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Picture this: A young couple has just closed on their dream home. They’re debt-free and have $80,000 in savings. The wife is on maternity leave, and after crunching the numbers, they realize they’ll have just $200 left over each month after paying their bills.
It’s a classic case of being house poor: A financial situation where mortgage payments leave little room for anything else.
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This hypothetical family isn’t really that hypothetical. U.S. households spent an average of 32.9% of their income on housing in 2023, according to the Bureau of Labor Statistics. That’s a significant chunk, although still manageable.
But, if that number creeps closer to 40% — especially with tight cash flow and limited income — it’s time to reassess.
Here are three ways this couple could stay on track financially.
1. Build a bare-bones budget around any surplus
When your financial margin is razor-thin, every dollar counts. The first step? Create a strict budget where every dollar has a job and no money goes to waste.
The couple should:
- Break down fixed expenses like mortgage payments, insurance and utilities
- Track variable costs including groceries, gas, baby supplies and subscriptions
- Eliminate non-essentials like takeout, streaming services or unused memberships
Budgeting apps can help visualize spending and find areas to trim. Even cutting $50 here or $100 there can stretch that $200 into something more sustainable.
As new homeowners, this couple should also be aware of the add-on costs that come with homeownership — including insurance. Some couples lose out on savings because they don’t shop around for the best price on their policies, instead going with an insurer they already use.
If you need to trim your budget to the minimum, look for a better insurance rate with OfficialHomeInsurance.com, where you can find the lowest rates on your home insurance for free.
In under 2 minutes, OfficialHomeInsurance.com can help you browse offers tailored to your needs from a list of over 200 reputable insurance companies.
Simply fill in a bit of information and quickly find the coverage you need at the lowest possible cost for you. On average, you can save $482 a year.
While you’re saving money on home insurance, you might also consider whether your auto insurance is optimized for coverage and expense.
OfficialCarInsurance.com helps you instantly sort through the best policies from car insurance providers in your area, including trusted names like Progressive, GEICO and Allstate. With rates as low as $29 per month, you can find coverage that suits your needs and potentially saves you hundreds of dollars per year.
To get started, fill in your information and OfficialCarInsurance.com will provide a list of the top insurers in your area.
Read more: You don’t have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here’s how
Maximizing your insurance savings can open the door to saving, and investing, hundreds of dollars more than you would otherwise.
2. Treat $80K like a six-month lifeline
That $80,000 in savings is a huge asset, but it needs to be used wisely.
Here’s a potential breakdown:
- $10,000 Emergency Fund: Set this aside and don’t touch it unless it’s a true emergency, like job loss or a major medical expense
- $20,000–$30,000 Maternity Leave Cushion: Use this as a buffer for the next six months. That’s roughly $3,300–$5,000 per month to help fill in gaps while living on one income
- $40,000+ Long-Term Savings: Keep this intact for future goals like investing, education or improvements. Don’t dip into it unless absolutely necessary
Assigning a purpose to each dollar can help the couple spend confidently without jeopardizing their long-term financial stability.
They can also stretch their budget to accommodate a bit of extra savings with Acorns.
This platform automates investing and saving to simplify the process of setting aside extra funds. When you link Acorns to your bank account, each purchase you make is automatically rounded up to the nearest dollar. The difference is invested in a smart investment portfolio so you can grow your wealth without even thinking about it, even while you maintain a strict budget.
Plus if you sign up today, you get a $20 bonus investment with a recurring contribution.
Another way for this couple to stretch their existing savings is to ensure it’s deposited in a high yield savings account, so that the $40,000 balance can continue to grow.
SoFi offers high-yield accounts that can earn you up to 3.80% APY. Plus, with no account, monthly or overdraft fees, banking with SoFi helps you keep more money in your pocket.
The best part? You can now get up to $300 when you sign up with SoFi and set up a direct deposit.
3. Plan for post-maternity leave finances
This tight stretch won’t last forever.
Once both partners are working again, the couple should shift their focus from surviving to thriving. That means:
- Budgeting for child care now, since it can significantly reduce net income
- Replenishing any money used from the cushion fund
- Resuming long-term saving and investments — whether for retirement or their child’s future
Retirement may seem like a long way off when you’re holding your first child, but planning for your future should start as early as possible. A gold IRA is one option that can help you build a stable retirement fund.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties.
To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.
This couple may also benefit from speaking with a financial advisor to map out a long-term strategy.
If you’re unsure which path to take amid today’s market uncertainty, it might be a good time to connect with a financial advisor through Advisor.com.
This online platform connects you with vetted financial advisors best suited to help you develop a plan for your new wealth.
Just answer a few quick questions about yourself and your finances and the platform will match you with an experienced financial professional. You can view their profile, read past client reviews, and schedule an initial consultation for free with no obligation to hire.
You can view advisor profiles, read past client reviews, and schedule an initial consultation for free with no obligation to hire.
If the couple can get through this tight stretch without touching their emergency fund or long-term savings, they’ll emerge stronger and more financially resilient.
Being house poor doesn’t have to be a life sentence. With disciplined budgeting, a smart savings plan and short-term income boosts, this couple can navigate the squeeze — and still build the future of their dreams.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
