Ha! My wife and I live quite well on about $75k/year in upstate South Carolina. We drive older vehicles that are both reliable and paid off, our 3 bed 2 bath house cost $155k in fine condition, and we don’t have cable or any other major subscription services. Amazon Prime plus the occasional added subscription on there so we can watch a specific show is quite enough.
When did you buy your house though? Also, sure, you may be able to get that price in a rural area of SC, but how is your city services? School system? Like she said in the video, child care is huge.
@@General8675 we bought in October 2022 and so far we’ve had zero complaints about any city services other than electric reliability. We lose power for a couple hours once a month on average. It’s annoying, but totally livable. School system is roughly 7 out of 10. Our oldest turns 2 this month, so school isn’t really a concern for a couple years except maybe for house resale value. We pay $500/month at a really good place for our two kids’ daycare in the meantime. For this, it’s really important to use your personal network a bit. Ask a few local stay at home moms if they’d be interested in watching your kids and see if you can work out a deal with them. Oftentimes it’s not hard to work out a deal that’s awesome for both sides and your kids will get better treatment than at typical childcare facilities.
@@General8675 we bought in fall of 2022. Our oldest child turns 2 at the end of this month, so school quality (about 7/10 rated) is more of a resale value question than an actually practical concern for us at this point. City services are pretty good except the electric does go out occasionally for a few hours. Annoying, but tolerable. Childcare costs us about $500/month thanks to a deal we worked out with a family we know. The wife is a stay at home mom and their kids love our kids, so we help their budget and our kids have a blast together. It’s genuinely worth looking into deals like that if you possibly can.. Church is often a great place to find them. Definitely get to know the family before trusting them with your kids though. We’ve known this family for over a decade.
How much you need largely depends on where you live. $100k/year in the rural Southeast goes a lot further than the same amount in many major metropolitan areas.
@ErinMoriarity- I’m retired military, which is really nice but we also have his/hers Roth IRAs, which we both max out. My work 401k matches up to 5%, which I also take advantage of. I don’t have a brokerage account at this point but might at some point. We started investing in our early 20s even though we couldn’t save much at the time. We increased that amount with every promotion and over the years that has really paid off. Looking to retire at 62 or possibly sooner, which should be easily doable.
My wife and I are empty nesters about 5 years from retirement. Our combined annual income is $210k about evenly split between the two of us. We live in a Midwest suburb and have 3 years left on the house mortgage. No other debt. We have a 6 month emergency fund and put 20% toward retirement. We live comfortably but not extravagantly. We own modest vehicles and keep them till the wheels fall off. We lived very frugally when the kids were young and money was tight with much higher expenses. My advice is to develop a detailed budget and control where your money goes. If you are married combine your income and regularly agree on your budget priorities and goals. We have monthly budget meetings to plan for upcoming expenses such as lawn care, vacations, Medical procedures, etc. Don’t carry credit card balances and buy newer used vehicles. We buy most of our clothes at thrift stores such as savers. I regularly find new shirts and pants that were overstocks at prices 70% below retail. Eat at home. We make up meals in advance and limit eating out to 3 or 4 times a month. When we eat out we usually split an entree and add an extra side. Have a plan and stick to it.
This is not practical advice to renters, because their housing costs exceeds any other expense. While this is entirely workable for people who already own a house or have a mortgage, the housing consideration dwarfs any other concern. Their expenses and your expenses are so extravagantly different that we might as well be looking at two different lifestyles, tax laws, etc...
@@langhamp8912 Our house payment plus what we set aside monthly for real estate taxes and homeowners insurance is probably not far off a typical rent payment. I see no reason renters can’t budget and frugally save money on eating out, meal planning etc just like we did when we rented before buying. If expenses are extremely high consider relocating to a more affordable area of the country. It is not easy but many do move to make ends meet easier.
@@langhamp8912 Find more income and share housing costs. Yup, easier said than done. Good luck. I remember the lean years, they just make you more resilient and make your later success sweeter too.
@@krissynyc 6 month emergency fund. We have other general savings used for travel, planned purchases etc. as well as retirement savings we continue to grow. We are on track to have a year worth of income in cash savings outside of the emergency fund to insulate our retirement savings from market fluctuations if there is a market correction in the early years of retirement. Given our lower managed expenses we should be fine….thanks for your concern.
Great Video! Thanks for putting it out there. What you said about vehicles is spot on and I wish that more people would realize that this is what keeps you poor. I was speaking with a co-worker of mine a few weeks ago and we started talking about retirement plans. We have both been with the same company for almost 25 years now. I asked her if she had been taking advantage of the company offered 401K plan and she stated that she does not contribute at all and really never has. I asked why and she said that she just cannot afford it. However, I did point out to her that she can afford to "purchase" a new vehicle every 3 years, which she has done since I have known her.
Even used cars suck like a leech, with insurance, maintenance, etc... However, taking public transportation, walking, and bicycling are very feasible options.
@@langhamp8912 Absolutely true. Not the most convenient options depending on where you live, lots of US cities have transit that sucks, but by far the most cost effective transportation options vs paying for a car.
I retired last year at age 64 on a pension and IRAs to tap if I run short. I do NOT yet draw SS. I am waiting till 67 to make sure my also retired wife has the best benefits if I pass on. We have a paid for house but seven insurances take a toll. Considering canceling term life insurance as we have no kids and it is $580 per quarter for a $200k payout. We bring in maybe $60k a year as a couple and so far are making it till SS kicks in. We already took two major road trips and the credit cards are at zero till we load them up again with hotel stays and gasoline. It's a routine to run up $2,500 a month on the card then pay it to zero when the monthly pension comes in. If only to avoid loading up the card again :( We feel middle class even with only $60k and hopefully getting a break on taxes this year as we make less.
You may be both die at 70. Any smart financial person will tell you to take the SS now cause you may not get it at all, or may get it for a short time.
@@sakurabahfan It was not that high till I turned 65. Its a $100 higher now. Granted the $580 covers 1/4th of the year, or $2,320 for a year. If I live 30 years, I will pay in $70,000 but they will raise the price the older I get. If I live far less than 30 years, I might keep it as I saw the other day, the median mortality in the USA is now under age 70.
We're sending 2 kids to college this Fall. One expected, but more expensive than expected, and one 2 years early. It's made budgeting quite the adventure.
It so, so widely depends. My wife and I spend ~$100k a year (honestly, quite a bit less on any given month, but accounting for major house repairs/car purchases/large medical hits) FIRE-retired. But, $100k living in the midwest with a paid-off house, structured so income tax is like $1500 a year (state and fed combined!) is all entirely unlike the lifestyle of someone *making* $100k W-2 income, paying 1/3 to their mortgage, 7.65% to FICA payroll, ~15% to income taxes, etc. We're probably closer to the spending power of someone making a nominal $200k if not more.
I'm 57, divorced, kids gone, live alone, and make 170k/year in Nebraska. I'm not rich, but I know I'm in a good position financially. It's hard out there for a lot of people and I feel blessed to not have to struggle with having enough money. I do miss the days when I was broke raising a family though! lol
I'm 57 and make anywhere from 30K to 60K a year as a self-employed attorney and I easily meet all those middle-class indicia. I've never made more than 88K in a year in my life. I have everything I want - because I've learned to stop wanting everything. I live in an affluent part of Atlanta city proper and I see consumerism up close every day; people buy a lot of crap they don't really need, and buy far more of the things they do need (housing) than they actually need.
I'm 54, no kids, and make 120k/year in Brooklyn. 170k in Nebraska is probably like 250k in NY. I don't know how people starting out today can make it and still save for retirement.
Age 48 making 200k/yr in RI. Never felt rich. Used cars only and visit dollar stores and Walmart most of the weekends. I think money is the freedom of choices. And the only way to get there is to keep expensive choices away from life before retirement.
