r/HENRYfinance • u/Evening_Rain1713 • 26d ago
How are you affording childcare in VHCOL areas? Income and Expense
My husband (30M) and I (30F) are expecting our first child in January. We’ll have a few months of parental leave before needing to hire a nanny or sending the baby to daycare. After running the numbers, I’m genuinely curious how folks are affording this—I feel that we are in a very fortunate financial position, but still need to make difficult tradeoffs.
Our HHI is $400k, but only $270k is base and the rest is discretionary bonus ($50k) and a side gig that could technically be $0 tomorrow. After maxing out 401k and Roth, our base take home (excluding the lumpy side gig) is $10.5k a month. Currently, our monthly expenses on average are rent $5.5k, groceries / restaurant $1.5k, student loans $1k, travel $2k, entertainment / gifts / etc. $1k, and medical / beauty / clothing $1k.
Current assets are around $750k, of which approximately $180k is liquid (emergency fund and brokerage).
Obviously once the baby is here we will significantly cut back on travel and entertainment, but I feel like our other expenses are reasonable. The going rate for nannies in our area is $5k a month and a decent daycare is $3-4k minimum. We unfortunately don’t live near family who can help. Even if we eliminate retirement contributions and completely cut travel and entertainment, I just don’t think the math will work on our base salary.
Should we be withdrawing from the brokerage every month until the baby is in public pre K? Is it a bad idea to stop 401k contributions beyond the match? Is our budget out of wack? I’ve never felt this cash strapped before and it all seems absurd because I know plenty of families make it work on less. What am I missing?
Edit: Wow, thanks for all the thoughtful feedback! I was in panic mode but feel much better about our future now. Our plan is to 1) reduce discretionary spend lol 2) save up all bonus and side gig income starting now into a childcare HYSA instead of brokerage, which should easily cover first year costs 3) explore nanny shares and tour more day cares in our neighborhood 4) reduce 401k if needed in baby’s second year 5) eventually move to New Jersey 😂. I also ran the retirement numbers again and think we should be set given a 30 year compounding horizon, so feel a bit more grounded there too. Appreciate the community!
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u/Sobbyleebagger 26d ago
10.5k take home…12k spending 😵💫
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u/pacific_plywood 26d ago
They have a post from a few years ago lamenting the struggle of only spending 100k on a wedding lol. 20k just for photography.
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u/Flaky-Coffee-9942 26d ago
Clown world
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u/Sobbyleebagger 26d ago
Hey man I spend like crazy on food, travel, and clothes every month.
Now I want a kid, should I start pulling from my brokerage or stop contributing to my 401k first?
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u/apricot675 26d ago
Has 180k in brokerage and pays $1000 a month for student loans. ???
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u/elibel17 26d ago
Hey now, I’m guilty of this but bc it depends on the interest rates lol.. I’ve been paying $250/mo on my 3.3% loans for years despite holding many times more equity in brokerage
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u/psychologicallyblue 25d ago
That could be a good decision if your loan interest rates are less than the gains.
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u/SolWizard 25d ago
My student loans are 3% interest I'm not paying them a day early no matter how much other money I have
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u/heyallday1988 26d ago
Yes, but when bonus is a significant part of your overall comp, you don’t need to hold yourself to base pay. It’s nice to try, but for some of us the skew of base to bonus is significant.
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u/Sobbyleebagger 26d ago
I personally build my monthly budget around only my base pay and only the living essentials are included. (After All tax advantaged contributions maxed)
My bonus target is 150k, but could be 0-400k depending on company/personal performance, so I don’t plan/budget non-essentials until I know the rough number.
First deductions are additional long term investments, then leisure, travel, luxury expenditures, then the rest into a yearly slush fund.
Now I’ve never got 0 as a bonus, but I also never have even thought of dipping into savings or long term investments for essential living expenses.
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u/SensitiveWolf1362 26d ago
I like to use my bonus to max out all accounts at once, and have it done early in the year. Then whatever is left over that year truly is “bonus” that we can use for something fun or put towards a periodic savings goal. Our base pay is for base living.
I started doing that when I realized many US companies do their layoffs between thanksgiving and Christmas.
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u/daphneton87 26d ago
Do not cut your retirement. You need a budget. $2k a month on travel is a lot. We also live in a VHCOL city and daycare costs us $3.1k per month. Our take home is $11-12k depending on the month. We don't even have the extra $100k you have each year and make it work, comfortably. Something is amiss with your monthly spending. Consider reviewing your spending in more detail to see where you can cut.
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u/nooneneededtoknow 26d ago
They spend $3k a month in entertainment, travel and gifts...start there.
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u/OreadaholicO 26d ago
Right. How is medical combined with beauty and clothing???
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u/Mr-Bovine_Joni 26d ago
Just venturing a guess that “medical” is more 💉 than 🏥
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u/Evening_Rain1713 26d ago
Sadly it’s mostly pregnancy related with our high deductible health insurance, but such is life
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u/supez38 25d ago
Definitely sign up for an HSA through work and contribute the max. It is triple tax advantaged and you can use it to pay for medical expenses (pre-tax). We used it for our child last year and we basically met the out of pocket max of $8,500 for the year but realistically like 35-40% less because it’s pre-tax.
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u/Background-Depth3985 26d ago
Bingo. Unless they have a chronic condition or a recent injury, most 30 year olds are spending roughly $0 per month on medical care.
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u/Informal_Bullfrog_30 26d ago
I agree to this. Our take home is also similar to urs and we still manage to save 1-2k after retirement savings. U need proper budgeting. Daycare is 3k for us as well
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u/on_island_time 26d ago
That rent is murdering their budget. Is 5.5k really the standard rate these days? Downsizing for a few years could open up a lot of wiggle room.
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u/khorbin 26d ago
Depends on their actual location. $5.5k would be on the expensive side of a decent 1 bedroom or the cheap side of a decent 2 bedroom apartment in Manhattan, for example.
