Personal Finance

Our family spends nearly $40k per month because of our high income - is our spending out of control though?

Christy Bieber

Published: January 24, 2025 1:24 pm

Is it reasonable to spend $38,000 per month?

A Reddit user posted this question recently. At first glance, you may say no way considering it’s around 60% of the total amount the average American makes in a year. However, the answer is not necessarily as clear-cut as you’d think. 

Let’s take a close look at the Redditor’s situation, including his income and where his money is going, to determine if the original poster (OP) is being fiscally responsible or making a mistake he’ll regret. 

A look at spending and income

First, let’s consider what the OP is spending money on.  His total fixed expenses, which don’t change each month, come in at $27,448. They include a mortgage, nanny, car payments, preschool, student loans, a house cleaner, various types of insurance, streaming services, and utilities.

While his mortgage and car payments are pretty high at $13,400 and $1,934 respectively, some of the other expenses in this category are relatively reasonable, like $160 per month for streaming. And some, like daycare and nannies, are likely necessary to make working possible. 

He also has $10,488 in discretionary expenses which include but aren’t limited to $822 monthly for restaurants, $1,281 for groceries, and $342 for food delivery. Discretionary costs also include alcohol and bars, doctor visits, his dog, rideshare services, and shopping.  Plus, right now, he incurred a monthly one-time expense of $8,300 to upgrade and furnish his home. 

The good news is, the OP’s income is very high. His monthly average income is $133K but comes down to $80,000 after tax. He said that even with the temporary home expenses, he’s currently saving 42% of his income but expects to save 52.5% once those one-time homeownership costs settle down. 

Is the OP’s spending out of control?

While the OP is certainly spending a lot of money, the definition of out-of-control spending is that you are not in control of your finances. Usually, this means that you are living beyond your means, going into debt regularly, or juggling which bills to pay on time and which to pay late. 

The OP is not doing any of this. In fact, with a 42% to 52.5% savings rate, the OP is saving far more than most people. Sure, he could save more, but he already has $1.5 million invested with a wealth manager as well as $2 million in real estate investments and $2 million in an inheritance trust. And he’s expecting to increase his income to around $1.8 million, up from $1.6. There’s very little reason for him to try to cut expenses and be frugal in this situation as his high income gives him the ability to both spend lavishly and grow wealth. 

That’s especially true since a good portion of his $38K in spending ($20,775 of it) goes towards his home, nanny, and daycare. That’s more than half of the total amount in fixed, unchanging expenses.

Of course, he could — and may want to — talk to a financial advisor to ensure he is on track despite the spending, especially as his costs may only increase as his kids get older and age into more expensive private schools and activities. But, ultimately, the bottom line is this. When you make a lot of money, you can spend a lot without sacrificing your ability to build financial security. That’s one of the reasons to strive for a high income. You can open up the door to live the way you dream, both now and in the future.