Lifestyle creep. When we make more money, we spend more money, and we're VERY good at coming up with non-essentials on which we waste our money. Don't buy the house that the mortgage company says you can afford. Look for a house that is HALF that amount. "I've been approved for $350,000!" That's great! Now, look for a house in the $175,000 range. Smaller, more affordable housing needs to make a comeback. Builders only make houses that will sell, and those houses are driven by what the banks allow people to borrow. Not a lot of people are interested in a new house under 1500 sq/ft these days, so builders don't construct smaller houses. Don't go into debt spending money you don't have to buy stuff you don't need to impress people you don't like.
I agree, we had a house budget before we ever went to the bank. We didn’t even ask the question, “how much do we qualify for” because that number would sound insane to us. Less than 2000sq ft home, just the two of us, it’s more than enough. Have to keep the Wants/Needs in check.
When my wife and I purchased our home we decided to price it based which one of us had the lowest income in case the higher income lost their job for an extended period of time. We ended up purchasing a bit higher than we wanted due to just how competitive the market was but still well within our comfort level. I understand many areas you can not do that as the average house is crazy expensive, I am lucky that the Midwest is very affordable.
I agree, but unfortunately in some areas affordable housing simply does not exist. $350,000 is the entry-level price. As long as people are buying up those homes (which they are), the problem will persist. At this point I think it will take another sub-prime mortgage crisis or something similar.
As budget increased and is not as tight i have switched mostly to pay mysef first model 31% is cuurent target with additional 10% sinking for larger annual purchases. After taxes/donations leaves about 30% for monthly expenses. If i go over sinking fund Absorbs and vacation and christmas gifts shrink which gives whole family some skin in game to stay on target. If we want more things we have to earn more or live without.
Living in a cheap area is a huge boon. I've been feeling like we're well into the middle class since we hit about $80K a year, up to about $110K a year now. We got really lucky with the interest rates when we bought our most recent home, at less than 3%.
Great information Erin, the first step is to lay out a budget. It sounds easy but I can't tell you how many times I have said this to my kids. (Well they are not kids anymore) I feel lucky that my wife stopped working in 1997 when we had our 2nd of 3 kids, she returned to work in 2006. It just was easier back then. House payment. 1,225.00, property taxes 35% of what it is now and my 100K was more than enough to pay the bills and save 20%. It definitely takes a team effort these days to afford a house and save for the future.
I consider the ability to go on a family vacation domestically for around a week every year or two without going into debt as a marker of middle class status. The classic American middle class family vacation is going to Disneyland or Disney World. The cost to do this has gone up dramatically over the years so that fits with the increased income requirement to be in the middle class shown by the calculators in the video. I consider the ability to go on similar family vacations internationally (excluding neighboring countries like Canada or Mexico) as a marker of upper middle class status.
Never been to Disney plenty of better things to do for 1/10th the cost. Visit any other theme park for a single day and you’d have a better time than a week at Disney 😂
Disney is great, but it's also one of the most expensive vacations you can pay for. The tickets, the food and drink, transportation to the parks (or worse pay the price to stay at the parks), fast pass, etc. A much more attainable vacation for people is to see if people can afford to fly to a place and go on a beach vacation. Far more common on a yearly basis (who wants to go to Disney every year, we're not all children) and going to the beach is a normal yet far cheaper vacation.
My family afforded a middle class lifestyle in only my dad's income. But they lived simply and didn't send us children to daycare. But that was also 20 to 30 years ago and prices weren't as inflated back then
I make 110k definitely comfortably fit into the middle class on a single income with 3 kids. You do have to live in the right location but it’s not this hard to get by.
It also depends on what city and state you live in as well I live pretty good as a single male on a low income the pew said I’m in the middle class I live way down in the south unfortunately these sites like pew leave out other important things like is your house paid off and how much in investments assets do you have to me that should be included to decide what class you belong in
I think the middle class is beyond numbers but as you alluded to where financial security should be the metric. However, I will say that the government, banks, car lans, mortgages, and students uses the government’s definition of household members and monetary income. Thanks for this video Erin! Rhode Island.. thats only 20min away from me. We should form a UA-cam content creation group in this area. 😊
From my analysis, people overpaid for homes even while loan rates were low, I believe there will be a housing catastrophe because these people are in debt. If housing costs continue to drop and, for whatever reason, they can no longer afford the property and it goes into foreclosure, they have no equity since, even if they try to sell, they will not make any money. I believe that many individuals will experience this, especially given the impending mass layoffs and rapidly rising living expenses.
I just ran the EPI calculator for my area and $119,000/yr is what came up as middle class for a family of four. I have 5 children and make around $55,000/yr. I don’t pay for housing or health insurance because I’m military. The EPI said that housing in my area should be just under $1300/mo. That is completely inaccurate for what I would need for my family. A 4-bedroom (3 or 4 kids sharing a room) house with a VA loan would still cost me $2,400/mo! I’m glad I’m military because my wife chooses to stay at home due to child care costs. I can afford it because we are frugal, save our money, and have no debts (we own both of our vehicles). I unfortunately see many other service-members who have not been so disciplined and who make far less than I struggle to put food on the table.
Hi Erin. Thanks for another great video providing a very good discussion and presentation of interesting facts. I will definitely take a look at those two calculators and give them a test drive. Keep up the great content. Larry, Central Valley, Ca.
Love your videos Erin! Are the incomes shared here net or gross? Saving 20% of a $100,000 income is not $20,000 but more like $16,600 post federal tax (and not including state and other taxes) - unless of course it’s pretax savings like a 401-k but not everyone has access to one. And car payments and child care expenses are definitely post-tax. Taxes make a big difference in net income. I understand though if you’ve decided to use round numbers to keep the analysis easy.
Yeah, the child care costs being the biggest line item really speaks to a major problem. These days we’re hearing so much about declining fertility rates and people postponing or forging having children…gee, I wonder why? Unless we start dramatically lowering and/or socializing these costs it’s really no wonder that many people are simply going to decide not to have kids and to thus avoid these child care costs (and the myriad other financial costs involved in raising a child to adulthood). Raising a family with a decent quality of life is rapidly becoming a luxury many people simply can’t afford.
I dont think that's realistic at all. Maybe if you don't start investing until your 40, then 30% is the number. But someone who invests 30% from age 21, can probably retire by 50. If you're saving 30% and 30% goes to taxes then you're only living on 40%. If you can save 30% and live on 40% you'll retire in no time. Saving 15-25% depending on how late you start saving should be adequate for most people. But the later you start the higher your investing rate needs to be.
@@JoeFromSomewhere2303 question on this. So first job at 21 I earned 60k and put 10% into 401k/Roth. My income has grown but I've kept it at 10%. Now I'm 29 earn $120k, and I put 13%. Is this good enough? Aka people with lower incomes need to put more into savings since they already put less, but in my case I have a good income so naturally it's a higher dollar amount. I want to retire with a simple basic life. No fancy house or cars. Probably move to Puerto rico since it's cheap. I can't really save more due to super expensive rent and trying to get my first home. My current net worth is $150k.
I’m so glad someone is saying being finished with daycare costs will make a big difference. Everyone tries to tell me oh just wait, you’ll spend just as much. I find that hard to believe! We already do extracurricular activities. I can’t imagine having to spend $1400 per kid once daycare is done. We also shouldn’t need after care which we’re lucky for. I work from home mostly so we should be able to manage. I can’t wait to see that payment disappear!
@@williamandersen1367 It went back up in June to 3.2, but yeah sucks that prices wont go back down. We need something to deflate prices, but that's not great either from what I've seen and heard from how other countries have it.
Great video. I’m retired, with adult kids and grands. They make a good income in HCL areas, but they don’t have room for extras. I’d rather them save for their retirement and then plan a few fun trips with the grands. Braces, musical instruments, now I am saving for family clunker cars. Your video says I am on the right track. The “extras” are tough - even with a good income.