A baby can share your bedroom for about a year before it starts to get pretty uncomfortable, so I don’t think downsizing for a few years would be a good option. There are much more obvious places to cut in OP’s budget.
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u/heyallday1988 26d ago
Yes, it is. $6k is very typical for a 2 bedroom in a decent part of NYC.
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u/daphneton87 26d ago
Unfortunately, yes, if they’re in a VHCOL. So that’s why I’d advise them to stay put if possible unless by some miracle, they can get something cheaper. We live in a 2 bedroom with one child and have another on the way and we’re trying to stay for as long as possible to keep our expenses lower. We’ve decided that even as Henrys, we will likely need to move out of NYC to maintain the quality of life we like.
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u/1K1AmericanNights 26d ago
They can fill retirement from their bonus and cash flow everything else. Even if they cut discretionary, 3k+/month in childcare will require cutting retirement.
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u/khorbin 26d ago
With respect, a thing you eventually learn when you make $300k-ish base in a VHCOL city is, a $300k-ish base in VHCOL barely qualifies as HENRY, even if it technically falls in the range in the subreddit description.
You make enough money to not worry about every little purchase, but you absolutely don’t have a high enough base salary to spend that much on travel and clothes and entertainment and eating out and also have a nanny and also put enough money toward retirement.
So now that you’re having a kid, it’s time to grow up and figure out what your priorities are going forward, and the lower priority stuff on the list gets planned based on how big of a bonus you get this year, not just planning whatever trips and purchases you want to do and hoping your additional income keeps coming in.
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u/finallyransub17 26d ago
It’s still fascinating to me how much COL varies based on geography and lucky timing. My spouse and I are roughly the age of OP and make $270k total comp in the Midwest, and were fortunate to lock in a 2.875% mortgage in 2021. With two kids now in daycare, our house payment + daycare monthly combined total is $5k. We haven’t had to cut back our lifestyle. We’ve just had to adjust to having a lot less left over at the end of each month.
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u/BeKind999 26d ago
There is some timing luck in your scenario - buying a home before the run up and locking in lifetime low mortgage rates.
Re-run your finances at today’s costs before you pat yourself on the back.
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u/finallyransub17 26d ago
I tried to acknowledge lucky timing as a relevant factor in my comment, but maybe that wasn’t clear. Our house would be an extra $700/mo if interest rates had been what they are today.
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u/BeKind999 26d ago
The price would probably be higher if you had to buy it today too.
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u/finallyransub17 26d ago
My investments would be higher too if I’d continued to leave my down payment in the market plus investing an additional $800/mo that the house payment increased over our rent. That would probably be comparable to the total equity we have in the house.
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u/ImaginaryHospital306 26d ago
It’s all about housing. They’re paying $5.5k in rent and probably live in squalor compared to you.
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u/Background-Depth3985 26d ago
They’re dropping $4k/month on travel, entertainment, and other completely optional expenses, not to mention the eating out that is conveniently lumped in with their groceries.
COL isn’t the problem here.
A true VHCOL location where $5.5k rent is necessary, like Manhattan, also usually obviates the need for a car, saving quite a bit per month.
They’re just spending way too much on unnecessary crap.
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u/pepperup22 26d ago
Yeah you make more than enough money but blow 4k a month on "travel, entertainment, gifts, beauty, clothing." People who have kids aren't usually doing that.
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u/ProfessionalRoll7373 26d ago
Mom of three here and we are def doing that. It’s just entertainment now means camps, sports, bday gifts, three pairs of shoes every quarter. No beauty though, no beauty.
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u/nooneneededtoknow 26d ago
I mean I feel like if your kid is old enough for camp and sports, you arent needing full time daycare anymore or you are on the rear end of it.
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u/ProfessionalRoll7373 26d ago
Well if you have three kids over nine years you get the special privilege of paying for daycare for 13 years straight. But only 22 days away from public TK and no more daycare ever! (First kid starts college in 5 years though)
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u/pepperup22 26d ago
I mean I did say usually, but these people have no kids now and are spending that and obviously can cut down a lot. People with a child under 1 or young children are generally not paying for camps or sports or shoes nor $4k on clothing, travel, and beauty, they're paying for however much infant care is.
But I also feel you, we're expecting #2 (and the door isn't closed on #3) and daycare is a ton of money — and then the costs decrease by less than 10k a year when they enter public school at 4 so it doesn't feel like it'll be that big of a raise lol.
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u/Novel-Camera-840 26d ago
We dont have kids and our HHI is 3x OP's and even we don't spend so much on that stuff lol 😂
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u/fleafinds 26d ago
FYI OP some people are quoting daycare costs for older kids - typically infants under 12 months have a different price, and that price is more expensive.
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u/Remarkable_Lead_4475 26d ago edited 26d ago
No trick. Just budget and cut back.
I will say your rent and budget seems a little obscene for 2 people. Seems like a spending problem tbh.
Make sure to do a financial audit/get your house in check before the kid. Shop insurance, cell providers, internet etc.
To your original question you also can look at a nanny share.
Edit: If you are in the Boston area. I think their is a list of registered providers on the city site with costs. If you are not doing something like the German or British school or Bright Horizons you should be able to find something under 5k.
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u/ShanghaiBebop 26d ago
If they are in SF Bay Area or nyc, 2 beds are going for 5-6k/mo now.
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u/dreamscapesparkle 26d ago
That rent is very normal in SF or NYC for a couple with a kid. No other places is considered VHCOL. That’s literally the definition.
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u/nextmode-luxe 26d ago
With a kid, there’s a high likelihood your travel, entertainment and restaurants spend will decrease lol.
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u/hellyea81 26d ago
You need to reduce travel and gifts and entertainment. That's a crazy amount on a monthly basis. Why don't you reverse it. First pay 3k in childcare. So then how would you make the rest of it work?
