings to be our emergency fund.
Goals-oriented savings accounts: We have a small savings for our son’s education fund—it’s about $3,000 (3.10% APY). We plan to eventually put it into a 529, but we haven’t opened one yet.

Total in checking, savings, and investment accounts: $307,400

Housing:

Size of your home: We live in a 2,100-square-feet, three-bedroom, two-and-a-half-bath house on a .18-acre city lot.
Mortgage: $2,500
Current home value: $500,000
Current mortgage balance: $375,000
Year you bought your home: 2022
Amount you paid for your home: $428,000
Mortgage interest rate: 4%
How much was your down payment? We made a 10% down payment ($42,800), not including closing costs, which were around $7,000.
How long did it take you to save for the down payment? We had lived in a smaller, less expensive home for five years before buying our current home, and most of the equity we had in the first house when we sold it went to our down payment. It took us about three years post-college to save for the downpayment on our first home (we put down 20%, so about $39,000).
Did you have any family help buying your home? Not in cash, but my dad did write our mortgage, so he negotiated a slightly better rate on our behalf.
Property tax (if you’re a homeowner): $446, included in our mortgage
Homeowner’s insurance: $183
Electricity: $275
Water: $100
Cell phone: $35. One of the benefits of having my husband stay at home with our toddler is that he went on a deep dive to find a more affordable phone plan for us.
Internet: $40
Housekeeper: N/A
Gardener: N/A
Other: We’ve had some expensive home renovations this year that are not part of our typical monthly budget. We spent about $20,000 updating a bathroom and making a home office so our son can move into what was my office.

Transportation:

Monthly car payment: Both our cars are paid off, but we’re looking to buy a used minivan soon.
Car insurance payment: $190 for our two cars
Gas: $135
Car maintenance: $200
Parking: N/A
Monthly public transportation: N/A. I work from home, but I’ll occasionally take the train to Washington, DC, to be in-person with my employer. They cover travel expenses for mandatory in-person meetings (once or twice a year). If I go more often, I pay for the train ticket.
Ride shares (Uber, taxi, etc.): N/A

Children:

Number of children and their ages: We have a two-year-old, and I’m due with our second this month.
Day care: My husband is a stay-at-home dad, so we don’t pay for day care.
Babysitter: $16 an hour for six to 12 hours a month ($192 a month on the high end). Earlier this year, we started hiring a babysitter to watch our toddler on Saturday mornings so my husband and I can get some baby-prep projects done. Occasionally, we’ll use a sitter for a weekend evening date.
Extracurricular activities: Our son does soccer and an art class, about $400 total per “season” (e.g. fall runs September to November).
Other: N/A

Debts:

Student loan total balance: $0. My husband had nearly a full ride thanks to a scholarship, and my parents paid for my undergraduate degree. I had a fully funded graduate education through an assistantship, which included health insurance.
Personal loan total balance: N/A
Credit card balance (if you carry a balance month to month): $0. We pay off our credit card balance every month.
How much do you spend on your credit card(s) each month: We put everything that isn’t our mortgage or utilities onto our credit card, so around $5,000 to $6,000 each month.

Food:

Groceries: $1,300. We try to buy local, high-quality food. For a long time we shopped at a local co-op grocery, but it was bought by a private equity firm, and the quality has gone downhill. We’ve been looking for a good alternative and have been shopping at Fresh Market, which is a local chain. We also like to go to the farmers’ market, and once a year, we buy a quarter cow from a local farmer. That helps cut our weekly grocery bill down some because he charges ground beef prices for all the cuts of meat we get. We get the meat in the spring and store it in our chest freezer. It lasts us just about a year, maybe a little less now that our toddler is eating some meat. We still supplement it with some chicken and pork we buy at the grocery, and we eat vegetarian some nights to stretch it out.

We mostly cook at home. Between the two of us, we cook six out of the seven nights, and then we usually get takeout or go out to dinner maybe one night a week.
Dining out: $400. This includes takeout or dinner out once a week. We mostly eat lunch at home, but sometimes we’ll grab food from a nearby restaurant. I’m trying to lower this a bit.

Socializing and Entertainment:

Subscriptions (streaming services, magazines, etc.): We have Netflix and Amazon Prime, which together cost about $30 a month. We use free apps like Kanopy for a lot of movies, and we also bought a DVD player and plan to start building a DVD collection.
Memberships (museums, etc.): ~$34. We have memberships to the local children’s museum and botanical garden.
Movies, concerts, other events: $0. We rarely do movies or concerts these days.
Entertaining and socializing other: This expense is captured in our grocery and dining out budget. Most of our socializing is around toddler playdates or hosting dinners and cookouts.
Hobbies: I don't do a great job of tracking this, but maybe $100 a month on fun/discretionary things. I love reading physical copies of books, and I’m in a couple of book clubs, so often it’s a book purchase (though I’m leaning more heavily on my Libby app these days). Occasionally I take an art class at our local community center or buy something related to one of my creative hobbies, like an Adobe Lightroom subscription. (I usually only buy a month at a time when I need it.) My husband mainly has outdoor hobbies, and he has amassed equipment for them over the years, but occasionally he buys things like arrow tips (he’s into bow hunting) or fishing gear.
Travel: This year we traveled to the midwest to visit family and friends. I also traveled solo to New York a couple of times for family events (sister’s surprise birthday) and once as a family to visit my parents. We did a long weekend family vacation in the Chesapeake Bay, which my in-laws paid for. We spent about $3,500 total on travel this year, and I don’t anticipate any more due to the new baby arriving.