I only make about 65 after taxes in one of the most expensive places to live in Florida. If my home and vehicle was not paid for, yet it would be a struggle, but still doable. I don't buy starbucks, eat out, get mani's pedis or subscriptions. People can KILL their budget with these 'treats' they say is occasional but I see them doing it on the regular. If you buy starbucks in the morning, then buy your lunch everyday, you are easily spending 30 plus a DAY. for FOOD. That is 600 a month on top of your grocery bill and eating out at night or on the weekends. I was astounded at the amount I was spending before I did a budget and analyzed my spending. Food, Amazon, Car and toy payments kept me from saving anything for retirement. In 5 years I got rid of all those things and finally paid off my house.. Now able to save for retirement. Very late, but I hope to make some serious gains in the next year or so.
Sorry your point is null. Your home is payed off... That means you got it when it was way cheaper. Get that home today, what's the cost? What would your income need to be in today's dollars? Starbucks and treats WILL NEVER compete with the home price inflation. Simple. End of story. I'm 29, earn 120k, no debt and still bet I couldn't afford to buy your home or be in your area. Economy is a joke and y'all need to understand if you were in our shoes today you'd be so screwed.
@@djm2189 no I did not get it when it was way cheaper.. I bought it last year when the prices were probably the highest here and the interest rate was 7.5 percent. I did sell a home to buy this one, but I still had a big mortgage because of the interest rate, TAXES and INSURANCE. You have to live below your means and SAVE.
@@anniesshenanigans3815 sold a house to get it.... Yes many do live below their means but the ridiculous rates keep us from getting our first starter home.
As a single person in a lower cost of living city, $50k after taxes and savings is more than enough to live comfortably. I think a $30k budget would be a strain. The transportation budgets by MIT and EPI are too high. Paying more than $300/mo per adult for transportation is a luxury. If you say, "but car payments!" I say you didn't get an affordable car. Buy used and keep it for 10+ years.
I don't even make 50k let alone 100k I think things are relative I don't have kids and 100k would be a lot I also don't have a car payment or live in a high cost area
This is incredible - we are Literally median middle class 😂 but we actually feel like we're doing well because we're in a MCOL (are there any LCOLs anymore??)
The only two ways the lifestyle of the middle class is unattainable by the middle class is if a huge number of people are living above their means or you didn’t define a middle class lifestyle.
Much of Europe has very low-cost or even free childcare, paid for by taxes. If you have kids, try to move to Germany or Sweden, because life is designed for families there. In NJ, a good middle-class lifestyle is probably a household income of around 250-300k
Or neither. Rent somewhere affordable where you can either find work or work remote from. Once you build up enough savings, and progress enough in your career, then you can look at more options.
I remember somewhere between 2009 and 2011 I had three kids in daycare. That year it cost me a little over $20,000. I put 30% in my 401(k) that year. I’ve virtually brought home what it cost for daycare. But I did not want to give up my job. Luckily my wife’s job became work from home at that time and the kids got to stay home.
So I am a single mom, 2 kids. Single income in a suburb of a big city. How much would I need to earn then? $150,000. Their dad does pay for some things. He pays me child support so I’m including that as my income. Would it be $150,000? That’s impossible for m. I make $40,000 but that’s part time hours. 25 hours a week. And $25,000 child support.
She pays $2000 a month in child care? How many children? And why have there not popped up some baby sitter centers in peoples homes were someone has a child and just stays home and then takes on a few more children at a reduced rate to pay bills? It used to be that child care was rather cheap be cause one or two people would be watching several children so the cost was spread out. Some of these people yelling they can't find a job needs to go into business for them selves and start a child care center in their house. good money
You have an inordinate number of assumptions. Lifestyle has everything to do with the analysis of needs and wants and the discipline to live inside of one’s means. I see colleagues and friends all day every day who will never afford a 350 K home yet they’re living in a 400 K home; house poor; the same people are taking weekend getaways two or three times a year and family vacations in the summer. They can’t afford it, and yet they do it anyway. Debt alert! Many of these same people eat out as though they make three times their actual income. Eat at home! They buy new phones every year, the air condition their homes at 68° in the summer. They have their kids in every ridiculous activity to compensate for the fact that they don’t have the discipline to spend actual time with them. The list goes on and on and on. If you can’t live in an area, move. If you can’t afford childcare, figure out birth control. If you can’t afford the mortgage for a 350 K home, rent a basement apartment somewhere. Here’s the problem. Most people are lazy and undisciplined with their hands out expecting everybody else to empathize with their foolishness. I raised two children with stay at home mother as a wife only a single income, teacher salary in a right to work state, we lived debt-free, still do. We drive older vehicles, we own our home, and we still live below our means today. The middle class hasn’t gone anywhere, but the discipline quotient is antiquated for millennials.
I would argue that today's "middle class" has priced themselves out of what once was the middle class. In the 1970s my dad was a scientist/professor at a California university. We had a mortgage and a car loan. Credit cards were for the wealthy. We had a small black and white tv with an antenna on the roof. My mom sewed my sisters clothes and repaired mine. We lived in a middle class neighborhood, and by all accounts at the time, were a middle class family. Like my friends' families and neighbors, we rarely went out to dinner, and it was usually for pizza. We had an 8' X10' camp trailer and camped a lot each summer. Today I see young families driving $50,000 cars (often two cars). The children all have $1,200 Apple iPhones. The camp trailers are now 40' behemoth RVs that cost $140,000. Families spend more on eating out each month than my parents' monthly mortgage payment. Sure inflation has raised the costs of living, but today's families are all trying to live like the rich people. I have a masters degree, own my 4X4 diesel truck, side by side, motorcycle, frontend loader, sawmill and three timber properties in two states. Everything is paid for. I live on roughly $1,150 per month. I do have a credit card, one, and live off the card (food, fuel, Amazon, etc.), and it is paid off in full each month. Even including property taxes, I live on about $18,000 a year. Today's families seem to have lost the term, "live within your means."
Yeah lifestyle creep is real these days. My grandparents raised 6 kids in a 3 bed/1ba 1200 sq ft house with no AC. Can you imagine a 20 something year old living like that now?
$100,000 a year doesn’t buy what used to be an upper middle class lifestyle. People simply don’t want to bother with simple chores like cooking, cleaning, fixing up small personal items and things in the house. People want lavish vacations, always new clothes, expensive top end items and new cars. People don’t really budget well and don’t save for purchases to avoid paying interest.
I'm 29, earn $120k, no debt, single no kids. Even with that I don't feel like a strong middle class person. I grew up poor first gen American. My rent is 2400, and that's cheaper here. Even cheaper states rent has gone up where it's not worth moving away from family. I save 13% of my income into 401k and Roth. I drive a beat up 2016 Altima I bought cash, I mostly eat at home. This is sad that I'm not afforded more luxuries and it's sad because people with lower incomes or family are definitely struggling when compared. Everything is too expensive but yet lower quality.
It can be done. I have supported a family of four for a long time making under $100k. You just have to be cheap with cars and not go to Disney world. A 3% mortgage helps.
As someone who made $360k last year and paid over $80k in taxes I can attest that this is true. Currently sitting here in Nassau on a Caribbean cruise that cost me $7k plus. Thirty years ago my father made $120k a year as an attorney in private practice. My quality of life is effectively the same as his but I’m making three times as much yet netting the same result. Anchoring biases are a real thing. Inflation not only steals your purchasing power but it plays tricks with your mind. You “feel” that “x” amount is worth “y” but if you objectively look at it your sense of value and worth for what a set amount should be is anchored at some point in your youth. The value of what $20 is, or $100, or $100,000 is anchored in your mind but it is constantly eroding.
Wow, I need more write-offs, I made just under $320,000 last year and paid almost $120,000 in taxes. I live in Canada though, I'm assuming you're in the USA.
I’m retired with a high income, don’t forget IRMA tax penalties which can add up to thousands a year to pat for Medicare. Investing to keep at pace with inflation is a job in itself.