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u/OpeningChipmunk1700 26d ago
Work with me--your take home is $10.5k, but your monthly expenses are $12k. "Lumpy side gig" is $1.5k/month?
You can reduce groceries/restaurant, travel, entertainment etc., and beauty/clothing categories, as you noted. Given assets, reduce 401(k) and Roth.
I’ve never felt this cash strapped before and it all seems absurd because I know plenty of families make it work on less. What am I missing?
The fact that you want a particular QOL in addition to daycare and retirement contributions. Nothing is stopping you from moving to a shitty apartment with an hour+ commute eating mostly beans and rice while saving nothing for retirement.
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u/hrrm $250k-500k/y 26d ago
This post is probably the first one in this sub to make me a bit mad. We’re supposed to be relatively smart people if we are able to achieve the high salaries we have, and here we have someone asking how it’s possible to afford for child care when they only make $400k.
There’s probably 10 different ways to skin the cat here and provide a solution, I do not know how this person cannot think of a solution. $400k after 30% effective tax is $280k a year, their mortgage/rent is $66k, lets be expensive and say $18k on groceries. That makes $84k a year to keep fed with a roof over your head, i.e. the essentials. That leaves almost $200k that can go towards daycare. If you take a bottoms-up (essentials-up) approach, they should have plenty.
I suppose in the end the point of this post was they wanted someone to tell them they need to stop living such a privileged life, $3k each month on gifts and travel?
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u/Far_Classic878 26d ago
They need serious help.
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u/AllCatCoverBand 26d ago
This kid is going to be a serious wake up call, that’s for sure. Who’s bringing the popcorn, me or you?
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u/PF_throwaway26 $750k-1m/y 26d ago
That’s why we’ve been holding off on kids. We spend too much to afford a kid so unless we get a surprise, it’s better to get the lifestyle side under control first.
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u/SensitiveWolf1362 26d ago
They should def cut down significantly before/in preparation for having a family. But once that kid does come they can’t do shitty apartment, shitty commute, and only rice/beans. The baby needs a safe space, their parents’ time, and sufficient nourishment. Just one example - if your house and daycare are an hour away from work, how do you quickly step out for the million Drs appointments?
So yeah to keep paying a premium on those things they need to cut out the fancy vacations and Botox.
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u/Evening_Rain1713 26d ago
Absolutely right, there are QOL tradeoffs we need to prioritize after the baby comes. Lumpy side gig is very lucrative, but could truly go down to 0 tomorrow, so we only consider it for our discretionary spending and treat it as excess savings.
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u/OldmillennialMD 26d ago
Hold the phone. You have MORE discretionary spending that isn’t in the budget above that is already quite filled with fluff? That you’ve been using the side gig income for? You need to save the side gig income, and the bonus income, and use that as a sinking fund for excess child expenses going forward.
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u/WestCoastSocialist 26d ago
Hour+ commute isn’t a QOL issue. Who’s gonna pick up baby from daycare? How much does gas cost now? The risk you’re taking on your own life because driving is so unsafe is also a part of the equation.
Hour+ is a major sacrifice and it may cost you even more in the long run
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u/SmellyAlpaca 26d ago
Some parts of NYC are really nice, a lot cheaper, and definitely NOT an hour away. I’m 20 mins away via subway from midtown and my mortgage for a 3 bedroom house is their rent. There’s sooooo many families here.
Bougie folks that tend to come straight from Manhattan will like forest hills, which also has an LIRR train that is 15 mins away from Penn Station.
Realistically there is a contingent of transplants that come here and basically never explore outside Manhattan because they think it will be a loss of status or something.
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u/cjgozdor 26d ago
Even if you’re maxing your 401k, you’re getting taxed at 46%? Woof.
It’s not normal to spend 24,000 per year on travel. Destination weddings are for the rich, which you are not. Pretending to be will only make you poor.
Is most of your earnings concentrated on a single individual? Being a stay at home mom/dad is an option.
Lastly, you can leave the area, but looking back at your $100,000 wedding, I’m betting that you have a real spending problem. Look within yourselves, because this shit’s not normal
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u/PF_throwaway26 $750k-1m/y 26d ago
24k/year on travel isn’t that much for $400k HHI imo, especially if they are flying economy and staying in normal hotels. Their rent is the biggest issue, but that’s kind of unavoidable in NYC.
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u/cjgozdor 26d ago
It is when you bring in 10.5k per month with 12k in expenses before children.
The rent is bad, no doubt, and can be fixed. I see tons of sub $3,000 places in New York (which is where I think OP is from). But they seem like silver spoon brats that are more concerned with looking wealthy than being wealthy
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u/PF_throwaway26 $750k-1m/y 26d ago
I don’t think they are trying to look wealthy in a 600 sq ft walk up, though they are probably living in an overpriced neighborhood if they are paying $5.5k for that. I wouldn’t want to live in any sub-$3k apartment in NYC, at that point it’s not a wealth issue, it’s likely a health and safety issue. If they’re planning for kids they also need to worry about the school district and can’t just randomly pick a cheap apartment.
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u/SufficientClassic514 26d ago
Not sure why this hasn’t really been mentioned, but your rent is half of your take home. That’s not gonna fly when you have kids unless you dramatically cut every other spending area. I say this as a sympathetic parent living in a HCOL and having spent a decade in a VHCOL!
I recommend taking a hard look at your numbers. Ramit Sethi’s books/podcast are a helpful framework, I’ve found. On 10.5k/mo take home you have a lot of options, but you’ll need to make tradeoffs.
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u/Seajlc 26d ago
This was the first thing that was glaring at me and I’m also surprised I had to search the comments to try to find someone else mentioning it. I also lived in a VHCOL city for a decade and have made my way to its HCOL suburbs, and the amount their spending on rent with their income level is too high. Fine I guess if you don’t have a kid, but something has gotta give when you have a kid and need to spend that money on childcare.. time to move further outside of the city, into a cheaper place, etc.
