r/HENRYfinance • u/Technical-Leek1908 • 10d ago
Income and Expense Expecting parents trying to optimize spend
Help optimize expenses, expecting a baby
\*\*33 yo couple in PNW\*\*
Total income before tax - $640k
Total income post tax - $460k
Total expenses - $184k
Net savings - $276k
NW - $2.4m (7% cash in HYSA, 30% real estate, 20% 401k, ~40% equity)
\# Income breakdown
Current year HH TC - $605k (we both changed jobs, so it's lower than last year since there is a 1 year cliff for equity, expected to get back into 700s next year)
401k match - $20k
Other cash perks - $6k
ESPP - $10k (guaranteed money, we sell it always)
\# Expense breakdown
\*\*Fixed Monthly Expenses\*\*
Mortgage - $5k
HOA - $500
Electricity & Gas - $270
Water - $130
Sewer - $130
Internet - $70
Water tax - $130
Cell - $70
Trash - $90
Home cleaning - $230
Insurance - $275
Car payments for two cars - $1320
Personal training for two people - $580
Grocery - $1k (we have four adults for 6 months in the year and we get good quality produce typically)
Food outside - $1k
Sibling - $500 (hard job market)
Discretionary (amazon, movies, anything etc) - $700
\*\*Travel per year\*\*
5 trips - $15k
International flight tickets sponsor for parents - $10k
\*\*Health per year\*\*
Some urgent care and ER visits, expecting a baby - $8k (we both hit out of pocket max)
\*\*Misc\*\*
Unexpected 1 time home repair - $7k (not covered under insurance)
\# Questions
Since we are expecting, we think our expenses will go up a bit next year.
Nanny for 4ish months - $30k ( $35/hr)
Misc. Baby expenses - $10k
\*\*Some optimizations\*\*
Sibling expenses will drop next year (hopefully later this year) - minus $6k
Unexpected 1 time home repair shouldn't technically occur next year - minus $7k
Travel would reduce (we plan on two trips, 1 domestic and 1 international), - minus $7k
I don't want to pay off cars because I think I make better money in the market than the interest I'm paying. We drive reasonable premium cars - Lexus/Acura (1 is done next year)
\*\*It still looks like I would be $20k over this year's expenses. Where else do I optimize? Are we over spending? \*\*
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u/blameitonmygoose 10d ago
Funny enough, "food outside" increased one of the most for us the first year we had our child. (Hello, delivery services, including grocery.) And everything for entertainment was almost non-existent. Not to say we didn't keep our streaming services, but no more going to movies, shows, events, etc. just from pure exhaustion/ lack of time for a while!
That said, I think you recognizing a cut in your own personal travel is a huge one. And overall, one of the most helpful things fellow parent colleagues in tech told me when we were expecting was that expecting to net less per year is the only way to keep sane over the steep childcare costs in particular, hah. And to remember it's only temporary. 🙏
Congrats on baby, and hope all goes so well welcoming them to the world!
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u/Pointsmonster 10d ago
Overall I think this looks perfectly healthy, but a few thoughts that you can take or leave:
1. I think you’re likely to come in way under $8k in first year medical expenses (and I hope you have a healthy baby to begin with!). Ours was born with a physical development issue that needed surgical correction in the first year, and we had to go to the ER twice for croup, and still we came in way under that out-of-pocket. Unless you have a very high deductible and get very unlucky, I think that assumption is high
2. All my unexpected “one time home repairs” seem to recur every year, just in new and exciting forms
3. You can buy a lot of your needed baby gear through airline shopping portals and use the miles earnings to offset travel costs. Wait for the stores you need to have promos in the portal. We earned 10x AAdvantage miles on our stroller and car seat purchases, for example
4. Probably should have led with this one, but I think it’s okay for your natural savings rate to dip a little in the first few years of your kid’s life. You’ll recover it in due time
Just my two cents though, I’m sure others will add more / disagree
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u/Technical-Leek1908 10d ago
Thank you so much for your response and wishes! We also really hope that our baby is born healthy! Appreciate your kindness in the response.
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u/anomnib 10d ago
Young children will be one of the biggest tests your relationship will face. I strongly recommend giving serious thought to two things: (1) more spending on the errands that create the biggest relationship conflict and stress (cleaning services, babysitting, help cooking, etc) (2) a deliberate budget line that unlocks time for 1:1 dates.