One can save more still on transportation with a bike(acoustic or electric) and, if available, public transit. Electric bikes in particular increase speed and range over an acoustic bike, and all around cheaper compared to a used car. I couple a bike with public transit and it cuts my usage of my car to generally once a week and I often only spend about $35 in gas, and put less than 1500 miles a month extending how often it needs maintenance.
I don’t know what a standard middle class lifestyle means. If it reflects the spendy apartments/ homes / cars shown on social media, probably 250k. If it is being comfortable with having what you have. Probably 75k.
If you lived in a Western European country like France or Sweden, daycare and college costs could be minimal or non-existent because the state or country pays for most of these expenditures. However, in the United States these services are often considered "extras". If you want or need these additional items or services you have to pay for them. They are not guaranteed in a normal middle class lifestyle here.
@@viktorivakhno2244 $400 to $425 for German daycare would be a steal in the United States. Many U.S. parents pay thousands of dollars per year for adequate daycare for their children with little subsidization beyond a limited tax credit.
Here's a thought. People need to stop taking kids for granted. 100k/year checks all of the "features of a middle class life" boxes when you haven't opted to pop out two kids you couldn't afford.
If most people would buy a modest home, modest car they could live on 1 income. One person could stay at home with the kids and save on child care. Too many people want to live like Kings but can’t afford it. Live below your means. And move out of CA.
It says that we should need $150k to have a strong middle class existence. We don't spend nearly that much and don't feel deprived at all. My wife home schools our children and we recently paid the house off. We keep entertainment inexpensive. I always tell my kids they are living the idealistic life.
I just ran the calculator and it said $139K, but the housing budget they set is impossible to find in this city. Even if you could stay within the housing budget they set, add a 20% savings rate and you're at $175K!!!
100k as a household, with 2 kids, paying for child care? Yeah, you’d have to live on the frugal side of life, but that’s 2 people making 50k… literally the median income in the USA. You also picked Rhode Island, not a cheap area. Why not Cheyenne, WY? Spokane, WA? Midland, TX? Nobody lives in Mississippi? Alabama? West Virginia? 100k, as a household of 4, is absolutely middle class. You can’t do whatever you want, but you’re doing pretty well if you budget. Life style creep is the problem… and housing prices.
A couple can have a very fulfilling and complete life without children. And we know many couples whose children have derailed their finances or happiness or both.
"Health insurance is a basic necessity" Define health insurance. Primary care costs me $80 per month, no insurance needed. And they treat me like a DEITY in that place precisely BECAUSE I'm not using insurance. It's called Direct Primary Care -- look into it. Now, if you want to insure against actual health accidents and not recurring medical expenses, those plans seem to cost under $100 per month (though you can't exactly just get a blind estimate, so it's hard to say). You'll pay a high deductible which you can plan for, but you'll be inoculated against the $50,000 ER bill (which nobody ever pays anyways - they can always negotiate a payment you can afford) But the idea that you need every. stupid. little. thing. covered by insurance is why insurance is so expensive -- it's not insurance. It's subsidized healthcare. So get actual insurance and pay for dumb little doctor visits for the sniffles or to look at a wart out of your own pocket. Your doctor will love you for it.
Exactly right! The beginning of "health insurance" happened in California and was actually a pre-paid hospital subscription. They jumped thru the hoops to call it insurance so it would be more favorably regulated. From there it grew into the monster we know today where you "subscribe" to everything.
Im not locked in to my mortgage rate of 3%. Im locked in to my homestead exemption for property taxes. Buying a similar home would cost me 100% more in property taxes.
@ErinMoriarity- Not doing much trading but investing. Been rolling CDs with current cash at 5%+, the economy is not good and want to keep some powder for a downturn, we will see but at least im not losing money on my cash via inflation.
I don't feel much sympathy towards the so-called middle-class when the lower-class is having exponentially harder life; their expenses are not much less (housing, transportation) but they make far less.
15-20% for saving/retirement is very wishful thinking. Real life would be 6 to 8% and over the 25/30 years would be more then enough to have a great retirement., as long as you have zero debt. These retirement website have a vested interest in your saving along with the scare tactics they use with what use to be, you have to have a million to retire and now who knows what it is.
@ErinMoriarity- I'm retired at this point in my life and after my military, labor, pipeline & plant field work, I retired. It was only the last two (40yrs) that I was able to save and that was all that was needed. Could have retired 10 years early but I didn't.
Good % Of Middle Class ?How to help 350 Millions Americans.For example Fund Raising From Cities Counties .can helpful if Neighbors have Kindness .Thanks nice Topic.
$29,000 for 2 kids per year? I don’t know what people are spending that on. Gold plated legos? lol. Also, the food costs are way too low, and people waste so much money on cars…
@@ErinTalksMoney makes sense. It’s unavoidable for some families - I feel bad for them! We were relatively lucky, and never really needed or used daycare. My wife also works at the school, so my kids haven’t needed after school care. That being said, her wages are basically less than what you’d make working full time at a fast food restaurant. So it’s still a trade off.
This EPI calculator has some ridiculous numbers for North Carolina. Like $795 for childcare? Lol $1400 is the actual number. $1500 for housing? Roflmao, good luck with that…
I’m living paycheck to paycheck… my take home is 6k a month, 4K automatically gets transferred to a HYSA and investment account and I live on 2k per month! That way I can be disciplined with my budget and keep my spending within my self-imposed 2k limit.
Average rent nowadays is 2k everywhere. So your point is null. Unless you have family to live with rent free or somehow we're given a home, NO ONE can do this. You're a unicorn situation.
@@djm2189 BS! You can make more by side hustles or a part-time job and spend less! Then SAVE the rest… that’s how I and millions before did it, not rocket science!
@ErinMoriarity- This is probably going to be tl/dr, so the summary is my long positions are SMH, VUG, and XLK (all of which are too high for me to recommend others to buy into right now). My long positions which are unrealized gains (I don't realize gains or pay taxes until I sell) are currently up around $165k (24.69%) for the year. I've had around $25k of gains in CDs maturing. Money markets are 5.2% interest, but I don't know how much growth those have had. I'm still in my 30s. Not including my personal house, my net wealth is whereabouts $1.8m. I graduated into the 2010s recession and there were literally no jobs in my field within 1,000 miles. I really didn't know what to do. I had worked throughout college and had about $25k on the other end. I asked my parents to co-sign a mortgage and bought a rental duplex. Money earned within and outside the rental dwelling went into buying more rental dwellings. About 18 months ago, I got burned out and have been selling buildings and investing the proceeds (described above). I'm down to three buildings - 1 of which is selling on July 15. While people might be envious of the money, this job has been very lonely. An occupation that ate up most of my time & one where I could not make friends with anyone I worked with / worked around. I was asset rich and cash poor. Monthly income was not guaranteed which forced me to save, budget, and constantly stress about money. I learned a lot about construction stuff that I had no experience in prior to my business. I also learned a lot about contracts, title searches, and deeds. Basically, I traded 10 years of my life to be very stressful years with the ability to retire early*. *As long as I keep living like I have been living. If I go crazy with spending, then I'll run out of money and have to rejoin the workforce. I also have to be very careful what to invest into and when to invest into those things. Day trading scares me. Buying single stocks scares me. I don't want my investments to go to 0. I want super conservative investments where the money cannot go down and super high growth index funds that have a long history of good performance (long positions mentioned above). I also want to learn from others - wide spectrum of people / views - to see what they're doing right, what they're doing wrong, and how I can do self improvement based on their lived experiences. Your channel falls into this category. I want to learn from you. You're clearly smart. You're articulate. Your videos are interesting. It is clear to me that you try really hard and are good at what you do. Thank you. Last year was my first year my taxable income was over $100k. I've had a couple years prior where gross revenue was over $100k, but never net. I genuinely don't understand how my accountant lowered my taxable capital gains last year. Despite selling 7 houses, I only paid like $60k in taxes (fed + state). So far this year I've sold another 7 which guarantees this year to be another year with over $100k in taxable income. I hope you have a great evening.