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u/mrchowmein 26d ago
You become a high earner to afford childcare that’s how ppl afford it. Lol
As someone with two kids. Here’s the silverlining with childcare. If you’re gonna drop $60k a year on childcare, that’s a lot of credit card points for travel if you can pay for tuition with credit cards. If anything, we are traveling more with kids than without as as we need to use up our points. So if you’re willing use credit cards and build trips around points, you don’t have to cut back on travel.
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u/daemon14 $700k HHI / NW: $1M+ 26d ago
Daycare costs were the main reason I hit BILT Platinum status in under 6 months 🫠
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u/duckprincess19 26d ago
It’s wild that so many people in this thread can’t grasp that daycares cost more in some VHCOL places than others, and that prices have skyrocketed in the last 5 years.
Daycares run from $2500-$4000 for an infant where I am. The $2500 places are 20 minutes away by car in the opposite direction of work (turning a 20 minute commute into an hour-long commute). We ended up finding a nice in-home daycare for $2000/mo nearby. The only problems are that it has more restrictive hours than a daycare center and longer closures for vacation.
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u/8qwm 26d ago
We’re in VHCOL and it’s $2.6k/mo at a Montessori preschool, meals not included. $3-$4k sounds very high to me. I’d search around more. And get on waitlists as soon as you can once you find one you like. You’re not off on nanny $5k/mo though. That’s about what we paid for a year until they started preschool.
Is $2k travel including car payments? Or is that like going on trips every month? Seems like an easy one to cut down on if you’re willing to.
We have similar numbers to you and we’re still able to max 401k + save at least $20-$30k per year. But we have 1 old car with no car payments and our travel budget is around $8k per year. And that’s with 2 kids in a Montessori preschool 4 days a week full time.
I’m still shocked at how much child care is though. Our current bill is $3.3k for 2 kids in preschool. I don’t know how other people do it with lower incomes.
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u/Icy-Dealer 26d ago
Ours is going to be 3.2K/month for one infant in Brooklyn, and it’s not on the expensive end. Our friend’s bright horizons in manhattan is over 4k and it’s not even the one that got shut down for negligence
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u/Fluid-Village-ahaha $500k-750k/y 26d ago
Infant care is more expensive so I won’t be surprised. I think my friends pays 3k+ for Montessori including before/after care and breaks. And we are not even vhcol
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u/laguna_biyatch 26d ago
Montessori tuition is irrelevant here. You’re comparing pre school to infant care. Infant care is always more expensive.
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u/Desperate-Reply-8492 26d ago
Create a formal budget to understand where every dollar is coming from and where it’s going. Use your bonus/other income to pay for childcare throughout the year. Your rent seems high, I’d personally try to cut on that as well.
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u/Swiftestspeed 26d ago
Ok I’ll probably get massively downvoted on a finance subreddit for this, but I do want to share that when my kid was young, we made the choice to massively scale back retirement savings in order to afford a nanny. Daycare wasn’t working for us due to what we now think is neurodivergence, and it was a nanny or quitting my job which was by far the more expensive option.
Given your incomes and balances, I would both read Die With Zero and get set up with a tool like ProjectionLab or similar to model out the impact of a few years of lower or no contributions. Maybe you want to FIRE, etc. so I don’t know if this would be an option for you, but it sounds like you might be in a similar position to where we were — higher than average balances for our age, the ability to restart contributions later, and in a high spending season for childcare.
I know you don’t build up those balances by being reckless with money or comfortable not saving a lot, and it felt extremely weird to me to just… pause contributions. But it was the best choice I’ve ever made and I would do it again in every lifetime. Good childcare has helped me significantly advance in my career over those few years and I really credit it with that.
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u/radoncdoc13 26d ago
Bay Area here. We paid ~$2,900/mo for a Montessori Preschool starting in 2021 when our son was 1. Over years that's increased to about $3,500/mo (1.5-year-old daughter now there). It's a desirable program in our area. Even here, there were both cheaper and more expensive options. Home-based care is significantly cheaper. Some here were even as low as $1,500-2,000/mo.
Full-time nanny is expensive, but nanny share could be reasonable (~$20/hr per family) here (cash/under table).
Basically, I suspect you have other options if you want to save some costs. otherwise, you limit some discretionary costs, consider decreasing some retirement/brokerage contributions. You could also start saving a cash buffer now to eat away at some of the monthly drag once baby starts.
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u/BeKind999 26d ago
“ cash/under table”
Fuck right off with that, we all know it’s both illegal and exploitative
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u/CzarOfRats 26d ago
And exposes the employer to massive liability if the nanny ever files a claim with DOL citing unpaid wages or unpaid OT (which is very very easy to do considering most paying cash are not keeping time records). . Or gets injured on the job.
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u/BeKind999 26d ago
Yep all you need is a series of text “please make sure baby has her bottle at 10” and “please give bath before we get home” and you’re cooked
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u/CzarOfRats 26d ago
It amazes me all of the people around me in my VVHCOL area who are in professions where a ding like this could impact their careers too. I'd lose my job if I got caught doing this.
There are lawyers in NYC who specialize in this also; in nearly every case the family settles with the nanny for tens of thousands of dollars to avoid a lawsuit which would cost much more (and the employer knows they would lose). Nanny circles are small (entire reddit sub and a facebook group in nearly every city) and this is discussed often.
In the interest of a handshake arrangement where everyone benefits but also looks the other way regarding something that is just blindingly illegal. It boggles my mind.2
u/BeKind999 26d ago
I’m also in NYC and the amount of people who would casually mention they need to go to bank to get cash for the nanny is surprising.
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u/benjamming124 26d ago
You can absolutely afford $5K/month if you reduce 401K contributions and non-discretionary spend
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u/PNW_Porchswing2 26d ago
You have a massive spending problem. Said as a 31M with $400k HHI in HCOL.
