$170K Household Income: See Our Budget

Updated June 30, 2025.

A $170K household income in the United States will put you in the top 20% of earners, or what many would consider “rich.” At the end of the day, peace of mind is more about what you do with that money than your income level or net worth. Once you buy a house and take out auto loans, not to mention monthly expenses, money disappears quickly, even with a high gross monthly income. This is especially true if you pay private mortgage insurance on top of the principal and interest payments that come with your conventional loan, or if you have a high debt-to-income ratio. No matter your income, whether you make $50K or $500K, high earners in the upper middle class could still be living paycheck to paycheck. 

For B&K, their median household income is on the upper income level according to the Census Bureau, but they know that lifestyle creep, cost of living, and how they manage money plays into their personal finance situation. While they feel confident and in control of their money now, it wasn’t always the case. 

See how this family of three, making an annual household income of $170,500, spent their money in April.

About Our Gross Income and Monthly Payments & Allocations

• Names: B & K 
• Ages: 37 & 37
• Location: Virginia
• Jobs: Accountant & Self-Employed
• Living situation: K and I have been married for 15 years and have one elementary-aged child.

$170K Household Income

• (B) Accountant: $135,000
• (K) Self-Employed: $35,500

Savings: $329,000

• Cash on hand: $50,000
• 401K: $91,000
• ROTH and IRA accounts: $139,000
• HSA: $40,000
• 529 plan: $7,000
• Investment account: $2,000

Debt: $292,000

• Mortgage: $292,000

April Inflows: $10,132

• IRS Stimulus Money: $2,900 (our income last year was within the IRS limits for the economic impact payment)
• Self-Employment Income: $1,500
• Accounting Income: $5,732

When I budget, I know there are ongoing monthly cost estimates I need to make first. Quite a few dollars get siphoned off before my paycheck hits our bank account. I contribute 8% to a Roth 401K, 4% to a traditional 401k, several hundred dollars a month to an HSA, and I'm responsible for a substantial portion of my health plan premium.

April Budget

Here's an example of what our budget looks like with monthly housing costs, monthly payments, credit card bills, and other important categories added in.

My Money Saving Categories

Before we started using YNAB in 2014, I handled the money because I had the accounting degree so obviously (sarcasm font here) I was the gifted and natural choice. Unfortunately, I threw everything into one giant savings mess (a separate checking account). The funds were usually all there but K didn't get the warm fuzzies that we had enough allocated for Christmas, vacation, etc. because it was all just one big blob. K worried we wouldn’t have the savings when we needed it, but I’m all, “oh don't worry babe... accountant, remember?” Turns out K was right all along. Lesson learned.

When we switched to YNAB (and away from my brain), we created a category called "Savings Buckets" where we allocate money each month to minimize surprises. It includes "adulting" things like personal property taxes and life insurance savings but we also have fun stuff. For example, we made the intentional decision about 2 years ago to make family vacations a priority so we throw hefty savings into vacations. It's also where we store money for future car purchases, Christmas, etc.

Now that K can see how much we have in each bucket, nerves are calmed and we've pretty much reached budgeting zen.

My Month

April 2020 was a humdinger. The idea of "normal" went out the window with COVID-19. School for the kiddo ended early, K had to fit kid-management into her schedule, my career moved from 50-60 nights a year in a hotel to my basement, and the pets didn't know why they lost their 8-hour uninterrupted naps each day. The adjustment was jarring all around.

And speaking of pets, several unexpected vet bills crept up in the form of a ghastly zombie-eye in my poor dog. Although the expenses far outweighed our budgeted amount, lower expenses in other categories caused by COVID let us roll with the punches. Having less travel, less eating out, and fewer random Target runs gave us a nice cushion to cover the vet bills, tests, and medicines.

My Story

Fine, I admit it. We are millennials. The kind who vividly remember 9/11 and borrowed 110% to buy a house in 2005 because everyone was doing it. We took Dave Ramsey's Financial Peace University through our church and learned a lot. However, we were much better at talking about budgeting than actually budgeting.  