You can probably get away with 100k in my state Louisiana. Biggest reason is housing here is so cheap. 250k for your average home. Louisiana is suffering from brain drain tho which is horrible for the state. It makes sense though, why stay in Louisiana when you can go to Texas you right next door and you get better education better pay no state income tax and just a better life you dont have to deal with the threat of hurricanes as much. I know a lot of Texas suffered from tornadoes. I scared of both of them and dont wanna be there for a hurricane again hearing those winds hot the side of the house is some scary stuff. 120+ winds make some scary sounds
Depends on debt. I have no debt and the house is paid off. We could live just fine on even $85k in our area and still invest. But we're not spenders, drive cars until they die and don't take lavish vacations.
Sorry your point is null. Your home is payed off... That means you got it when it was way cheaper. Get that home today, what's the cost? What would your income need to be in today's dollars? Starbucks and treats WILL NEVER compete with the home price inflation. Simple. End of story. I'm 29, earn 120k, no debt and still bet I couldn't afford to buy your home or be in your area. Economy is a joke and y'all need to understand if you were in our shoes today you'd be so screwed.
So the EPI Calculator says that I need $185,607 for a family with three kids at home. I was thinking that we would need closer to $300,000. We do save 15% of our income and have been doing that for almost 27 years now. We own our home so the amount needed for a place to live was lower for us because we own. We never paid child support as we chose to work different shifts at the hospital that we work at. So that worked out well. Now the youngest is 17 and the benefit there is that we end up spending less with our kids making their own money, buying their own clothes and things that they want.
Luckily I'm single with no debts and no dependents. About 60% of my income goes to investments and savings. I have no idea how a family making the median income can even survive these days.
@@ericnewman254 yeah it is. Having a parent stay home with the kids saves 20K-25k a year. Not to mention why pay someone to replace you or to do your job? They are YOUR kids. I stay home with mine. So all this that you guys complain about not being able to afford, we do just fine. It's not as bad as the media says.
You need at least $120K/year income just to afford a run-of-the-mill median priced house in the USA today, though it does vary a bit up or down from that depending on exactly where you live exactly. The median price individual income today in the USA is around $60K. See the problem? It's the same basic situation with regards to being able to afford a new vehicle today, & that list goes on & on.
I can’t reduce 401k investment to spend on daycare because the money difference is now taxable income which calculators don’t account for - the triple hit of child care costs, lost long term investment, and higher tax burdens.
Ha! My wife and I live quite well on about $75k/year in upstate South Carolina. We drive older vehicles that are both reliable and paid off, our 3 bed 2 bath house cost $155k in fine condition, and we don’t have cable or any other major subscription services. Amazon Prime plus the occasional added subscription on there so we can watch a specific show is quite enough.
When did you buy your house though? Also, sure, you may be able to get that price in a rural area of SC, but how is your city services? School system? Like she said in the video, child care is huge.
@@General8675 we bought in October 2022 and so far we’ve had zero complaints about any city services other than electric reliability. We lose power for a couple hours once a month on average. It’s annoying, but totally livable.
School system is roughly 7 out of 10. Our oldest turns 2 this month, so school isn’t really a concern for a couple years except maybe for house resale value. We pay $500/month at a really good place for our two kids’ daycare in the meantime. For this, it’s really important to use your personal network a bit. Ask a few local stay at home moms if they’d be interested in watching your kids and see if you can work out a deal with them. Oftentimes it’s not hard to work out a deal that’s awesome for both sides and your kids will get better treatment than at typical childcare facilities.
@@General8675not if you have a stay at home parent. If you stay home, you save 20-25K a year.
Well put! A lot of us live quite comfortable on less than 100K
@@General8675 we bought in fall of 2022. Our oldest child turns 2 at the end of this month, so school quality (about 7/10 rated) is more of a resale value question than an actually practical concern for us at this point. City services are pretty good except the electric does go out occasionally for a few hours. Annoying, but tolerable.
Childcare costs us about $500/month thanks to a deal we worked out with a family we know. The wife is a stay at home mom and their kids love our kids, so we help their budget and our kids have a blast together. It’s genuinely worth looking into deals like that if you possibly can.. Church is often a great place to find them. Definitely get to know the family before trusting them with your kids though. We’ve known this family for over a decade.
How much you need largely depends on where you live. $100k/year in the rural Southeast goes a lot further than the same amount in many major metropolitan areas.
@ErinMoriarity- I’m retired military, which is really nice but we also have his/hers Roth IRAs, which we both max out. My work 401k matches up to 5%, which I also take advantage of. I don’t have a brokerage account at this point but might at some point. We started investing in our early 20s even though we couldn’t save much at the time. We increased that amount with every promotion and over the years that has really paid off. Looking to retire at 62 or possibly sooner, which should be easily doable.
My wife and I are empty nesters about 5 years from retirement. Our combined annual income is $210k about evenly split between the two of us. We live in a Midwest suburb and have 3 years left on the house mortgage. No other debt. We have a 6 month emergency fund and put 20% toward retirement. We live comfortably but not extravagantly. We own modest vehicles and keep them till the wheels fall off. We lived very frugally when the kids were young and money was tight with much higher expenses. My advice is to develop a detailed budget and control where your money goes. If you are married combine your income and regularly agree on your budget priorities and goals. We have monthly budget meetings to plan for upcoming expenses such as lawn care, vacations, Medical procedures, etc. Don’t carry credit card balances and buy newer used vehicles. We buy most of our clothes at thrift stores such as savers. I regularly find new shirts and pants that were overstocks at prices 70% below retail. Eat at home. We make up meals in advance and limit eating out to 3 or 4 times a month. When we eat out we usually split an entree and add an extra side. Have a plan and stick to it.
This is not practical advice to renters, because their housing costs exceeds any other expense. While this is entirely workable for people who already own a house or have a mortgage, the housing consideration dwarfs any other concern. Their expenses and your expenses are so extravagantly different that we might as well be looking at two different lifestyles, tax laws, etc...
@@langhamp8912 Our house payment plus what we set aside monthly for real estate taxes and homeowners insurance is probably not far off a typical rent payment. I see no reason renters can’t budget and frugally save money on eating out, meal planning etc just like we did when we rented before buying. If expenses are extremely high consider relocating to a more affordable area of the country. It is not easy but many do move to make ends meet easier.
@@langhamp8912 Find more income and share housing costs. Yup, easier said than done. Good luck. I remember the lean years, they just make you more resilient and make your later success sweeter too.
You make that much and only have 6 months of expenses saved? That's terrible. 😮
@@krissynyc 6 month emergency fund. We have other general savings used for travel, planned purchases etc. as well as retirement savings we continue to grow. We are on track to have a year worth of income in cash savings outside of the emergency fund to insulate our retirement savings from market fluctuations if there is a market correction in the early years of retirement. Given our lower managed expenses we should be fine….thanks for your concern.
Great Video! Thanks for putting it out there. What you said about vehicles is spot on and I wish that more people would realize that this is what keeps you poor. I was speaking with a co-worker of mine a few weeks ago and we started talking about retirement plans. We have both been with the same company for almost 25 years now. I asked her if she had been taking advantage of the company offered 401K plan and she stated that she does not contribute at all and really never has. I asked why and she said that she just cannot afford it. However, I did point out to her that she can afford to "purchase" a new vehicle every 3 years, which she has done since I have known her.
Even used cars suck like a leech, with insurance, maintenance, etc... However, taking public transportation, walking, and bicycling are very feasible options.
@@langhamp8912 Absolutely true. Not the most convenient options depending on where you live, lots of US cities have transit that sucks, but by far the most cost effective transportation options vs paying for a car.
It is a matter of lifestyle. A lot of people make under 100K and live quite well.