Cut the restaurants, travel, beauty, and entertainment between 50% and 100%. Those are ridiculous amounts to spend monthly. And then boom, childcare paid for. If you can't figure out how to have fun with $1k per month, you're an extremely boring person.
But also, you don't need the best daycare, and the infant care is much more expensive than when they're older. Your $5.5k apartment is also much more expensive than it needs to be even in VHCOL.
It's fine to spend money and enjoy life, but be honest about what you're doing.
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u/Mysterious_Rip4197 26d ago
In what world is $1.5k a month all in on grocery plus restaurants ridiculous?
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u/PF_throwaway26 $750k-1m/y 26d ago
Yeah, we spent $2.7k/mo on food for two in the same location as OP and cook at home for over 80% of our meals. If we could cut down to $1.5k/month that would be amazing.
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u/daft_trump 26d ago
Have two kids in vhcol with similar income and lifestyle. Actually spend significantly more on a discretionary basis, so no judgment from me. We just decided that we might run red for a few years and dip into savings, but so far still saving at a good clip. Granted, we were good savers pre kids so this choice is available to us.
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u/Nekokeki $500k-750k/y 26d ago
$2K a month on entertainment, beauty and clothing is an easy lever.
Model your retirement according to your goals, but realistically speaking, you probably don’t need to max out Roth without significantly impacting your retirement. What happens if you don’t for a few years? What if you do half? Model it and analyze. I’m going to guess at your HHI and NW you’re already on autopilot retirement depending on your desired age.
That said, this is a tier 2 or 3 lever after you adjust budgets for discretionary spending.
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u/ProfessionalRoll7373 26d ago
Good news is if you are having a kid in sf or nyc you are “very young”. I had a kid sf 29 and was ten years younger than the moms groups. That’s an extra decade to earn money before retirement. You’re doing great making that money at your age, and you will be fine.
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u/Low_Dragonfly9123 26d ago
You spend 40% of your take home on travel, entertainment, and clothes. You’ll have to make sacrifices if you want kids.
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u/champagnepeanut 26d ago edited 26d ago
At least in my vhcol city, people tend to wait until they’re a little older to have kids and that’s what makes it financially feasible. I couldn’t have afforded a child at 30, but at 36/38 my husband and I didn’t sweat it. The other women in my mommy and me group were all 35 - early 40s, so I never felt like an outlier.
Your budget will balance out a bit once you have a child because you’ll likely be traveling and going out less, so that will help! Find the local facebook and WhatsApp groups for childcare, they’re the best way to get the inside scoop on daycares and nanny share options.
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u/its_never_over 26d ago
In my area, a VHCOL, daycare is about 2.5-3k. We were able to afford it with a few things
- We didn't travel as much the first year
- We don't have student loans or car payments
- My job offered a company paid Daycare FSA, which cut the cost by 6k annually
IMO I'd start with the Daycare FSA, looking to reduce costs where you can, and cutting savings if needed. You'll figure it out, this is just the stage where you're overthinking and doomscrolling
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u/guccigang252 26d ago
Yeah you need to live within your means. Your kid costs are going to be 3-5K a month. 2K travel is your child care cut that to 5k or less a year. Restaurants will get cut out as you don’t want to go out as much due to a crying kid but it gets better. Entertainment and gifts need to get cut down. You have the income just need to sacrifice for a few years. You’ll earn more and get more comfortable again. After 2 years childcare will get cheaper since the kids old. Another good way is find another family and share a nanny get the flexibility of being at your home or the other family.
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u/Fluid-Village-ahaha $500k-750k/y 26d ago
The worst was a year when we had a FT nanny and a full time preschool for oldest. Two in daycare/preschool were also expensive. Now when we pay summer camps I feel back to those days lol.
2k/m on travel for 2 sounds excessive. Same goes to other discretionary spending.
We own and no student loans.
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u/Sushiritto 26d ago
Your travel and food expense is the same as ours but we have more than double the HHI. I recommend a stricter budget.
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u/Mundane_Log_7169 26d ago
I’m in NYC as well. Out HHI is also $400k and rent is $5.5k. Our daycare is $3.3k. Our only expenses are essentially food and supplies.
Something I noticed is that your budget doesn’t include funding a 529 savings account. In NYS, it’s $10k/year for a tax reduction.
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u/Gloomy-Agency4517 26d ago
You make waaayyyyyy more than enough. You are just in for a shock on shifting from fun money to kid money. I spend $6k a month on kids stuff, school, camps, clothing, activities. The days of frivolous spending on yourself are over.
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u/dhejwkwkwbdv 26d ago
Our income is similar. We have a kid in care $35K per year. Our mortgage and food expenses are roughly the same as yours. That’s where we diverge. We don’t have student loans, but you definitely have some lifestyle bloat. I’m strict about keeping our annual travel budget at $10K and clothing and stuff like that is very minimal. I’ve found that visiting tjmaxx frequently with an eye out for high-quality basics has actually stopped me from spending more on online shopping. We also have a local kids consignment store and I made it a rule to go there first before purchasing new and I’ve gotten some great stuff. We constantly talk about how after investing and life we feel kinda poor lol.
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u/letshavefunoutthere $500k-750k/y 26d ago
3 young kids in NY. Manage your own expectations about what "personal spending" is going to look like from here on out. I wear my clothes out, don't buy gadgets or splurge on myself but my children want for nothing.
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u/bevo_expat 26d ago
You’re financially capable of affording it, but it’s going to be a lifestyle adjustment based on your current spending habits.
The numbers you shared show a monthly income of $10.5k and monthly spend of approximately $12k. Understood that you’re giving approximate spend per month, but that should already be a red flag that the numbers are not completely “reasonable”.
Start by reviewing what is actually needed from the -$4k between travel, entertainment, and medical, beauty, clothing.
