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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWhy Households Need To Earn $300,000 A Year To Live A Middle Class Lifestyle Today
Let me tell you a sad story about who households need to earn multiple-six figures to live a middle class lifestyle today.In order to comfortably raise a family in an expensive coastal city like San Francisco or New York, you’ve got to make at least $300,000 a year.
You can certainly raise a family earning less as many do, but it won’t be easy if your goal is to save for retirement, save for your child’s education, own your own home instead of rent, and actually retire by a reasonable age.
Although $300,000 is a lot compared to the median household income in the United States of ~$65,000 in 2020, it’s not an outrageous sum of money once you look at the realistic income statement I’ve put together for this article.
All expenses in my example use current prices. I’ve also cross checked the expenses with my family’s monthly expenses now that we have a son to make sure they are within reason.
I use $300,000 in this post because I also believe it is close to the ideal income for up to a family of four to experience maximum happiness.
At $300,000, you aren’t paying an egregious amount in taxes, you probably aren’t killing yourself at work if both parents are working, but you’re still earning enough to live a comfortable lifestyle anywhere in the world.
Half the US population lives on the coasts, therefore, this post is directly targeted at folks who need to live on the coasts because of their jobs, schools, or families.
Finally, this post should also provide insights to non-coastal city residents on how good you’ve got it if you enjoy living where you are. $100,000 – $150,000 is a rough non-coastal city household income equivalent.
https://www.financialsamurai.com/living-a-middle-class-lifestyle-on-300000-year-expensive-city/
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empedocles
(15,751 posts)Yavin4
(37,182 posts)You don't get the same salary in Muncie, Indiana like you would in NYC.
Kaleva
(40,345 posts)I supplement my income babysitting at $4 an hour. Make $80 some a week doing that.
jimfields33
(19,382 posts)The roof for 17,000, the AC/heater for 6500, the exterior house painted costing 3600 dollars. The actual day to day living is pretty easy and reasonable. It those surprises that hurt most people especially all at once.
Klaralven
(7,510 posts)Any time you own an asset, you have to make continual contributions to an account for its depreciation and maintenance so you will have money to replace and/or repair it as needed.
Kaleva
(40,345 posts)An elderly neighbor of mine got new windows, exterior doors, siding and roof at no cost to her.
jimfields33
(19,382 posts)Kaleva
(40,345 posts)One has to be pretty low to get it but it's there for people who are below the threshold.
marybourg
(13,632 posts)2200sq ft house with a large lot and a scenic view in a community with marvelous amenities, not pinching pennies , on < $30 000/year. I'd like to spend more; I don't want to be the wealthiest corpse in the cemetery, but I don't need or want anything else. So you can guess what I think of the premise of the above article.
honest.abe
(9,238 posts)There are several issues with their budget. Here are the biggies..
Their 401 K contribution is huge -- most people can't afford to put down 12% into their 401k. I suspect the average is more like 6%. So if they reduce their contribution to say 8% which is still decent they now have an extra $1000 per month.
Their childcare cost is huge -- we live one of the most expensive cities in the country (Wash DC) and we found a decent daycare/preschool for $1200 / month. So lets say they move their kid out of Guicci daycare and get something more mainstream for $2000/month they now have another $500 / month extra.
Their mortgage is huge -- They must have a big house in an expensive neighborhood. A $3900 mortgage would be about a $900,000 house with 20% down payment. We live in an expensive housing market but we choose to live in less expensive neighborhood and in a moderate sized house and our mortgage is $2300 / month. Lets say they downsized a bit and moved into a less expensive neighborhood and settled for around a $750,000 house their mortgage could be reduced by about $500 / month.
So just those reasonable changes they now have $2000 month spare money. Who has that??
mercuryblues
(16,393 posts)$400 for clothes, and 1,650 for food a month is ridiculous.
7,800 for 3 vacations a year?
honest.abe
(9,238 posts)All that can easily be cut substantially so that's probably another $1000 / month savings. I know there are people who live like this but its their choice and they can easily reduce their expenses but they really dont want to. It's not a necessity as the article is implying. They simply like living that lifestyle.