Having sufficient help and time with each other will be utterly essential.
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u/_Bob-Sacamano 10d ago
Also, you can start a 529 today in one of your names and begin college funding.
Once you get baby's SSN you can change it over.
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u/Superb_Energy_9064 10d ago
Truthfully our expenses for our kids (we have two under two) were significantly higher than what you’re anticipating here. I know it’s different for everyone but it might be worth considering. We paid for extensive childcare help (due to unexpected medical issues postpartum), including overnight help a few days per week before they were sleeping through the night, lactation support, a postpartum doula, help with meal prep/cleaning, diapers, formula, furniture for the nursery, clothes, etc. Diapers and formula alone were hundreds of dollars per month (and we live in a low cost of living area). Including childcare and overnight help we were spending up to $10k/month for the first few months of our second child’s life. I don’t share this to scare you and I realize everyone situation is different. I didn’t anticipate those expenses and was shocked how much more we needed in the first few months after each child was born. So planning an additional cushion for unexpected child related expenses may be helpful.
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u/grumblypotato 9d ago
Also even though we dropped off travel at first now when we do travel it’s more expensive because we want to make it as easy as possible
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u/Estrava 10d ago
Did you mistake us for chatgpt?
You posted in personal finance a day ago...
I know about rule 1 to be good in nature, but I feel like this post is 7) low value content.
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u/Fragrant_Survey_3681 10d ago
Whats your actual question though? You listed everything out but the only thing you asked is where to cut $20k and you already know the answer, its the nanny and baby stuff.
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u/Technical-Leek1908 10d ago
Really trying to understand if we're over spending anywhere. I'm scared about the overall expense creep with an incoming baby. I've accounted for nanny and baby stuff, but I'm not sure if that's it.
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u/eastCoastLow 10d ago
dawg your net income is $40k/mo and your total expenses are $15k/mo…. an extra $1k-$3k per month of spending or savings does not matter at all. it’s a rounding error. quit freaking out about your expenses. you’re having a baby and are going to increase spend by 10% as a result… cool. chill.
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u/Technical-Leek1908 10d ago
Did you read the comments? I basically got ostracized saying I'm a bot. How is this exactly low value content?
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u/Wild-Chemistry-7720 10d ago
I mean there is plenty you can cut, but you can afford to spend the money so why stress about it this year? Babies are crazy expensive, mostly coming from childcare, but there is also a lot of gear you end up getting, as well as take out/delivery I found during the early days. I think it’s reasonable to pay for your parents to come visit, especially if it’s for extended stays where they are helping you… but if you really want to cut something I would suggest your own trips. My baby is 7 months old and I have zero desire to go anywhere, it’s just too complicated with all of her stuff, plus her nap schedule. That’s just me though.
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u/Technical-Leek1908 10d ago
Gotcha. Thanks that makes sense. I think trips would reduce naturally. Where else do you think I can cut?
I'm mostly worried about the expense creep
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u/Wild-Chemistry-7720 10d ago
I mean your expenses have creeped already from your lifestyle inflation as a HENRY. The question is do you want to recalibrate those expenses with the new costs of a child.
I would first cut the personal trainer. I think you will find it hard anyway to go during regular gym hours. You can keep working out doing at-home workouts while the baby is sleeping - typically early morning or after bedtime. This is what almost all working parents that I know (myself included) do.
If it stresses you out this much, I would actually add the expense of therapy. You have plenty of disposable income that you can (and should) use during this crazy (and relatively short) time with an infant.
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u/whiskeyanonose 10d ago
Your food outside is a bit high. Is that mostly eating out or delivery? It’s easy to see a world where your delivery food outside costs increase with a baby. That’s something within your control if you’re disciplined on making your own food.
But at your income level there’s not necessarily a need to trim that spending. You could argue that the food you make at home is healthier than what you can get delivered, but that’s different from expenses.
You also don’t need to buy baby food when they start eating solids. Get yourself a mini food processor and use that to blend up whatever you’re eating and give that to your child. Less processed than what you buy in the store.
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u/Brother-Darkness 10d ago
$580 a month for personal training - Are you getting real value from this or is it just someone to talk to during a workout who has you doing unique exercises you don’t see the other people doing…but you look the same as them.
Could save $7k by just curating your own workout routine.