I'm single 53/M...Toledo Ohio..401k..IRA..HSA..bring home 60k.. debt free plus a Robin Hood account I rent and I love my life😊
I retired last year at age 64 on a pension and IRAs to tap if I run short. I do NOT yet draw SS. I am waiting till 67 to make sure my also retired wife has the best benefits if I pass on. We have a paid for house but seven insurances take a toll. Considering canceling term life insurance as we have no kids and it is $580 per quarter for a $200k payout. We bring in maybe $60k a year as a couple and so far are making it till SS kicks in. We already took two major road trips and the credit cards are at zero till we load them up again with hotel stays and gasoline. It's a routine to run up $2,500 a month on the card then pay it to zero when the monthly pension comes in. If only to avoid loading up the card again :( We feel middle class even with only $60k and hopefully getting a break on taxes this year as we make less.
How much is in those IRAs though? Also, if you die, what costs do you need to cover? That will determine whether you want that term life insurance.
You may be both die at 70. Any smart financial person will tell you to take the SS now cause you may not get it at all, or may get it for a short time.
That seems high for life insurance, or is that the average?
@@sakurabahfan It was not that high till I turned 65. Its a $100 higher now. Granted the $580 covers 1/4th of the year, or $2,320 for a year. If I live 30 years, I will pay in $70,000 but they will raise the price the older I get. If I live far less than 30 years, I might keep it as I saw the other day, the median mortality in the USA is now under age 70.
This is how I use my credit card. I load it up on a trip but pay the balance down to zero every month.
We're sending 2 kids to college this Fall. One expected, but more expensive than expected, and one 2 years early. It's made budgeting quite the adventure.
It so, so widely depends. My wife and I spend ~$100k a year (honestly, quite a bit less on any given month, but accounting for major house repairs/car purchases/large medical hits) FIRE-retired. But, $100k living in the midwest with a paid-off house, structured so income tax is like $1500 a year (state and fed combined!) is all entirely unlike the lifestyle of someone *making* $100k W-2 income, paying 1/3 to their mortgage, 7.65% to FICA payroll, ~15% to income taxes, etc. We're probably closer to the spending power of someone making a nominal $200k if not more.
get a new wife. lol
Taxes are our biggest problem.
I'm 57, divorced, kids gone, live alone, and make 170k/year in Nebraska. I'm not rich, but I know I'm in a good position financially. It's hard out there for a lot of people and I feel blessed to not have to struggle with having enough money. I do miss the days when I was broke raising a family though! lol
I'm 57 and make anywhere from 30K to 60K a year as a self-employed attorney and I easily meet all those middle-class indicia. I've never made more than 88K in a year in my life. I have everything I want - because I've learned to stop wanting everything. I live in an affluent part of Atlanta city proper and I see consumerism up close every day; people buy a lot of crap they don't really need, and buy far more of the things they do need (housing) than they actually need.
I'm 54, no kids, and make 120k/year in Brooklyn. 170k in Nebraska is probably like 250k in NY. I don't know how people starting out today can make it and still save for retirement.
@@cisium1184so you work part time?
Age 48 making 200k/yr in RI. Never felt rich. Used cars only and visit dollar stores and Walmart most of the weekends. I think money is the freedom of choices. And the only way to get there is to keep expensive choices away from life before retirement.
What do you do for work?
Lifestyle creep. When we make more money, we spend more money, and we're VERY good at coming up with non-essentials on which we waste our money.
Don't buy the house that the mortgage company says you can afford. Look for a house that is HALF that amount. "I've been approved for $350,000!" That's great! Now, look for a house in the $175,000 range. Smaller, more affordable housing needs to make a comeback. Builders only make houses that will sell, and those houses are driven by what the banks allow people to borrow. Not a lot of people are interested in a new house under 1500 sq/ft these days, so builders don't construct smaller houses.
Don't go into debt spending money you don't have to buy stuff you don't need to impress people you don't like.
I agree, we had a house budget before we ever went to the bank. We didn’t even ask the question, “how much do we qualify for” because that number would sound insane to us. Less than 2000sq ft home, just the two of us, it’s more than enough. Have to keep the Wants/Needs in check.
When my wife and I purchased our home we decided to price it based which one of us had the lowest income in case the higher income lost their job for an extended period of time. We ended up purchasing a bit higher than we wanted due to just how competitive the market was but still well within our comfort level. I understand many areas you can not do that as the average house is crazy expensive, I am lucky that the Midwest is very affordable.
Dave Ramsey has entered the chat 😂
I agree, but unfortunately in some areas affordable housing simply does not exist. $350,000 is the entry-level price. As long as people are buying up those homes (which they are), the problem will persist. At this point I think it will take another sub-prime mortgage crisis or something similar.
@@Lazirus951 I agree. As long as people keep getting outrageous loans to pay for the houses, they will sell for what the market will bear.
Absolutely true about location and family size. The numbers wildly change depending on those two things.
As budget increased and is not as tight i have switched mostly to pay mysef first model
31% is cuurent target with additional 10% sinking for larger annual purchases.
After taxes/donations leaves about 30% for monthly expenses. If i go over sinking fund Absorbs and vacation and christmas gifts shrink which gives whole family some skin in game to stay on target.
If we want more things we have to earn more or live without.
Living in a cheap area is a huge boon. I've been feeling like we're well into the middle class since we hit about $80K a year, up to about $110K a year now. We got really lucky with the interest rates when we bought our most recent home, at less than 3%.
Great information Erin, the first step is to lay out a budget. It sounds easy but I can't tell you how many times I have said this to my kids. (Well they are not kids anymore) I feel lucky that my wife stopped working in 1997 when we had our 2nd of 3 kids, she returned to work in 2006. It just was easier back then. House payment. 1,225.00, property taxes 35% of what it is now and my 100K was more than enough to pay the bills and save 20%. It definitely takes a team effort these days to afford a house and save for the future.
I consider the ability to go on a family vacation domestically for around a week every year or two without going into debt as a marker of middle class status. The classic American middle class family vacation is going to Disneyland or Disney World. The cost to do this has gone up dramatically over the years so that fits with the increased income requirement to be in the middle class shown by the calculators in the video. I consider the ability to go on similar family vacations internationally (excluding neighboring countries like Canada or Mexico) as a marker of upper middle class status.
Opinions are subjective
Never been to Disney plenty of better things to do for 1/10th the cost. Visit any other theme park for a single day and you’d have a better time than a week at Disney 😂
Disney is great, but it's also one of the most expensive vacations you can pay for. The tickets, the food and drink, transportation to the parks (or worse pay the price to stay at the parks), fast pass, etc.
A much more attainable vacation for people is to see if people can afford to fly to a place and go on a beach vacation. Far more common on a yearly basis (who wants to go to Disney every year, we're not all children) and going to the beach is a normal yet far cheaper vacation.
My family afforded a middle class lifestyle in only my dad's income. But they lived simply and didn't send us children to daycare. But that was also 20 to 30 years ago and prices weren't as inflated back then
Middle class is just the area where you worry every day if you are going to move to the upper level or fail miserably and fall into the lower.
Love the outtakes at the end! 😂🤣😍
I make 110k definitely comfortably fit into the middle class on a single income with 3 kids. You do have to live in the right location but it’s not this hard to get by.
That is considered poor in the Bay Area.
@@mocheen4837should probably get a better job...or move.
Minnesota. Back to back years of 86k gross income. I feel very wealthy.
It also depends on what city and state you live in as well I live pretty good as a single male on a low income the pew said I’m in the middle class I live way down in the south unfortunately these sites like pew leave out other important things like is your house paid off and how much in investments assets do you have to me that should be included to decide what class you belong in
Depends on where and how you live. Our family of four spends $27-$30k a year on basic living in our low cost state. Everything else is invested.
I think the middle class is beyond numbers but as you alluded to where financial security should be the metric. However, I will say that the government, banks, car lans, mortgages, and students uses the government’s definition of household members and monetary income. Thanks for this video Erin! Rhode Island.. thats only 20min away from me. We should form a UA-cam content creation group in this area. 😊
Depends on where you live!
@ErinMoriarity- -I have a brokerage account, make about 80K a year, live in the Midwest and do just fine!