Miscellaneous:

Clothing: We rarely buy new clothing for ourselves but occasionally do need to replace something or buy our son clothes. I’d say $50 a month. For my first pregnancy, I went to Old Navy and bought a bunch of extra-large men’s T-shirts and shorts and pants with elastic waistbands that I could also wear post-pregnancy. I felt like it was a waste to buy maternity clothes I’d only wear for a few months. This pregnancy, I’ve mostly reworn those clothes I bought the first time around. I work from home, so wearing nice clothes isn’t a job requirement.
Home supplies: ~$100. There might be some overlap here with the groceries category.
Exercise: $80 for our YMCA membership
Personal and self-care (haircuts, manicures, massages, etc.): ~$40 for haircuts. I only get a couple of haircuts a year, and my husband gets his hair trimmed every six to eight weeks.
Pet expenses: $0. Our dog passed away this year.
Donations: ~$30. We contribute a small amount to a few nonprofits and charities.
Tithing: N/A. We don’t belong to a church.
Events (birthday parties, etc.): This is included in dining out.

Insurance:

Life insurance: $0
Health insurance: $651 a month, which comes out of my paycheck. I anticipate this will go up after the new baby arrives.
FSA contribution: $75. Also comes out of my paycheck.
HSA contribution: $0
Other insurance costs: $0

Total monthly spending (includes annual expenses divided by 12; doesn’t include home renovations): $6,406

Tell us more:

What are your top financial priorities?
I would like to get back to contributing to my savings. Right now, all of my retirement contributions come from my employer, who automatically contributes a 10% match of my salary. We haven’t contributed anything to retirement since my son was born and my husband left the workforce.
How do you feel about your current financial situation?
I have conflicted feelings. Mostly I feel lucky to be in the position I’m in. It was an enormous privilege that my parents completely paid for my undergrad education, and that my husband got a nearly full ride. That gave us a leg up and helped us stay out of debt.

On the other hand, it all feels a bit precarious. Since I’m the sole income earner right now, our budget is tighter than we had become used to on a two-salary income. We’ve had to draw on our savings a bit this year to cover our home renovation and some other unexpected expenses. It feels like if I lose my job or one of us gets seriously sick, the whole thing could come apart.

It seems like just the basics are so expensive (housing, health insurance, groceries, etc.) that there isn’t much left over. I think carefully about every purchase I make that’s over $50. For example, with this pregnancy, I’ve needed some physical therapy, and I had to consider the spacing of appointments, since it’s $200 a session and I’m paying for it out of pocket. (It was a long wait to see an in-network PT, and I couldn’t get in to see them until very close to my due date, which wouldn’t help me much.)

I know our financial situation will change when my husband returns to work (planning for that in two to three years), but even so, it feels like we need to be really on top of our budgeting to make it all work.
How is your financial situation different from 5/10/15 years ago? How has that changed the way you manage your money?
Well, 10 years ago, I was pretty new to the workforce, so I was just happy to have a job, no matter how low-paying. I was in a committed relationship with my now husband. We moved in together and lived as cheaply as we could, saving as much as we could, which allowed us to buy a small starter home (two bedroom, one bath) in the Midwest and build equity relatively early on (we were 24/25 years old).

Through the rest of our 20s, we focused on saving for milestone things, like our wedding and home improvements, and building our careers, which included me going to grad school. In our 30s, we moved back to the East Coast and bought a larger home, hoping to start our family. After having our first child, our approach has kind of shifted to surviving the early years of parenthood and hoping we can catch up later. We don’t live near any family, so we sometimes have to supplement with paid help, which can be expensive, but is worth it to us.
What are your money stressors?
Since we’re not contributing to retirement, I worry that we’re falling behind. I worry about what might happen if I lose my job, which provides our health insurance. I worry about whether I’ll be able to help my children pay for college the way my parents helped me.
Do you expect to receive (or have you received) an inheritance from a family member?
I think my parents plan to leave an inheritance, but I have no idea how much that would be, and I hope it’s not for a very long time. I hope they live long lives and get to spend most of it!
Do you receive any financial support from your family?
My in-laws usually pay for a family vacation once a year, where we rent an Airbnb within driving distance. My parents buy grandparent-type gifts for my son on his birthday and Christmas, and they purchase some clothes for him seasonally. Every now and again they give us a big-ticket item, like our couch when we moved into our first house ($2,000) or our dining room table in our current house ($3,000). My parents also contributed $10,000 toward our wedding expenses, and my in-laws paid for our photographer. (Our total wedding cost was $26,000. It was mostly a DIY kind of wedding in 2019.) I believe my dad also contributes to a 529 account for my son, but I have no idea how much is in there.
Do you financially support any family members beyond yourself and your nuclear family?
No, and I don’t expect to in the near future. I think both of our parents have retirement savings that should support them for quite a while.
How do you and your partner split your finances? How did you decide to go that route?
Pretty much everything goes into a joint account, and we pay all our expenses out of it. We each have individual checking and savings accounts from when we were both working, but now they only have a couple of hundred dollars in them.

