Old post indeed! Maybe I’ll do a follow up on how our situation is now – that would be pretty fun :)

But yeah, having kids is no joke on the wallet. We took a beating for a couple of years trying to adjust to things ($2,000/mo in daycare alone! with only 1 source of income!) but fortunately we’re back on the up and up again earning more and saving more. It was definitely an adjustment. In a perfect world you’d be able to plan and save for kids and then have them on demand, but unfortunately it doesn’t work like that :) Same with marriage/career/etc. Sometimes you never feel like there’s a “right time” for stuff too and then you magically adapt just fine once you’re there. It’s kinda cool actually.

Thanks for breathing fresh air back into this article – was fun to re-read and remember what my former self was like :)

I wonder how your situation has changed. Not having kids was a huge plus that allowed you to save insane amount of money. Good for you. I wasn’t making that much when my daughter was born. However, she is now 6, and our incomes shot up (almost 3X now), so we are now saving that kind of money *without having a second kid*. Both of us are still in comfortable 30s, so we still have a decent few years before having a second kid.

For a typical “family of 4”, if you live in a major metro area (NY/NJ, DC, the bay area, LA, Houston etc), here is what needs to happen for you to be at the upper end of the middle class:

1) Household income of at least $200K OR
2) One or more major liabilities paid up such as the house, kids education funds, and/or student loans

Without both conditions, you will simply not fund your retirement enough. You should then not have a “family of 4”, just save whatever you make, pay up that house, fund your kids college and then think about having kids.

*Average income is about $60k for 2010. Our last comprehensive statistics about income etc can be found at: http://www.abs.gov.au/ausstats/abs@.nsf/Previousproducts/6523.0Main%20Features172005-06?opendocument&tabname=Summary&prodno=6523.0&issue=2005-06&num=&view=

*Average wealth of an Australian household in 2003-2004 was $468,000. Median net worth (i.e. the mid-point when all households are ranked in ascending order of net worth) of all households in Australia in 2003-04 was $295,000 (ABS Stats).

Houses are relatively cheap ($250-$350k) if anyone wants to risk growing up in ‘ghetto’ style neighbourhoods (government housing, high unemployment rates, gangs, youths skipping school, drugs etc). Pretty much the whole of Australia has gone through successive property booms so all CBDs are hideously unaffordable. I know ppl whose mortgages are around $600k-$800k on average.

To be fair, there is also a lot of wealth disparity/inequality in oz. “Household saving in Australia declined from a peak of 18.0 per cent of household gross disposable income (less depreciation) in the March quarter 1975 to a trough of -4.4 per cent in the June quarter 2002” ** Although it is now a positive percentage again due to the GFC.

Oz is really the lucky land in some ways. I have read about the 99ers/6monthers in the US and how unemployment income is not indefinite. Here in Oz, you can be unemployed for an entire lifetime and still receive government welfare. We also have a 9% compulsory superannuation (for retirement) unlike the US where you have to make your own contributions.

*Our minimum wage is a lot higher than the US: Our national minimum wage is $569.90 per week (before tax), or $15 per hour (as rounded to the nearest 10 cents). Nothing like the $6 or $7/hr hourly wage that I read about in the US.

**http://www.treasury.gov.au/documents/1451/HTML/docshell.asp?URL=06%20Household%20saving%20in%20Australia.htm

24 Lauren Jade April 27, 2010 at 4:13 am – pobably reciting what she read & learnt from Kiyosaki’s book and taken his definition of assets/liabilities as gospel. The way she considers housing equity, cars etc as liabilities is wrong. Even though the cars depreciate and the house may be be losing value, if there is housing equity or the car runs, that is still considered an asset nevertheless…despite being a ‘depreciating’ asset. J.Money – you’re calculating your net worth the right way. Kiyosaki’s/Lauren’s definition of an ‘asset’ is a more simplistic version for beginners so that they can understand the game.

Anyway, interesting post about averages/medians in the US. The numbers are nowhere near applicable for life in oz. Down here, amongst the ppl I know, most of us are ‘upper class’ according to that list but life is expensive down here.

Its really a tough balance retire much earlier or live a little more extravagantely now?