The goal at that time was pretty simple—live on one income so K could stay home and raise the kiddo. That meant figuring out how to gracefully swim out of a $70,000 underwater mortgage on our "dream" starter home. 

After the kiddo was born, K willingly continued her full-time job while we stashed savings, slashed debt, drove cars a few years longer than we should have, and cut the cord before it was a thing. Do you know they still give away free TV over the air? I do. Scraping and saving allowed us to sell our house without foreclosing, then rent to build up more savings (yet again), regroup, dream a little, and game plan our next move. 

A few years later we purchased a house with a decent down payment that we can pay for with one income, freeing up K to stay home—only to realize she missed the challenges of outside-the-home work. But with the freedom that comes with strategic budgeting, she can now do gig work when and how she wants, making her (and me) happy campers all around.

The most significant budgeting victory for us was the day we began to budget last month's income. It was about 6 months after we started using YNAB. What a relief to know the money we were planning to spend was already locked and loaded in our checking account.  

Truth be told, we have enjoyed steady and fulfilling careers with increasing incomes, even during down markets and economic changes. That blessing is not lost on us for a minute. But the crucible of the Great Recession now flavors all of our financial decisions. We always pay cash for a car, exploit every benefit from the Target Red Card (debit card, obvi), and freeze the cheap expiring meats. And when gooey-eyed 20-somethings rush to share how they're planning to buy a house because they hate paying rent, I appreciate my emerging gray hair all the more.

My Financial Goals

• Retirement
• Funding a college savings plan 
• A beach house (K insisted that I add this one)

There has been a strange shift in our conversation recently. In our 20s we set goals thinking about where we wanted to settle, how can I get the next car or whatever. Now, in our mid 30s, we are thinking about what it will be like to be empty nesters in a few years. Unless a black swan event throws us off course (Hello, Coronavirus?), we will be more focused on income tax reduction and how to spend our downtime than what the next purchase is going to be. In fact, we don't think much about "financial goals" anymore. I would love to be a 401k millionaire by 40, which may be possible depending on the markets, but I don't worry about it. We have time to keep saving, plenty of food to eat, and we're healthy. I think a proper budget allows you to meditate on those more important things.

I would rate my current financial situation on $170K household income: 5/5

More Insights: What Should Your Financial Goals Be?

Just like B & K's goals have shifted, and they've been able to find a lifestyle and home they love and can afford, you can budget to do the same. The biggest part of your budget every month should go to your home. Like them, you'll want to find a home that fits with your financial goals. So, how much house can you afford?

Buying a Home - Know Your Total Monthly Housing Cost Limit

Make sure your total monthly debt fits within the recommended monthly debt limit, and is a payment you can afford. The 28/36 rule is a great way to stay within the recommended monthly housing cost limit. Your mortgage broker or other mortgage lenders may find a way to give you a larger loan, but that doesn't mean you should do it. You may also have heard of FHA loans or VA loans, but those can be harder to qualify for with your higher income. We recommend going with a conventional loan.

The 28/36 rule says that you shouldn't spend more than 28% of your monthly income, or 36% of your debt, on your home. The formula is simple: Divide your income by 12 to get your monthly income. If you’re making $170,000 a year, that comes out to around $14,000 a month. Now, multiply this by .28 and .36 to get these other two numbers. This comes out to a monthly payment of $3,900, and a monthly debt limit of $5,000.

Also, remember that if you're purchasing or refinancing your home, you'll need to pay closing costs and home insurance premiums.

Other Financial Goals

These will depend on you and your partner's needs and lifestyle. For B & K, they're planning for retirement and a beach house. For you, it may be the same, or you may have other goals. Maybe you want to travel or are saving for multiple kids to go to college. No matter your goals, YNAB can help! We'll assist you in creating a budget for your 170k income that will get you exactly where you need to go.

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