SPEAKER_00 0:07

Welcome to Money Talk for Real, a podcast where I discuss making money, spending money, and everything in between. I'm Nick, and in this episode, I want to just talk about real numbers for a second. I'm always over here talking about finance, talking about personal, you know, spending, personal income, but I want to talk about real numbers, an actual example. And the example I'm going to use is $60,000 a year. So $60,000 a year, what does that actually look like? For some people, that sounds like a lot of money. Sounds like solid income. For others, it feels like it maybe is barely enough to get by. So what does it actually look like? Not in theory, not some perfect budget spreadsheet, but in real life. In this episode, I'm going to break down what you actually take home, where the money realistically goes or could go or should go, and why it can feel tight, and how someone making $60,000 a year can start getting ahead. Let's start with the reality. We all know that. You don't bring home your full salary. When you accept a job offer, you if if it is for $60,000 a year, you cannot just take that, divide it amongst how many paychecks you get a year. The math will not math because you have to factor in federal taxes. You have to factor in state taxes. You have to factor in Social Security. You have to pay into Social Security. Yes. You have to pay into Medicare. You're not taking home $60,000 a year. You're probably taking home closer to, I would say, $45,000 to $48,000 a year, depending on your situation, depending on how you have your tax withdrawals and withholdings and stuff set up. If that's the case, let's just call it as an example, $3,800 a month, $3,800. That's the number that actually matters because that's what you're working with. And we're doing it by month because every job pays different. Some people get paid once a week, some people get paid bi-weekly, which is twice a month. In other words, every other month. Some people get paid truly twice a month, let's say like on the first of the month and the 15th of the month. Some people get paid once a month, whatever it is. But your bills are typically based monthly. Another example would be sales uh salespeople, commission. You might not be on an actual time to pay schedule, but your bills are based based monthly. So we're gonna call it $3,800 a month, is what you're working with. Let's break this down like a real person. Your monthly take home, $3,800. Now let's assign it to where it needs to go. Your rent, and these numbers are gonna heavily depend on your area, what part of the country you're in, what part of the city you're in. There are certain parts of major cities that are obviously more expensive than others. Um, it's gonna depend on the neighborhood you live in, right? If you're in the city limits paying taxes versus not, that's gonna make a difference. If you're in a homeowners association, that's gonna make a difference. So all these numbers are just examples. But on $3,800 a month, let's say between $1,200 and $1,600 a month for rent and or mortgage, but I'm using rent in this example. Again, depends on your area. It also depends on if you have roommates or not, right? That's why there's a range that I'm putting on this: $1,200 to $1,600 a month in rent. Car or vehicle, whatever you want to call it, car, truck, van, whatever it is you drive. A car plus the gas plus the insurance, those three things combined per month, I would say between $400 and $700 a month. Next, I'm gonna talk about food, your groceries specifically. $300 to $500 a month. Again, I'm just making up numbers here that can fit. Your phone plus your subscriptions, again, putting lumping these together as one monthly expense. I would range between $100 and $250 a month for your phone plus all of your subscriptions. I don't know how many you have, but in this example, that's what we're doing. Eating out andor your lifestyle. For example, if you're eating out all the time, if you're getting coffee, that's not eating out, but I'm looping that in here. If you never eat out, but you get drinks with your friends every week, I'm looping that in here. That's why it's eating out and lifestyle. $300 to $600 a month. And then your debt payments, if you have any, a lot of people have debt, so let's just include that. I'm gonna say $200 to $500 a month plus even. Now look at that. You're already close to the limit if you add all those up. And that is without any emergencies happening in your life, anything crazy that caught you off guard financially, without having any savings, and without investing any money. And this is why what I've just explained and just went over is why people say things like, I make decent money, but I still feel broke. Because the stuff I just named off is not super crazy. And $60,000 probably feels tight, right? Let's talk about why it feels tight. The fixed costs are eating most of it. The rent, the car, the insurance. Those are non-negotiable. They're not flexible. You have to pay those every single month. You cannot cut back your rent. You have to live somewhere. You have to have shelter, right? You can't cut back your car insurance. You can shop around and stuff, but objectively, you cannot that that's not going to change. Your rent, your car, your insurance, those are non-negotiable. They take a big chunk immediately, as they should. I think every human, their necessities, that's why we work, is to pay for those things. But then your lifestyle creeps in. You start making more money, you start spending a little bit more money. Nothing crazy, but it's enough to keep you stuck. I've talked about that many times. Small, frictionless, painless charges at the time, they start