When I finished school and got a good job, we decide to have kids, so my wife didn’t look for a job when we moved, and we adjusted to living on one salary (easy, since it was much bigger than the sum of her old one and my grad school stipend.) When the kids grew and she started writing for money, all of it was pretty much savings. (I forgot her SEP in my calculations before.) I’d say we live frugally, not poor, in that there is nothing we need that we don’t get - we just naturally don’t need stuff we can’t afford at the moment.
This means our investment advisor doesn’t yell at us about saving more for retirement, which I guess is about as rare as your doctor not telling you to exercise more.
In addition to our children (and my mother) becoming our housekeeper, they are also our landscapers. He (12) mows the lawn in exchange for cell phone privileges. She (11) helps with the spring planting, the weeding, and does the trimming.
Once our kids are gone, we’ll downsize from the house in the 'burbs that requires lawn maintenance to one in the city which doesn’t (condo or townhouse or something).
But in general, our standard of living hasn’t changed MUCH from when we made a quarter of what we do. We didn’t choose a lot of custom landscaping that would require maintenance - we hired a guy who worked cheap and said "we work a lot, we aren’t ‘yard people’ - the kids take care of the yard - plant “easy to maintain and mow around.”
Its probably easier to hire a decorator to paint and refurnish than doing it myself - or I can live in a house that could use a coat of paint for a little longer and stretch it out. Then, when I need a painter, hire the painter my dad knows who works cheap. (My mother paints, too - but she won’t do stairwells at 65).
Now - home repairs - we have a handyman on speed dial. Neither of us are handy and its easy to write a check. Same with car stuff.
Our neighbors are under the impression that our income is similar to theirs (and I’m under the impression that most our neighbors probably make less than half what we do - but maybe they are big savers too) because we live like them.
And honestly, some of the people I know who work the longest hours and pull the worst shifts don’t make enough money to pay the landscaper. And yet they manage to get the lawn mowed. If my daughter’s friend’s parents are any example - he’s pulling all the overtime he can get at a relatively unskilled labor sort of job, and she’s working two jobs and they are holding it together with a clean house and a mowed lawn (and he changes his own oil and does the handy stuff around the house)
Hmm. This is good. I may suggest it to my wife. We do it slightly differently. We each get a weekly allowance; I get $100, she gets $150 (I know, I know. Moving on…). Everything we do individually for the week, e.g., gas, lunch, tolls, etc…, must be covered by our allowances. It’s worked for us. I actually end up with a few bucks at the end of the week. My wife? Not so much.
What makes my plan much worse than yours is we’ve placed no limit on the amount we spend on whatever we do together, or groceries.
I don’t do the tracking thing at all, or set an allowance. I probably should.
My method (or lack of method) is simply to extract savings first, and spend the rest.
Boston, Mass Area
About 40%
About 11%
But our pre-tax income is about to decline by 40% when my wife’s job ends (about 30% after tax) so our savings are going to drop dramatically. We have known this day was coming, and have been living on one income for the last couple of years. So this is not normal, even for us. And our mortgage payment will go up to about 16% of after tax income.
It’s amazing how much easier it is to spend money when it’s “for” the other person. It’s like two alcoholics living together, both thinking the other one sure is drinking a lot of beer.
We have sort of an unusual situation where there aren’t many things we both eat, so it’s easy to keep groceries separate. The few things we both use we just split the cost of, and obviously we don’t nickle and dime each other if I eat some of “his” granola or he drinks some of “my” tea.
Really, it’s the tracking that makes the difference. It’s like dieting: it’s damn hard to be aware of what one does if you don’t write it down, and the human brain is bad at understanding how little things add up.
Our (pre-tax) income has about doubled in the last twelve years, and we went from a 700 sqft apartment to a four bedroom house. We also have a five year old now. But we still manage to save a higher percentage of our income than we did ten years ago. And we have a much bigger tax bill, than we did in 1998.
But one of the ways we keep our spending down is thinking really hard about whether we need to employ landscaping or maid services. With the hours we work it is tempting to say we should not spend our weekends cleaning and working in the yard. But we make it work somehow, partly because when my wife’s telecommuting arrangement goes away, she probably will be a SAHM, and we will need to live on less. It’s easier if you don’t let your spending go up in the first place, than to try to get it back down. If I was willing to travel for work, I would probably make more money, but then we would definitely “splurge” on help with work around the house, so that I could take my daughter to the beach, pool, hiking etc on the weekends.
But around here in the Boston area, things like maid and landscaping services are really expensive. When we briefly had a maid, we found out that her son went to private school! He got financial aid, but she was still shelling out $7000 a year. When we bought the house we needed to have our lawn replaced. The landscaper we hired lived in a house we could not afford to buy! But I guess he couldn’t either, because they got foreclosed on.
