A 30-year-old earning $60,000 a year probably doesn’t live high on the hog. But they don’t eat dry ramen noodles every night either, at least if they live in a city with a moderate cost of living.
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That annual salary comes to $5,000 per month gross income, or around $4,000 net after taxes. Depending on their state and local taxes, they may pay $817 a month in taxes (federal only), or they could pay $1,175 or more in high-tax states and cities.
Here’s a further breakdown of an average 30-year-old’s monthly spending with a $60,000 salary.
Typical Budget
The average budget for a 30-year-old earning $60,000 will depend on not just their own personal priorities but also where they live.
For example, someone living in New York City, where the average rent costs $3,748 per Zillow, may spend half their income on rent, but go without a car (and car insurance). In Kansas City (average rent: $1,395), that 30-year-old would almost certainly have a car but pay a far lower percentage of their income on rent.
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Here’s how a typical budget would break down for a 30-year-old earning $5,000 per month:
- Taxes: $817 to $1,175
- Health Insurance: $300 to $500
- Housing: $1,300 to $2,000
- Utilities: $200 to $400
- Transportation: $500 to $700
- Groceries: $500 to $700
- Student Loans: $0 to $500
- Discretionary: $150 to $750
- Savings: $0 to $500
“After payroll deductions like taxes and health insurance, an average 30-year-old earning $60,000 a year probably takes home around $3,500 a month,” explains financial planner Jay Zigmont of Childfree Trust. “Half of that usually goes toward housing and utilities, which leaves around $1,750 for everything else.”
Ways To Trim and Save More
How much wealth you accumulate in the future depends on how much money you save and invest today. Compounding returns will make you rich if you save and invest while young, but if you miss the boat, you can’t buy back that lost time.
The good news: There are always ways to spend less without sacrificing (much) quality of life. Personal finance expert Melanie Musson of Quote.com urges younger adults to start simple.
“Pay off your car and keep driving it instead of buying a new one. Compare insurance quotes and see if switching providers can help you save. Use meal planning to maximize the groceries you buy and reduce waste,” Musson said.
Speaking of waste, avoid ordering prepared meals through apps like Door Dash, and take your own lunch to work if you want to save.
Consider house hacking to reduce or even eliminate your housing payment. The traditional strategy involves buying a two-to-four unit property, moving into one unit, and renting out the others. The rent can cover your mortgage payment, and perhaps even home repair costs.
You can use a conventional mortgage, and use the future rents from the other units to help you qualify. Alternatively, set up a basement apartment or other ADU in a single-family home.
If you invest $500 a month, at 10% return you’ll have over $1.1 million by the time you turn 60.
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This article originally appeared on GOBankingRates.com: How Much the Average 30-Year-Old Making $60K Spends Monthly
