Overview of Is My Spending Reasonable? This Data Set Will Tell You
This BiggerPockets Money episode focuses on a new budget benchmarking tool that estimates what “reasonable” spending looks like for different household types, income quintiles, and geographies. Mindy Jensen and Scott Trench use it to compare high-cost and low-cost areas, showing that most of the variation in spending comes from housing and transportation—not the smaller everyday categories. The big takeaway: whether your spending is “reasonable” depends heavily on where you live, what kind of household you have, and what income tier you’re comparing against.
What the Budget Tool Does
Scott explains that the calculator is built from multiple data sources, including:
- Bureau of Labor Statistics spending data
- HUD fair market rent data
- Regional price adjustments
- Daycare/childcare cost estimates
It’s designed to estimate actual spending, not aspirational or ideal budgets. The tool can be used to compare:
- Different household compositions
- Income quintiles
- Geographic areas
- Childcare usage
- Working life vs. early retirement assumptions
He also emphasizes that the tool is not about affordability in the strict economic sense, since affordability depends on local incomes as well as expenses.
Biggest Findings
Most expensive area
- Santa Cruz / Watsonville, California
- Estimated median spending for a couple with kids and no daycare: about $12,600/month
- Major cost drivers:
- Roughly $5,300/month for rent
- About $1,300/month for food
- About $1,600/month for transportation
Least expensive area
- Beckley, West Virginia
- Estimated median spending for a similar household: about $6,500/month
- Major differences vs. Santa Cruz are mainly in:
- Housing
- Transportation
- General cost levels across categories
Longmont, Colorado example
For a family of four in the middle income quintile:
- Estimated spend: about $9,100/month
- Housing alone is a major chunk of the budget
- Scott notes that if housing and transportation are reduced, overall spending can fall dramatically while the rest of the budget stays near median levels
Main Takeaways for Financial Independence
1. Housing is the biggest lever
The episode repeatedly shows that housing is the largest driver of geographic spending differences. Transportation is usually the second major lever. Most other categories don’t vary nearly as much.
2. High-cost areas can still support FI
Despite higher expenses, expensive cities may offer:
- Higher incomes
- Better job opportunities
- Faster wealth accumulation for some people
Scott argues that for many people, especially early in their career, living in a higher-cost metro can actually accelerate the path to FI if income growth outpaces spending.
3. Low-cost areas reduce the FI number
Living in a cheaper area clearly lowers the amount needed to retire, but that doesn’t automatically make it the “best” place to pursue FI. The decision depends on both spending and earning power.
4. Compare yourself to peers, not assumptions
The episode stresses that people often assume their current spending is either normal or unreasonable without context. Benchmarking against similar households in similar locations can reveal:
- Overspending in certain categories
- Opportunities to reduce costs
- Categories that are actually in line with local norms
Practical Ways to Use the Tool
Benchmark your own budget
Scott suggests exporting spending data from a tool like Monarch and comparing it with the calculator or an AI assistant. This can help identify categories that are unusually high relative to similar households.
Reassess retirement spending assumptions
People often assume retirement spending will match current spending exactly. The hosts point out that retirement habits, peer groups, and lifestyle changes can cause spending to shift—sometimes upward, sometimes downward.
Focus on the big categories first
If you want the biggest impact:
- Housing
- Transportation
- Food away from home / discretionary spending
- Utilities and other recurring bills
Scott also shares a personal example of reducing electricity costs by adjusting thermostat settings—a small change that compounds over time.
Cautions and Nuances
- The data is an estimate, not a perfect reflection of every household.
- Some numbers are based on slightly older data adjusted for inflation.
- The calculator includes savings and pension contributions in BLS spending data, but Scott notes those may need to be excluded for FI-specific budgeting.
- Local conditions like family support, homeownership status, or commuting style can make your actual spending differ significantly from the benchmark.
Final Thoughts
The episode’s core message is that “reasonable spending” isn’t a fixed number—it’s a moving target shaped by geography, household type, and income level. The new calculator is meant to help listeners:
- Ground their expectations in real-world data
- Spot outlier spending
- Compare life in different cities
- Make more informed FI and relocation decisions
Scott and Mindy encourage listeners to use the free BiggerPockets Money tools, compare budgets thoughtfully, and remember that small recurring savings can make a meaningful difference over time.