High income /NW - what is your spending profile?
Age : 35, NW ~ 3M (2M equity), TC 800K, Family of 4
In past few years, as TC and NW went up dramatically, so did our family's spending habits. Our savings is still high (> 280K per year), but from time to time I experience strong feelings of guilt... on other days, it feels justified ~ our NW is on track, time is short, and buying back time / increasing quality of life is worth the $, and giving our kids the highest quality education.
But I am curious - how are other high NW/TC families comparing to our monthly spend :
Mortgage - 10K (6K sqft home that we purchased as investment in a high demand HCOL area- already appreciated by 20% in < 2 years)
Food - 3K (hired chef that prepares special diets for health reasons)
Home maintenance - 1.2K (yardwork, etc)
Private schooling - 2K
Sitters - 1.5K
Kids extracurriculars - 0.5k
Travel/vacay - < 1K
Shopping/households - 1.5K (a lot of it is enrichment for kids' education and other hobbies)
Utilities - 1K
Gas and auto maintenance - 0.7k
Misc - 0.6K
Total ~ 23K / month
With 800 TC, our take home income is around 560K, so our spend is 276K annual, savings of 284K (about 50% spend / 50% save). About 3.5K of the mortgage goes to equity if you count that as savings.
Things are expected to stay this way for next 10 years or so - once kids are out, we'll be downsizing the home and reducing spend significantly.
comments
We spend 4500 a month and live a good life, so whatever you are spending is subjective. Only one advice, you don’t need to spend to prove to something to strangers.
While I don't have specific benchmarks to share I recommend thinking through the following:
1. You indicated 10 years to this spend profile. I'd confirm that your line of work can sustain these salaries for that horizon
2. I recommend familiarizing yourself with the 4% rule, by which as long as you spend up to 4% of your diversified (+50% in equities such as s&p500) your money will continue to grow.
Back of the envelope calculation:
At 280 spend yearly ( and even assuming you will sustain this spend profile in perpetuity) you need to aim for 280/0.04 = $7M
Meaning one you've reached a diversified net worth of $7M you can withdraw $280k from you account each and every year and you will die a far richer man in all likelihood.
At your current $3M, at 7% return you can expect you money to double within a decade, without putting in a single additional $ .
With your current saving rate this means you are well on your way to financial independence within the next 5 years or so. I see little issue in this spending profile so long as you are all enjoying life and can sustain this income.
If you are/spouse are interested in taking a break/slowing down for a bit I recommend familiarizing yourselves with CoastFI. Well done either way - you put yourself on a good track.
Happy to pm if you'd like to chat further