Really interesting data to consider! Hope you and your fam are doing well Erin!
From my analysis, people overpaid for homes even while loan rates were low, I believe there will be a housing catastrophe because these people are in debt. If housing costs continue to drop and, for whatever reason, they can no longer afford the property and it goes into foreclosure, they have no equity since, even if they try to sell, they will not make any money. I believe that many individuals will experience this, especially given the impending mass layoffs and rapidly rising living expenses.
There will be no housing crash.
I just ran the EPI calculator for my area and $119,000/yr is what came up as middle class for a family of four. I have 5 children and make around $55,000/yr. I don’t pay for housing or health insurance because I’m military. The EPI said that housing in my area should be just under $1300/mo. That is completely inaccurate for what I would need for my family. A 4-bedroom (3 or 4 kids sharing a room) house with a VA loan would still cost me $2,400/mo! I’m glad I’m military because my wife chooses to stay at home due to child care costs. I can afford it because we are frugal, save our money, and have no debts (we own both of our vehicles). I unfortunately see many other service-members who have not been so disciplined and who make far less than I struggle to put food on the table.
So if you didn't get free housing, you'd be screwed. 55k is enough when housing which is ALWAYS the biggest factor isn't included. No duh.
Hi Erin. Thanks for another great video providing a very good discussion and presentation of interesting facts. I will definitely take a look at those two calculators and give them a test drive. Keep up the great content. Larry, Central Valley, Ca.
Imagine if wages outpaced inflation. The single income family would still be a thing.
Think about it, in some states the minimum wage a is $7.50 in 2024!
@@seankirchner2378it’s terrible, we need to move that to $0.
Awesome stuff. Love the endings. It made me smile and that is much needed.
Love your videos Erin! Are the incomes shared here net or gross? Saving 20% of a $100,000 income is not $20,000 but more like $16,600 post federal tax (and not including state and other taxes) - unless of course it’s pretax savings like a 401-k but not everyone has access to one. And car payments and child care expenses are definitely post-tax. Taxes make a big difference in net income. I understand though if you’ve decided to use round numbers to keep the analysis easy.
People usually use gross numbers when stating them…they’re not using net figures
Yeah, the child care costs being the biggest line item really speaks to a major problem. These days we’re hearing so much about declining fertility rates and people postponing or forging having children…gee, I wonder why? Unless we start dramatically lowering and/or socializing these costs it’s really no wonder that many people are simply going to decide not to have kids and to thus avoid these child care costs (and the myriad other financial costs involved in raising a child to adulthood). Raising a family with a decent quality of life is rapidly becoming a luxury many people simply can’t afford.
Realistically and this is hard to hear for a lot of people, but if you cannot save close to 30% or higher of your income you are going to struggle.
I dont think that's realistic at all. Maybe if you don't start investing until your 40, then 30% is the number. But someone who invests 30% from age 21, can probably retire by 50. If you're saving 30% and 30% goes to taxes then you're only living on 40%. If you can save 30% and live on 40% you'll retire in no time.
Saving 15-25% depending on how late you start saving should be adequate for most people. But the later you start the higher your investing rate needs to be.
@@JoeFromSomewhere2303 question on this. So first job at 21 I earned 60k and put 10% into 401k/Roth. My income has grown but I've kept it at 10%. Now I'm 29 earn $120k, and I put 13%. Is this good enough? Aka people with lower incomes need to put more into savings since they already put less, but in my case I have a good income so naturally it's a higher dollar amount. I want to retire with a simple basic life. No fancy house or cars. Probably move to Puerto rico since it's cheap. I can't really save more due to super expensive rent and trying to get my first home. My current net worth is $150k.
I’m so glad someone is saying being finished with daycare costs will make a big difference. Everyone tries to tell me oh just wait, you’ll spend just as much. I find that hard to believe! We already do extracurricular activities. I can’t imagine having to spend $1400 per kid once daycare is done. We also shouldn’t need after care which we’re lucky for. I work from home mostly so we should be able to manage. I can’t wait to see that payment disappear!
My kids are driving me crazy right now and I am desperately looking for camp open spots. Two months to go till school starts.
According to the MIT calculator I'm doing super well 😂
My daughter is in daycare, now we live in a fairly low cost area and she still costs us $200 a week or over $10k a year.
Its absolutely wild.
Thank you for the great info! I hope this inflation calms down, and thank god I have my mom to help watch my son. Child care would be brutal.
Latest inflation is 2.6%.. so already down quite a bit. This means prices going up slowly, NOT prices going back down.
@@williamandersen1367 It went back up in June to 3.2, but yeah sucks that prices wont go back down. We need something to deflate prices, but that's not great either from what I've seen and heard from how other countries have it.
Great video. I’m retired, with adult kids and grands. They make a good income in HCL areas, but they don’t have room for extras. I’d rather them save for their retirement and then plan a few fun trips with the grands. Braces, musical instruments, now I am saving for family clunker cars. Your video says I am on the right track. The “extras” are tough - even with a good income.
Hi Erin !! Any chance you would start to create a high level of investment videos ?
@ErinMoriarity- I don't think this is Erin.
I only make about 65 after taxes in one of the most expensive places to live in Florida. If my home and vehicle was not paid for, yet it would be a struggle, but still doable. I don't buy starbucks, eat out, get mani's pedis or subscriptions. People can KILL their budget with these 'treats' they say is occasional but I see them doing it on the regular. If you buy starbucks in the morning, then buy your lunch everyday, you are easily spending 30 plus a DAY. for FOOD. That is 600 a month on top of your grocery bill and eating out at night or on the weekends. I was astounded at the amount I was spending before I did a budget and analyzed my spending. Food, Amazon, Car and toy payments kept me from saving anything for retirement. In 5 years I got rid of all those things and finally paid off my house.. Now able to save for retirement. Very late, but I hope to make some serious gains in the next year or so.
Sorry your point is null. Your home is payed off... That means you got it when it was way cheaper. Get that home today, what's the cost? What would your income need to be in today's dollars? Starbucks and treats WILL NEVER compete with the home price inflation. Simple. End of story. I'm 29, earn 120k, no debt and still bet I couldn't afford to buy your home or be in your area. Economy is a joke and y'all need to understand if you were in our shoes today you'd be so screwed.
@@djm2189 no I did not get it when it was way cheaper.. I bought it last year when the prices were probably the highest here and the interest rate was 7.5 percent. I did sell a home to buy this one, but I still had a big mortgage because of the interest rate, TAXES and INSURANCE. You have to live below your means and SAVE.
@@anniesshenanigans3815 sold a house to get it.... Yes many do live below their means but the ridiculous rates keep us from getting our first starter home.
if you are retired, how do you know if you, a couple, are middle-middle class?
As a single person in a lower cost of living city, $50k after taxes and savings is more than enough to live comfortably. I think a $30k budget would be a strain. The transportation budgets by MIT and EPI are too high. Paying more than $300/mo per adult for transportation is a luxury. If you say, "but car payments!" I say you didn't get an affordable car. Buy used and keep it for 10+ years.
I don't even make 50k let alone 100k I think things are relative I don't have kids and 100k would be a lot I also don't have a car payment or live in a high cost area
50/30/20 Needs/taxes/unexpected needs
This is incredible - we are Literally median middle class 😂 but we actually feel like we're doing well because we're in a MCOL (are there any LCOLs anymore??)
The only two ways the lifestyle of the middle class is unattainable by the middle class is if a huge number of people are living above their means or you didn’t define a middle class lifestyle.
Much of Europe has very low-cost or even free childcare, paid for by taxes. If you have kids, try to move to Germany or Sweden, because life is designed for families there.
In NJ, a good middle-class lifestyle is probably a household income of around 250-300k
NJ is a high cost state. I'll take my low cost state.
@@LadyUpstart
Sometimes you get what you pay for
Choice between having a kid or owning a house
Or having a kid and buying a smaller, older house in a not-as-desirable neighborhood.