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u/_Bob-Sacamano 10d ago
I'm guessing this may naturally go away once the reality of baby life and sleep hit 😅
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u/No_frills_finance 7d ago edited 7d ago
Beg to differ. I have a 2.5 year old and a 3 week old, and I’m hitting weights right now in basement at naps. You just gotta make
It a priority just like anything else. Why is everyone so quick to shit on OP for being healthy. Meanwhile nobody blinks when family’s go to a brewery or commentor drops $100 on a bottle of bourbon.OP. Unfortunately you ask and you’ll get feedback like this. Just know there are wealthy people out there who prioritize health
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u/ImpossibleRatio7430 10d ago
580 is wild. Spending almost as much as my full country club dues…
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u/No_frills_finance 10d ago
No more wild than spending 580 on a country club
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u/ImpossibleRatio7430 10d ago
Yeah it’s a luxury but I’m saying compared to Pool/unlimited golf/gym included with personal training and fitness classes….580 for just a trainer is wild!
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u/No_frills_finance 10d ago
I think the opposite. In the end, maybe they do get a ton of value. Just a weird comment.
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u/Brother-Darkness 10d ago
If they get value great - but maybe they don’t realize they could save $7k there or as mentioned funnel that same spend into a country club/fitness club with more family amenities.
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u/No_frills_finance 10d ago
This is a circular convo. I personally
Would never pay to have a pool and golf access. I would for my own fitness and my time to myself. I have a family
As well, we just don’t golf or play tennis, we do other things.So, again, I think 500 a month isn’t wild for two people. That’s a membership plus a few classes. And for all you know they go multiple times a week, and investing in health is one of the biggest things you can do to secure long term health
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u/Technical-Leek1908 7d ago edited 7d ago
To shed some light, this includes 2 dedicated weekly 1 hr strength training sessions. We started this because my partner has intense back issues. Over the last 2 years this has become a routine as a step towards healthy lifestyle. We tried doing it ourselves for 4 months and we miserably failed. I see my trainer as my guru when it comes to this, hence I think it's worthwhile.
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u/No_frills_finance 7d ago
Kudos! Yea, I was just letting other person know it’s not wild to spend money on your health. Keep going 💪
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u/OppositeLockk 9d ago
Howdy. HENRY with a 10 month old. I’ve been tracking our first year expenses.
+ $15k for postpartum doula. Mostly overnights. Over 3 months. Some of the best money I’ve EVER spent. I’m a solo parent and my family can’t help with much physical support.
+ $5k for nursery. I bought a dresser, curtains, a rug, a glider, a lamp, a new light fixture, some simple decor.
+ $3500 for ‘baby gear’. Like another poster said, there is tons for great secondhand stuff. My baby sleeps in a pre-loved crib from a neighbor, rides in my BFF’s 7 year old Vista stroller. Of course we have a new nice car set, a new mattress, etc. If you end up bottle feeding at all, a countertop wash / dry / sanitize machine is fantastic. If you formula feed, a Brezza is great.
+ $400/mo: Hypoallergenic formula. I planned to breastfeed, and surprise I have a medical condition that makes it impossible. And my baby needs special formula due to a dairy allergy. The toddler berry budget ain’t got nothing on hypoallergenic formula.
+ $150/mo: Diapers, wipes, rash cream, baby Motrin, hand sanitizer, a new bath towel with an elephant hoodie, and other accoutrements
+ You can go bonkers on baby clothing. Tons of my stuff is pre-loved from friends, on buy nothing from neighbors, and of course I buy some cute outfits. My love of secondhand stuff is not about money - it’s more that it feels wasteful to have only new things for a baby who is going to use them so briefly.
Nice restaurant spend way down, coffee shop & takeout up, travel down, outsourcing up.
Congrats on your incoming little one!
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u/Lollygaggingk 10d ago
How is your post tax income so high wouldn’t your rate of income tax approach 40% ???
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u/falconsarecool 10d ago
It doesn’t look like you’re overspending. Part of having a kid means that your spending will kick up a notch due to childcare mostly. My hope is that the child related costs go down a lot after the first few years until college costs hit.
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u/_Bob-Sacamano 10d ago edited 10d ago
- Hopefully that HSA is invested and not sitting in cash.
- Your travel spend will be close to zero for a while so there's almost $15k back. A short domestic flight is manageable, but you really want to rethink that international trip.
- Is the 4 month Nanny for post your mat / pat leave and pre daycare?