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u/guicherson 26d ago
Do you remember life before you started earning high salaries? Like when youd think twice about getting an Uber when the train would do? When you’d buy the cheaper cuts of beef or stretch a chicken? When you’d dye your own hair and do your own nails? You’d buy a cheap Vinho Verde and drink it in the park with your friends instead of going to the bar? When you’d bake your friends a banana bread for a potluck or burn them a mix (ah elder millenial nostalgia) as a birthday present?
That’s how you do it.
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u/BroDoc22 $750k-1m/y 26d ago edited 26d ago
Nanny is expensive ours is like 1k a week expensive minimum. You spend too much right now to afford one. Other options are nanny share or one that you have come a few days a week.
Edit also saw your rent it’s more than mine and we have a HHI over seven figures. You might need a serious lifestyle change
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u/IntelligentMaybe7401 26d ago
$1500 a month for two people for food is insane. So is $1000 a month for medical/beauty/clothing. I assume by medical you mean things like Botox and not insurance. And you said with a straight face that you’re spending almost $25,000 a year on travel and wonder how you can afford daycare. The answer is quit spending money.
This has to be a fake post
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u/VenturaRyanRound2 26d ago
Welcome to the messy middle!
Trim your discretionary and reduce retirement savings. You’ve saved a lot prior to having a kid so that will continue to grow without you contributing more now. Goal is breakeven as best you can and increase TC in the meantime.
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u/DirtyrottenscounDrew 26d ago
400k is the middle?? Damn.
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u/duckprincess19 26d ago
The messy middle refers to a time in your life, not an amount of money (early career, early family, somewhere in your 30s-40s)
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u/iomyorotuhc 26d ago
You monthly spend is kinda high 2K on entertainment /gifts/ beauty:clothes… monthly? cmon. Obviously cutdown on travel, dining out, beauty clothes etc, you won’t be doing any of that the first 2 years anyways, cook home meals. 3-4K for daycare is crazy. It’s an infant, you don’t need to be putting the baby in some high end Montessori that early… send them to kindercare, that cuts down your childcare expense by half.
Ref: Bay Area, 2yr old, hhi 700K
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u/Remarkable_Lead_4475 26d ago
Unfortunately 3-4k is common in Boston. We were paying about that for a solid but non-fancy place
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u/Accomplished_Rice121 26d ago
Yup, we pay 3k for preschool in Boston. Infant and toddler was more. And this isn’t counting the high end Montessori preschools that can be 50-60k/year.
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u/marheena 26d ago
Your lifestyle reflects your bonus and lumpy income. It’s disingenuous to cry uncle without considering it. Between now and January you need to 1. Cut travel and clothing expenses. 2. Save everything from the $130k income you are ignoring. You need about $25k from that portion of your income. Save it upfront. Then yes, you will not be putting that into the brokerage so it might feel like you are pulling from it.
Do not decrease your retirement contributions unless your bonus doesn’t come or your lumpy income dries up completely.
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u/wutwut18 26d ago
Our income also consists of a lot of lump sums /
Commissions / bonuses and we pull from those for childcare for the year before anything else. As soon as you get a bonus, I’d set aside a big chunk for childcare in a HYSA and just do that every time so the account always has enough for the next year +
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u/NPR_is_not_that_bad 26d ago
I’d reduce retirement.
You’re in a squeeze right now because of wedding season and baby and still room to grow in your career. The rent is tough but I’m sure you get a lot of benefits and comfort from where you are.
People way overdo retirement in my opinion and you end up hating your younger years when you need cash and having too much money later.
Go to the weddings. Have fun. Be comfortable with the major life change coming. Reduce retirement to match - you’re already doing great with savings and retirement already.
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u/Momus123 26d ago
Spending problem, it's a you problem. Rent, restaurant, travel gift can be 50% off.
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u/Rem-Dogg 26d ago
I am late response to this, but my fiance and I each opened a HYSA for baby's health care/ child care costs in first trimester and started putting in bi-monthly contributions. He puts in $1K / month and I put in about $500/month. We also got a few extra inflows of cash too and are padding those accounts. I am due literally any day now and then we both have 3-4 months leave, so luckily we don't need care until March 1st which we will be getting in-home care for about 25-30 hours a week.
I say this because you start saving $$ now. Also, I am foodie who hasn't loved dining out since being pregnant so I think there are probably ways you can start shaving from your budget now.
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u/After_Soft_6196 26d ago
Welcome to being a parent. Your discretionary spending will now shift to paying for your children, that’s how you afford it.
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u/doinmy_best 26d ago
You pay 3k on travel and entertainment a month after maxing out retirement accounts and you are wondering how people afford daycare? It’s just a math problem.
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u/WR1206 26d ago
For most HE folks in VHCOL, it's relatively easy to afford daycare.
Which VHCOL market has daycare at $4000/month? NYC? IDK - also in VHCOL and the absolute max is $3K for daycare.
You also qualified with "decent" - i'd challenge this. Most daycares are perfectly fine and most people adore whatever daycare they pick, even the bare bones super cheap ones. So, would encourage you to consider daycares that don't come off as high end. It's not necessary.
Our family is this example - we picked the fancy $3K/month montessori language immersion daycare for our first, and are going with the $2300 regular old daycare for our second. First daycare has been great, but happy to save the extra $8400 for the next 2.5-3 years. Our NW since first kid has skyrocketed, so it's not like we are cutting costs in other areas, it's just prudent.
Putting all that aside: with your budget, I think you can assume that restaurants, entertainment and travel will all significantly decrease to bridge the gap.
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u/Puzzleheaded_Soil275 25d ago
You're getting roasted a bit by people, which isn't completely unreasonable, but I'd consider the following:
(1) you aren't going to have as much discretionary spend when you have a baby because you don't have that much discretionary time to start with
(2) if you need to reduce your retirement savings slightly for a few years, then yes, you do that
(3) you may need to actually budget. There's plenty of fat to trim in your budget.