Johnny2X2X
(24,166 posts)Know that the labor movement fought for the dignity of the middle class, that is gone now. Our parents and grand parents simply wouldn't accept what life is like today for working people, because there is too much wealth here for us not to have the wealthiest middle class in the world. And not just in terms of salaries, but in terms of benefits, time off, and what society offers to them in terms of schools and parks.
People have forgotten what it's supposed to be like for the middle class living in America. Health Care didn't used to be an issue. College didn't require you to go into debt. People retired with pensions that took care of them. One parent could work while the other stayed home to raise children. Off that single income people could own a home, 2 cars, and afford modest vacations. I was raised in one of those families, we weren't rich, but we had everything we needed to be able to live modest and dignified lives. My parents were able to retire with dignity and enjoy the fruits of their labor.
It was taken from us, the American Dream was taken, by the rich and the greedy. And they're not done taking, they want it all for themselves.
brooklynite
(96,882 posts)...As others have pointed out, that's a limited definition for "middle class living".
brooklynite
(96,882 posts)...and how to prevent them if you don't want to pay the approximate $500,000 cost to raise one.
beachbumbob
(9,263 posts)and have appropriate offerings of any and all entertainment an hour or so away.
New Breed Leader
(927 posts)Engineer?
honest.abe
(9,238 posts)Who Makes $300,000 A Year?
Before we look at the income statement, let’s go through a list of various $300,000 income households.
A Bay Area Rapid Transit janitor who makes $234,000 + $36,000 in benefits who gets together with a Bay Area Rapid Transit elevator technician who makes $235,814 + $48,429 in benefits.
Starting total compensation packages for 22 year old employees at Facebook, Google, Airnbnb and Apple range from $120,000 – $150,000. By the time they are 30 years old, they are making $300,000+ a year.
30-year-old first-year Associate in banking earns $150,000 in base salary + ($0 – $120,000) in bonus. In a couple years, she is making over $300,000 a year.
A 26-year-old first year law associate at a big law firm like Cravath makes $190,000 base + $30,000 sign on bonus. By the end of his 6th year his is making over $330,000.
A 29-year-old Director of Marketing at a startup makes between $150,000 – $180,000. She’s married to a pro blogger who makes $350,000.
A 42-year-old college professor at Berkeley makes $235,000 and $279,000 at Columbia and NYU.
The average specialist doctor finishing his or her fellowship at 32 makes $300,000. The average salary for a primary care physician is $200,000.
A 26-year-old middle school teacher making $60,000 a year plus her $250,000 a year VP of Marketing wife.
My 60 year old high school athletic director colleague makes about $180,000 a year plus his wife who makes about $200,000 working for the city.
Thousands of employees at tech companies like Google, Apple, Facebook, Google, Slack, Zoom and more.
PoindexterOglethorpe
(28,493 posts)this hypothetical family move somewhere less expensive.
Those of us who live on about 15% of that amount, just don't get it.
Makes me glad I have been relatively poor most of my life. I learned to live on very little, and that's very helpful now, even though my current income is higher than it has ever been. But still a fraction of $300k. And right now I'm saving a ton of money because I'm not going out to eat, and I'm not making the many small trips I normally make. I realize that's not the case for everyone.
jimfields33
(19,382 posts)I think there’s a thread where credit card debt is down this year. No surprise. Of course there is a segment of our population that is hurting.
PoindexterOglethorpe
(28,493 posts)Although the people who lost their jobs in the spring, whose unemployment benefits have run out, and with no new stimulus check in the offing, they are in serious trouble.
I had several wonderful trips planned before everything shut down. Someday I hope to do at least some of them. What I will do, whenever I can resume traveling, is upgrade the whole experience. First class air fare. A better room in a better hotel. Stuff like that.
I'm 72, and while I'm in excellent health and hope to remain so for at least the next twenty years, the truth is that at some point in the relatively near future I will need to cut back or stop solo travel altogether. So I may as well do it in style while I still can.