People in the middle class earn anywhere from $47,189 to $141,568 depending on their household size and location, according to Pew Research Center. Ignoring taxes, this is anywhere from $4,000 to $12,000 a month.
For upper middle-class earners, this kind of money can go a long way. But for those earning on the lower end — or those with a higher cost of living — it can rapidly disappear if you’re not careful.
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Many middle-class families still make it work, however, regardless of where they fall on this broad scale. GOBankingRates spoke with Amelia Thompson, a middle-class mom of two, about her household budget and how they make ends meet. Here’s what she told us.
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Household Size and Monthly Budget
The average American household spent about $72,967 in 2022, according to the most recent BLS data available. This equates to roughly $6,080 a month. It covers all household types, regardless of the number of people.
Amelia Thompson’s household consists of herself, her husband, and their two energetic children — ages 8 and 5. She said, “Our monthly household budget typically falls around the $4,000 mark, a sum we’ve found sustainable over the years. This budget covers everything from utilities, grocery shopping, education expenses, and leisure activities to keep everyone happy.”
Working on a tight budget can be tricky, but the Thompsons have managed to make it work without too much difficulty. Here’s how they do it.
Prioritize Needs Over Wants
“We manage our budget by prioritizing needs over wants,” said Thompson.
Their family still allots some money for things they want, like vacations or other leisure activities, but the majority of that money goes toward necessities. Common necessities include:
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Housing
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Utilities
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Groceries
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Insurance
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Personal care
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Healthcare
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Transportation
Remain Financially Conscious
One of the fastest ways to blow through a monthly budget is to spend money without a plan or pragmatic approach. For the Thompson family, with their $4,000 a month budget, it’s prudent to be conscious about their spending.
“We pride ourselves as a financially conscious family, always working towards a balance between responsible spending, and ensuring we live a satisfactory life,” said Amelia Thompson.
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Plan for Major Expenses Ahead of Time
Thompson said her family plans for big expenses early. That way, they’re aware of what’s coming and can save or cut back accordingly.
This isn’t a one-time thing, either. It’s something they do every year.
“Each year, my husband and I sit down and outline our major expenses, usually sourced from home projects, vacations, or substantial purchases,” she said. “This proactive approach gives us a wider time frame to save, reducing the financial burden when these costs crop up.”
Use Personal Finance Apps
Personal finance is a major topic, and there are plenty of tools and apps to go along with it. These apps are designed to help individuals and families alike manage their finances, set and meet savings goals, and track their spending — especially regarding impulse buys.
The average person reportedly spends around $150 a month on impulse purchases. In a household of four, that can quickly add up to exorbitant amounts. By using personal finance tools, Thompson’s family manages to keep costs down.
“We use personal finance apps to track our expenses and limit impulsive or unnecessary purchases,” she said.
Teach the Kids the Value of Money
Far too many households don’t educate their children on the value of money, something that can lead to potentially harmful money habits that can limit their ability to save or plan for the future. Thompson and her husband prioritize teaching their children about money so they can be better prepared for when they’re older.
“[Our children] know the value of a dollar, and the importance of saving,” she said. “Every month, they save a portion of their allowances for something they want. We match whatever they save, incentivizing the habit. This way, they’ve learned the value of patience, and the reward of saving for something they’d like.”
Shop Around and Use Discounts
“We also actively look for deals and discounts,” said Thompson. “Thrift shopping, price comparison on grocery items, or couponing often help us stretch our budget further.”
There are plenty of other ways to save money on essentials, too.
For example, price trackers can monitor the cost of certain goods online and send a notification whenever they change or drop. Free browser extensions, like Honey, can automatically search for deals online whenever you shop. Most major grocery stores also have a free loyalty program that comes with extra savings potential at check-out.
Eat at Home
The cost of food continues to rise. According to the BLS’s most recent data, the average American household spends $9,343 on their total yearly food costs. This includes $5,703 on food at home (or $475/month) and $3,639 on food away from home (or $303/month).
While food is a necessity, cutting back on dining out can significantly lower someone’s bill. It can also be a great bonding experience for the whole family as it gets everyone working together.
“We make an effort to cook at home,” said Thompson. “It’s healthier and cheaper, even if it’s a bit time-consuming. We often turn cooking into family time, a fun activity bringing us all together, and saving a few bucks in the process.”
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This article originally appeared on GOBankingRates.com: I’m a Middle-Class Parent With 2 Kids: Here’s Our Monthly Household Budget