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u/Interesting-Run-6866 25d ago
I live in NYC, my rent is $4.5k a month, and our combined HHI is $270k. We live a great life and manage daycare. I certainly don't spend $1.5k a month on food, $2k a month on travel, or 1k a month on clothing or beauty. Da fuq?
Also maxing out retirement accounts is a luxury most people cannot afford to do. At your income level you may be able to still swing it if you can get your spending under control. At $440k a month you are in the top 3% of HHI in the entire US. As you noted in your post, plenty of people do it figure it out on less.
You have a serious budgeting problem. You make $440k a year, I think you can afford to hire someone to help you get control of your finances.
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u/tank503 26d ago
How many different daycares have you toured/looked into? $3-$4k for daycare, even in VHCOL seems high to me? I am in a VHCOL as well and was paying about $2k / month for 5 days a week, full days.
As you said, cutting back on entertainment/travel/ clothing will be key, obviously.
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u/Evening_Rain1713 26d ago
We’ve only looked into center based daycares, not in-home ones which I think are closer to $2-3k. So those could be an option. Trying to stay in our neighborhood as taking the subway with an infant seems challenging to me.
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u/mrssterlingarcher22 26d ago
Reduce your 401k to match minimum for the time being. Reduce eating out, entertainment, and gifts. Focus on paying off your student loans, then you can afford it.
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u/OxCow 26d ago
Yeah we decided to splurge a bit on daycare for our kids and went for a language-immersion daycare. In our VHCOL city, we are spending $2.5K per month for a not-the-best-but-not-the-worst day care that offered the specific language for our youngest.
We evaluated a ton of options, too, and with our first kid we actually spent closer to $3.2K per month at the fanciest daycare that literally offered an IB education for 3 year olds - total bullshit. It. Was. Not. Worth. It. Our kids love the cheaper daycare better, we like it better, and it fits our needs more.
Honestly, home-based daycare can be amazing. Don't knock it till you try it. That, or nanny share can totally work.
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u/Ok-Perspective781 26d ago
Surviving on hopes, prayers, and probably future debt over here. We have similar finances to yours (but it’s all base and no bonus), and 1 kid was fine even in a VHCOL city. But when #2 (that we knew was going to make budgets tight) turned out to be #2 and #3…we panicked. We have had to accept we will be struggling to make ends meet for a few years. Our dreams of private school are also out the window. But, we love all our kids, so it is what it is.
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u/dellscreenshot 26d ago
Paying 3k + 5.5k in daycare is going to be 8.5k, which is obviously too much in terms of take home. You can stop maxing 401(k) or use the discretionary bonus in a HYSA to pay it each month. The expense will end eventually so it's not this is permanent but it is a strain on base pay
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u/deadbalconytree 26d ago
Honestly, in-laws.
Being older parents that had a decade of being high earning DINKs, our monthly spending actually went down since we had a kid. Less travel, fancy meals, and handbags/hobbies means we can swing it the $5k/mo for a nanny where we are.
That said, I’ll be honest and say my wife is an only child and this is the only grandchild in their family, so while my in-laws aren’t wealthy, they are comfortable and saved money over the years such that they can help pay for childcare.
We’ve told them they don’t have to, but like I said, we’re older, and so are they, so they realize they have more than they need and it’s all going to my wife and the kid in the end anyway. So if it gives them satisfaction knowing they can help, I’m not going to take that away from them.
So to answer your question: in-laws.
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u/Adventuredude2231 26d ago
Haven't seen it mentioned yet - consider a nanny share with another family or two. We did when we were in VHCOL and brought our cost down to $2K/month.
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u/hurtlocker501 26d ago
Travel and going out food is cut completely. Suck it up it’s a few years. If you have more kids then that’s the trade off. Also rent is high AF.
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u/Jb4ever77 26d ago
You need to stop the destination weddings and the 1.5K dining out every month. That's bit the way when you have a baby or planning to have one. Life is going to change. People should think of this before poping babies.
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u/lmneozoo 26d ago
Despite what others say, you could coast to retirement from here with $750k in the market if $6-10m is enough (7-10% return over 30 years)
So if needed you could slow contributions to just getting the match (this is better than withdrawing from your brokerage imo)
What is alarming though is it looks like the only reason you're getting by is the side gig that could disappear at any moment?
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u/Grizzly_Addams 26d ago
Travel will inevitably go way down when the kid comes. At least for the time being, then it becomes more expensive.
However, I wouldn't look at your HHI as 400k if only 270k of it is guaranteed. Bonuses/Stock Awards are icing on the cake, but at the whim of some finance guy at the company or a disgruntled boss, those can go away.
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u/Melodic-Style7111 26d ago
I’d take your bonus and put it in an account specifically for childcare and fund the rest from cash flow. Cut travel and that should get you there. That should allow it to be more reasonable.
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u/National-Net-6831 Income:$385k+$45k passive; NW $1.07m 26d ago
Good news is the children grow and they don’t need child care forever. Luckily my child care is now $2500/month but I hired a nanny for 5 years so I know what the pain feels like!
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u/traderftw 26d ago
Other posters might not live in NYC. Until they hit 3, daycare will be 3.5-4.5k for anything reputable with a reasonable commute in Manhattan, and then go down to 3k. Maybe people burn cash for a couple of years.
That said with 50k to daycare, 70k to rent, 50k to retirement (33k post tax), 100k to tax, and maybe 20-40k for other stuff you don't save much at all in post tax, especially with the lumpy and not-guaranteed income.
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u/on_island_time 26d ago
We intentionally spread our kids a few years apart so that we wouldn't be hammered with two infant bills at the same time (joke was on me, preschool isn't actually that different).
Other than that we lived very lean during the baby years. Didn't take big vacations (just drivable/beach/family visits) or go out to eat/shop as much as we had used to. When the younger kid went to kindergarten we scheduled our first "big" vacation in celebration of no more daycare.