At a conservative estimate I save 60% of my post-tax income.
My mortgage is 5% of my post-tax income (but double that if you include condo association payments.)
I think we have even less of a method.
We extract some savings first (retirement, college, monthly ‘short term’ savings - for things like vacations and cars, also employee stock purchase programs). All of that comes straight out of the paycheck and might “graze through” the checking account.
We spend. At the end of the some period (month, six weeks, whenever I do a review) we are either up or down.
When we are up (we usually are) we choose where to put money - sometimes its into investments, sometimes it pad short term savings because something is coming up, sometimes it pads college funds, but sometimes we give it to charity, sometimes we blow it on a big purchase. When we are down, we extract from savings to cover it.
Additionally, our savings make more savings. Which is part of the math problem with saying how much of your post tax income do you save. My 401k comes out pretax. But I get a match as well. So as a number over my post tax pay that number is way more than the mere contribution percentage. Now add the fact that that 401k is to the point where I made more in gain (in years that aren’t 2008 or the like) than I contribute in - add that sort of gain and its related income (dividends and interest) into the net worth equation, and my net worth increases by more than the 40% I said upthread. That dividend/interest/realized gains that get plowed right back into investments have a 100% savings rate. Its a case where “money begets money.”
::::Hijack::: I once created a way to “force” myself to save by keeping track of my net worth and then letting myself spend $150 on whatever I wanted whenever my net worth increased by $500. I had to abandon that plan…because there was so much money in it I felt like it was burning a hole in my pocket and I’d spend the money just because I could.
But yes, to answer the theory, I would call myself upper-middle class, but only barely: if I had a family I would consider myself solid middle class (or maybe even lower-solid or lower-middle if my family were large).
California.
I’m not really sure how to answer. I pay into a 457 (like a 401), so it comes out before taxes. It’s 8.4% of my gross income. If I compared it to my net income, it’s 12.5%, but it’s not coming out of my net income. Regular savings is right around 0%.
My mortgage is 32% of my net. The appraised value of my house is about half what it was when I bought it.
In my case, in Canada we have a tax-deferral scheme known as a “registered retirement savings plan” or “RRSP”. When you put money into an RRSP, you get back from the feds the tax on earned income to the extent contributed to the plan - eventually, when you withdraw the cash, you get taxed on your then-marginal rate … and everything earned in the plan isn’t taxed.
Needless to say, in a progressive tax system, if you earn a lot your tax rate is high and this is a big benefit. I didn’t even try to account for it in my calculation. Like Barbie says, “math is hard” … 
[The gov’t sets a limit on how much you can contribute to your RRSP]
There is also a tax-free savings scheme, recently introduced, outside of the RRSP system, but the limit is reasonably low - $5,000 per year. We put money in that as well.
Heh. You want a luxury expense, I’ll give you one. A cruiser, with associated marina and slip fees, plus Winter drydock fees, plus yearly maintenance costs, plus gas, plus, plus, plus.
United States
After taxes:
Rent -17.5%
401K - 11.5%
Saving - 41.6%
It helps that we are frugal DINKs. Once we have kids, my wife will probably stop working. We will probably have a negative savings rate then.
We’ve discussed it, and quickly decided that the amount we’d save by stopping the landscaping and house cleaning services is simply not worth it, plus it’d never get done. I work long hours, go on trips for work, and take classes two nights a week. I’m certainly not going to spend what precious free time I do have cleaning, pruning, weeding, and mowing.
I fly a lot for work. I don’t believe there’s any correlation between my salary and my willingness to travel.
Yep, cleaning and landscaping services are expensive, especially the reliable ones. My cleaning lady does 2 houses per day and makes $2400 per week, which is nothing to sneeze at. I almost lost her to a neighbor who was willing to pay her more for my slot. I had no choice; I increased her rate. I learned the hard way that good cleaning people are very hard to find, which is surprising, considering all the solicitations I get in the mail, it seems everyone with a mop runs a cleaning service.
We just live in shabby disarray.
Me too. It’s been 5 days since my cleaning lady was here. What kind of crap is this? 
At the point where you buy a cruiser and rent the slip, you’ve pretty much decided that the level of wealth acquisition you’ve got is adequate for your plans and you are quite happy spending the rest. Or you haven’t - you wonder how you’ll retire or pay for the kids college, but you think you’ll have a heart attack at 58 and as to the kids - loans are fine!
Ah! That’s right! I almost forgot about the blessed heart attack coming at 58! I knew there was an out! I knew I’d ultimately be saved from all this mindless frivolity and reckless spending! Thank GOD! Whew.
Yeah, it’s pretty much what you said first. 
Heh. There really is no limit on how much one can spend on boats.
We have a boat, too! Oh, but it’s a 16’ aluminium shell with a 25 HP motor.