to keep you stuck because they add up. There's no margin, there's not much left over. So any unexpected expense is going to feel like a problem. And an unexpected expense can be an emergency, like, oh my gosh, I need new tires on my car because they just all blew out. Or it could be unexpected, like your kid, um, their school, you know, there's something you didn't know about, and now you have to pay for something big at his school, his or her school. That's just an example. I don't have kids, but I'm using an example. It's also just not structured. Your money's flowing out instead of being directed. That combination of those four things that I just mentioned, not having any structure, no margin, your fixed costs eating up most of your income, and your lifestyle creeps, that combination creates stress. Now, there's two different people on $60,000 in my example. And this is important because income doesn't tell the full story. A lot of people think I made an episode about how wealth, a lot of people associate wealth with income. Absolutely not the case. The income does not tell the full story. Let's compare two people making the exact same $60,000 a year. Person A or person one eats out a lot. They eat out often. They have subscriptions everywhere, whatever those are. They have no clear plan, and they save if there's anything left over. That's person one. Their result is that they're always going to be tight. Money's always going to be tight. They're going to feel stressed. Person B controls their spending. They limit their convenience or their convenience spending. They have at least some sort of simple system in place and they save something consistently. I put the emphasis on something because it doesn't have to be a big amount, just anything. They save something consistently. Well, guess what? Person B, they're not rich by any means, but they are progressing, right? Person A and person B have the same income, but completely different outcome. That's the difference between reacting and managing. Reacting is, oh my gosh, I got paid, let me pay the bills because the bills are due. Instead of managing is you have a plan, you have a budget, you know what's going on, you have control and you have a structure. Let's zoom out. $60,000 a year is not a bad income. And again, you could argue with me. If you live in Los Angeles, that's going to be different than um Auburn, Alabama, right? But let's say that objectively, for the sake of this conversation, $60,000 is not a bad income. But it's also not enough to just ignore your spending. It's not enough to avoid some sort of structure or plan. And it's not enough to just, quote, figure it out later. If you're making $60,000 a year, you have to be intentional because small decisions matter more at this level. Every $50, every $100, that adds up faster at this level. So how do you make sixty thousand dollars a year work better? What should you do if you're around this income, give or take? Control your housing. This is gonna be the biggest lever that you have. You do not have to live in that fancy apartment in a trendy downtown kind of town center area. You can get a two-bedroom house with a roommate or two, right? Control your housing. Your housing is gonna be your biggest expense for I think every human. Limit your convenience spending. This is where money leaks. I've said this many times. Don't pay because you're lazy or you didn't plan. You always pay more for that. Delivery, eating out, drive-throughs. That's convenience spending. Limit that stuff. Build a small buffer. Even a few hundred dollars helps. And a few hundred is certainly possible per month on $3,800 a month income if you're bringing if you're making $60,000 a year. Track your stuff loosely. It doesn't have to be perfect. It doesn't have to be obsessively, but just track your stuff just enough to at least stay aware and have an idea of where you're at financially. And then if possible, and this one is controversial, increase your income. Even a few hundred dollars extra a month can change things. This can be things like gig work. It doesn't have to be another actual job like a W-2 employee. You could drive for Uber, you could deliver food on DoorDash. You can do small side gigs, whatever your skill set is. I can't determine that for you, but you know, maybe you clean somebody's gutters, maybe you mow their grass, maybe you do graphic design for someone if that's your full-time job, whatever your skill set is, just increase your income even a little bit because even a few hundred dollars here and there can certainly change things at the level of sixty thousand dollars a year. The goal is not to stay stuck at sixty thousand dollars a year forever, it's just to manage it well with what you have while you grow. So that's what sixty thousand dollars a year actually looks like. It's certainly not terrible, but it's not effortless either. And if you're in that range, just know you're not crazy if it does feel tight. But with the right structure, you can make it work and you can start building from there. If you're at that range and you feel tight, or if you're at any range and you feel tight, you're struggling, you want some help talking about your money, I would love to talk to you. You can go to the website at money talkforreal.com, click on the debt help link, record yourself saying what it is you want to say, and I'll play it on the show. If you don't feel like doing that, you can type it out and I will legitimately walk through it and help you on the show or in private. You can stay anonymous. Please leave a five star review on this episode. Thank you so much for listening. I'll catch you on the next one. This is Money Talk for Real.