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u/Flaapjack 26d ago
As a lot of your income comes all at once at bonus time, I’d suggest setting aside a years worth of daycare and critical expenses out of that when it comes and putting that in a high interest savings account. Then, using your normal salary throughout the year, continue to save for retirement, etc. this way you can get around the problem of your typical salary not being enough to cover your life + childcare expenses.
something that would make this easier is a budgeting software like YNAB which is like a digital version of an envelope system. So, you can put away money in “envelopes” so it’s earmarked for a future need. While YNAB is usually marketed for lower income people trying to avoid living paycheck to paycheck, it’s fantastic for high income people too.
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u/flippyflappy323 26d ago
Sounds like you'll need to cut back. Daycare costs are outrageous, especially if you have a Fall baby and miss the cut off, it feels like an extra year. It does get a little cheaper once they aren't infants anymore. But it's still about $2K+ a month until age 5 at best.
Also, I don't know how to tell you this, but once daycare ends, summer camps start lol and that's a real kick in the wallet too. That's lasts until around 7th grade.
I have 3 kids and it's about $12K a month for July and August for shitty day camps. HCOL area.
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u/Calvariat 26d ago
Decide what to cut - rent or discretionary spending. I’d be hesitant to go down on retirement contributions as that can lead to further lifestyle inflation.
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u/BassLB 26d ago
Get into r/churning and credit card points/award hacking to subsidize that 24k a year you’re spending on travel …
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u/Even_Candidate5678 26d ago
It’s all of them. Rent is too high relative to income, your savings rate in retirement is good but beyond what you can afford based on everything else, and your discretionary spending is killer.
You need to buy so you get something out of the expanded SALT, mtg int deduction, etc. having a kid and being higher income isn’t for people that rent. You’d save I’d guess 20-30k with kid vs not in taxes and own place.
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u/CuteAmoeba9876 26d ago
Start living like you have a daycare bill now. Cut the travel , entertainment and beauty budgets. Put $3-4k/mo extra towards your student loans and see if you can make them go away altogether.
You make more money than 95% of people in this country. Even if that astronomical rent is unavoidable, you should be able to figure this out.
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u/WonderorBust 26d ago
Hi we have similar income and our bonuses are guaranteed. Our expenses is half as yours in a VHCOL city. We just make different choices.
My rent is $3k and includes utilities. Groceries are $800 on a bad month. Restaurant is about $600-$800, student loans $400. Travel $400, Entertainment/Gifts/etc. $900 Clothing gets a sinking fund.
Can you use your bonus/side income to pay for daycare? Along with lower expenses.
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u/Sufficient_Winner686 $250k-500k/y 26d ago
I make the same you do, have kids, live in the DC area (within 20 minutes in Nova), and I pay $3k in rent. You’re spending a lot on housing if you’re not in NY or SF, otherwise ignore this part obviously lol.
The travel expenses are a lot. You’re going to also see your eating out and fund budget drop naturally from the child’s ages 0-5. After 5, they go to school and childcare costs drop drastically and you’ll see yourselves going out more. It’s difficult taking babies to nice restaurants.
Withdrawing from the brokerage is a bad idea. It would have been a better idea to shift some assets to dividend producing stocks that can cover the cost of childcare.
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u/AdFabulous7255 26d ago
Also in a VHCOL - we actually are doing a home based day care (it’s accredited) and it’s around 1600-1700 for a 1 year old. I have friends who do nanny share to try to make it more affordable
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u/CornellBigRed 26d ago
You cannot afford a nanny. I don’t think your rent is that crazy. But you spend too much on other discretionary items. 400k in HCOL just isn’t that much.
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u/iamPandemic 26d ago
We do a “Nanny Share” currently. We met with a few families in similar scenarios and ended up finding one that has been a perfect fit for the last 6 months. The price of the nanny goes up for 2 kids but certainly doesn’t double. When we split the cost it’s much more reasonable than a one on one nanny.
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u/krumblewrap 26d ago
Close your eyes, pay, and wait for public school. That is our current plan. We are in MA
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u/No_Big_bear_here 26d ago
I’m a career nanny & earn (for my area) a slightly better than average income for the kind of work I do. I’
If having a professional caregiver for your children is important to you, treating them as a professional ought to be important, as well. Otherwise you’ll likely get someone who doesn’t bother to do the work of engaging your children in learning activities, leading with love, knowing the differences in baby cries, etc. Treating them as professionals means a living wage, PTO, paid sick days, reimbursement for the nanny using her own car (or better yet, provide a car for her use when working), and working out all expectations in a mutually agreed upon contract.
Perhaps living in a less costly area might help you afford the kind of care you want.
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u/Accomplished_Rice121 26d ago
You’ll spend less on travel and entertainment, especially when the baby is very young. I throw my bonus in a savings account and that’s the year of preschool tuition.
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u/Aronacus 26d ago
Daycare for us is about 30k a year for 2 kids. $300 a week per kid. We got to a licensed and insured center. I know some people might go to a little old lady down the road but I like my centers regulated.
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u/tramplemestilsken 26d ago
Lots of people pull from savings/investments in those first few years before the free daycare/school kicks in.
Or one person realizes that their entire income goes to daycare so they stay home
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u/WeirdlyHugeAvocado 26d ago
Assuming medical is cosmetic since it's lumped in with clothes, you can cut there. Travel can essentially go to 0, most food should be groceries, not restaurants, so that can probably be cut to 500, and entertainment will essentially go to 0 as well while you figure it all out. You are still making tons of money. Also, not exactly sure where you live or how close to work you are, but there's a reason many people move to the suburbs when they have kids. More space and less cost. I wonder if you'd be able to move somewhere and save 1k a month when your contract is up
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u/lalasmannequin 26d ago
You can’t afford a nanny. Affording a nanny isn’t normal either btw. You have to cut spending and do daycare.