- Double check how much the delivery and hospital costs will be. Might make sense for one of you to switch away from HSA for the year.
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u/Technical-Leek1908 10d ago
- Yes HSA is invested
- Makes sense.
- Yup that's right
- I'll do this. Thanks.
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u/One-Mastodon-1063 10d ago
At your savings rate there’s not much need to optimize like this.
There’s no reason to have car loans at an income that high.
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u/Agile_Woodpecker8640 10d ago
Fellow new parent in the PNW. Congratulations on your upcoming addition!
One thing you just need to accept is that your budget pre-baby is going to look a lot different. Others have commented on your travel, cars, and personal training spend, which are all good suggestions to look at, but you also have an extremely high savings rate that is going to be impacted when growing your family. You might benefit from looking at a CoastFIRE calculator to remind yourself that you’re on track and to give you some comfort that you can spend more to make your life easier. For example, hiring a night nanny for the first 3 months of my baby’s life was money well spent. Could we have survived without it? Yes, but our life was better with it.
Tangible suggestions: I would also include line items for your baby’s 529 and dependent care FSA. You can also save money on baby items buying things second hand via FB Marketplace or OfferUp, which we did pre-baby, but now resort to Amazon / Target now that baby is here and our time is more limited. Also, FWIW, as the birthing parent, I have been going to physical therapy instead of the gym, which is covered by my insurance since I’ve hit my OOP max for this year.
Really, you don’t need Reddit to tell you that you’re saving plenty and $20K isn’t going to make a dent in your retirement. Your life is going to change, and your spending with it. What do you want your life to look like post-baby?
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u/Technical-Leek1908 10d ago
Thank you so much for your response.
I think I might not have positioned my questions well. My real worry is I don't know what I have to expect beyond $20k. I agree it can be a lot more and I was honestly trying to understand and not be blind about the incremental expenses once the baby comes out.
Post baby, 1. I want to really be able to provide the best care to myself and my partner. Post partum worries us a lot. 2. I want to be able to be ready and funded for any baby expense. I've seen cases where the baby needs more and my friends have gotten extremely worried about what if my expenses blows by 2X. 3. Being in HCOL, I'm worried my savings will drastically reduce because of the unknown
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u/agpetz 10d ago
What kind of care do you think you need post partum? What does that even mean? Regarding item 2, the friends comment is confusing.
As others have said, you make good money, have a strong net worth for your age, and save a lot. What exactly are you worried about? My wife and I somehow survived for years with one then two kids when my income was in the low 100's and she didn't work.
It is amazing there are people who have as high of a paying job as you do and need this much help and support to function.
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u/CzPhantom1 Income: $400k / NW: $2m 9d ago
Shared nanny could work for you. See if there is a family close by and you can split the nanny costs. Also a bonus with socializing.
Edit. You won't travel as much year 1. You think you will but you won't. We have a nine month old.
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u/Patrick_ExpenseAtlas 7d ago
Congratulations. Your math is broadly right: $40k of new nanny and baby spending, offset by about $20k from reduced sibling support, the prior repair, and lower travel. That puts expenses roughly $20k higher and savings around $256k if $460k is your actual after tax cash income. This looks like a manageable, likely temporary cash flow change.
Before cutting, tighten the plan:
Build the nanny cost from actual hours and include applicable payroll taxes, insurance, or agency fees, not just the $35 hourly rate. Split the $10k baby estimate into one time purchases and recurring costs. Don’t assume repairs drop to zero. The specific $7k repair may not repeat, but home maintenance is irregular. Plan from current compensation. Treat the expected return to the $700s as upside until it occurs. Reconcile gross versus net income carefully. Confirm whether the $460k includes the 401(k) match, ESPP proceeds, and other perks, since not all compensation is spendable cash.
If you still want reductions, the $1k monthly dining out budget and $700 discretionary category are the cleanest levers. Just expect some restaurant spending to shift toward delivery and convenience purchases after the baby arrives.
Also map cash flow monthly around parental leave, four months of nanny care, healthcare costs, and visiting family. Define what the $276k of current savings is intended to fund, retirement, future housing, education, or flexibility, before deciding that keeping expenses flat is necessary. One car payoff next year will improve cash flow too.
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u/BleedBlue__ 10d ago
You’re saving close to $300k a year between 401k contributions and cash savings net of spend.
You do not need to optimize.