Since I became the primary breadwinner, I’ve tried to make sure our relationship doesn’t become a traditional setup where I’m the “man” who brings home the paycheck and therefore doesn’t have to contribute to the household. I think we have a pretty good division of labor. I usually work from 8:00 a.m. to 4:00 p.m. and then take over childcare duties for an hour before dinner so my husband can get a little break and go to the gym. I usually cook dinner, and he does the dishes. We both do our son’s bedtime routine together.

My mom was a stay-at-home mom in the traditional setup, and I saw a lot of tension growing up, which I’ve always wanted to avoid.
What is one financial goal you still want to achieve?
Contributing regularly to our retirement savings. Building up savings for larger expenses down the road (pre-school, vacations, more home renovation projects).
Tell us about one financial accomplishment you’re proud of.
Buying our home(s). Supporting ourselves without financial help from our families. Having (some) retirement savings.

Maybe it’s not an obvious financial accomplishment, but I’m proud of how I advocated for myself as we navigated issues trying to conceive both our babies.

When we were trying to have our first baby, I had trouble getting pregnant, and when I did, I had a miscarriage. The doctors didn’t have a clear answer to why it was happening; they just pushed us to move forward with fertility treatment. We were about to start IUI when I found out I was pregnant.

After my son was born, we had trouble conceiving again. I had a feeling that there was an underlying cause, and I didn’t want to just jump into fertility treatments. I have a family history of endometriosis—my mom had it. But all my doctors in Virginia just sort of shrugged off my concerns.

I ended up finding a highly recommended specialist on the West Coast who formally diagnosed me with endometriosis. She was out of network, of course, so I spent around $8,000 for surgery out of pocket. My insurance covered some of the hospital stay. And I paid to fly out to the West Coast with my sister to have the surgery, which was around $2,000 for flights and hotel stays. (My sister is a nurse, and my husband stayed home with our baby.)

It was a big expense, but it was ultimately cheaper than doing a round of IVF. I was able to conceive a couple of months after surgery, so it seemed to work.
What are you willing to sacrifice to meet financial goals?
I’m willing to live in a lower-cost-of-living area and sacrifice travel and entertainment (concerts, eating out) etc. in the near term to afford my husband staying home with our children (at least until pre-school). I work from home and love being able to be near them and still be a part of their day.
What are you NOT willing to sacrifice to meet financial goals?
I’m not willing to sacrifice time with my family in order to boost my income (hence no current side hustle). I also don’t want to sacrifice my mental health. If a purchase will make my life a lot easier, I will probably make it and try not to think about it too much. I know this hectic phase of life is temporary, which makes me feel a little better about this kind of spending.
What do you regret spending your money on the most?
I don’t really regret much of what we spend on, because we tend to be pretty thoughtful about our purchases, and it all seems to be either necessary or improves our quality of life. Sometimes, I regret an impulse buy (something on Amazon or clothing from an online store), but I’ve gotten better at returning items I don’t like or need (old me would just let it languish in my closet).
What is one thing you spend money on that makes your life better?
Paying for a recurring babysitter on Saturday mornings. We only started this a couple of months ago, but it helps my husband and I both have time to get things done around the house, and especially in the last weeks of pregnancy, it has given me some time to rest from chasing around a toddler.
What is one thing you spend money on that drives you crazy?
The thing that infuriates me (but I have no control over) is health care spending. I spend over $650 a month just to have health insurance and then still run into situations where I’m paying thousands of dollars out of pocket for care that I can’t get in-network, like physical therapy or endometriosis excision surgery. Even having to pay a $30 co-pay for a visit or lab test annoys me—it feels like it should be included in my $650 monthly tab!
Is there anything else you would like to add?
It’s been two years since my husband and I decided he would be a stay-at-home dad, and I feel like we made the right decision. My husband’s old employer ended up going out of business (it was a startup), plus he really enjoys being a stay-at-home dad.

I also feel like the burden of our household work is much more balanced than it was before. I believe that stepping into a caretaker role has made my husband appreciate just how much work it is and how unfair the division of household labor is for many people. And honestly, I think he’s more naturally suited for stay-at-home parenting than I am. Some family members have raised their eyebrows at our “nontraditional” arrangement, but who cares? We’re doing what works for us.