@@morebeer7673 bruh a crack house in my state is still over $300k 😭
Or neither. Rent somewhere affordable where you can either find work or work remote from. Once you build up enough savings, and progress enough in your career, then you can look at more options.
@@dstevens518 passport bro 😏
Stop giving yourself stupid choices.
I remember somewhere between 2009 and 2011 I had three kids in daycare. That year it cost me a little over $20,000. I put 30% in my 401(k) that year. I’ve virtually brought home what it cost for daycare. But I did not want to give up my job. Luckily my wife’s job became work from home at that time and the kids got to stay home.
Love the bloopers
So I am a single mom, 2 kids. Single income in a suburb of a big city. How much would I need to earn then? $150,000. Their dad does pay for some things. He pays me child support so I’m including that as my income. Would it be $150,000? That’s impossible for m. I make $40,000 but that’s part time hours. 25 hours a week. And $25,000 child support.
She pays $2000 a month in child care? How many children? And why have there not popped up some baby sitter centers in peoples homes were someone has a child and just stays home and then takes on a few more children at a reduced rate to pay bills? It used to be that child care was rather cheap be cause one or two people would be watching several children so the cost was spread out. Some of these people yelling they can't find a job needs to go into business for them selves and start a child care center in their house. good money
I was so frugal that I used to squeeze that nickel so hard that the buffalo on the back side would squeal.
@ErinMoriarity- I rarely trade. I also don't think you are the Erin who owns this channel. This looks like how a scammer starts one of these threads.
You have an inordinate number of assumptions. Lifestyle has everything to do with the analysis of needs and wants and the discipline to live inside of one’s means. I see colleagues and friends all day every day who will never afford a 350 K home yet they’re living in a 400 K home; house poor; the same people are taking weekend getaways two or three times a year and family vacations in the summer. They can’t afford it, and yet they do it anyway. Debt alert! Many of these same people eat out as though they make three times their actual income. Eat at home! They buy new phones every year, the air condition their homes at 68° in the summer. They have their kids in every ridiculous activity to compensate for the fact that they don’t have the discipline to spend actual time with them. The list goes on and on and on. If you can’t live in an area, move. If you can’t afford childcare, figure out birth control. If you can’t afford the mortgage for a 350 K home, rent a basement apartment somewhere. Here’s the problem. Most people are lazy and undisciplined with their hands out expecting everybody else to empathize with their foolishness.
I raised two children with stay at home mother as a wife only a single income, teacher salary in a right to work state, we lived debt-free, still do. We drive older vehicles, we own our home, and we still live below our means today. The middle class hasn’t gone anywhere, but the discipline quotient is antiquated for millennials.
Depends where you live for sure.
I would argue that today's "middle class" has priced themselves out of what once was the middle class. In the 1970s my dad was a scientist/professor at a California university. We had a mortgage and a car loan. Credit cards were for the wealthy. We had a small black and white tv with an antenna on the roof. My mom sewed my sisters clothes and repaired mine. We lived in a middle class neighborhood, and by all accounts at the time, were a middle class family. Like my friends' families and neighbors, we rarely went out to dinner, and it was usually for pizza. We had an 8' X10' camp trailer and camped a lot each summer. Today I see young families driving $50,000 cars (often two cars). The children all have $1,200 Apple iPhones. The camp trailers are now 40' behemoth RVs that cost $140,000. Families spend more on eating out each month than my parents' monthly mortgage payment. Sure inflation has raised the costs of living, but today's families are all trying to live like the rich people. I have a masters degree, own my 4X4 diesel truck, side by side, motorcycle, frontend loader, sawmill and three timber properties in two states. Everything is paid for. I live on roughly $1,150 per month. I do have a credit card, one, and live off the card (food, fuel, Amazon, etc.), and it is paid off in full each month. Even including property taxes, I live on about $18,000 a year. Today's families seem to have lost the term, "live within your means."
Very well put! My experience is quite similar..
Yeah lifestyle creep is real these days. My grandparents raised 6 kids in a 3 bed/1ba 1200 sq ft house with no AC. Can you imagine a 20 something year old living like that now?
$100,000 a year doesn’t buy what used to be an upper middle class lifestyle. People simply don’t want to bother with simple chores like cooking, cleaning, fixing up small personal items and things in the house. People want lavish vacations, always new clothes, expensive top end items and new cars. People don’t really budget well and don’t save for purchases to avoid paying interest.
Nailed it
I'm 29, earn $120k, no debt, single no kids. Even with that I don't feel like a strong middle class person. I grew up poor first gen American. My rent is 2400, and that's cheaper here. Even cheaper states rent has gone up where it's not worth moving away from family. I save 13% of my income into 401k and Roth. I drive a beat up 2016 Altima I bought cash, I mostly eat at home. This is sad that I'm not afforded more luxuries and it's sad because people with lower incomes or family are definitely struggling when compared. Everything is too expensive but yet lower quality.
It can be done. I have supported a family of four for a long time making under $100k. You just have to be cheap with cars and not go to Disney world. A 3% mortgage helps.
@ErinMoriarity- Yes, I trade options. I plan to retire early doing that.
As someone who made $360k last year and paid over $80k in taxes I can attest that this is true.
Currently sitting here in Nassau on a Caribbean cruise that cost me $7k plus.
Thirty years ago my father made $120k a year as an attorney in private practice. My quality of life is effectively the same as his but I’m making three times as much yet netting the same result.
Anchoring biases are a real thing. Inflation not only steals your purchasing power but it plays tricks with your mind. You “feel” that “x” amount is worth “y” but if you objectively look at it your sense of value and worth for what a set amount should be is anchored at some point in your youth. The value of what $20 is, or $100, or $100,000 is anchored in your mind but it is constantly eroding.
What do you do for work?
Wow, I need more write-offs, I made just under $320,000 last year and paid almost $120,000 in taxes. I live in Canada though, I'm assuming you're in the USA.
@@scootsmcdoots80 Yeah, US in a state without an income tax.
@@tb1951 Upper management in a small company (~100 employees, $30 million in annual revenue).
I’m retired with a high income, don’t forget IRMA tax penalties which can add up to thousands a year to pat for Medicare. Investing to keep at pace with inflation is a job in itself.
One can save more still on transportation with a bike(acoustic or electric) and, if available, public transit. Electric bikes in particular increase speed and range over an acoustic bike, and all around cheaper compared to a used car. I couple a bike with public transit and it cuts my usage of my car to generally once a week and I often only spend about $35 in gas, and put less than 1500 miles a month extending how often it needs maintenance.
I don’t know what a standard middle class lifestyle means.
If it reflects the spendy apartments/ homes / cars shown on social media, probably 250k.
If it is being comfortable with having what you have. Probably 75k.
I have cash reserves to maintain my life for 5 years, all expenses included
It took me a good while to do this and I'll never look back
@@Netizen_101 nope
@@Netizen_101Nope. I have 15 years of living costs in cash/cash equivalents. Not missing out on anything
If you lived in a Western European country like France or Sweden, daycare and college costs could be minimal or non-existent because the state or country pays for most of these expenditures. However, in the United States these services are often considered "extras". If you want or need these additional items or services you have to pay for them. They are not guaranteed in a normal middle class lifestyle here.
I guess income is lower and taxes are higher in Germany. You could easily pay 400+ euro for daycare after all of it.
@@viktorivakhno2244 $400 to $425 for German daycare would be a steal in the United States. Many U.S. parents pay thousands of dollars per year for adequate daycare for their children with little subsidization beyond a limited tax credit.
European countries also have universal healthcare, but their taxes are higher to cover these. Healthcare can be a big expense too here.
Here's a thought. People need to stop taking kids for granted. 100k/year checks all of the "features of a middle class life" boxes when you haven't opted to pop out two kids you couldn't afford.
If you have 3.5% or less interest rate dont move and take on 7%+... makes no sense , save that $$
need the definition of Middle Class life style first.
If most people would buy a modest home, modest car they could live on 1 income. One person could stay at home with the kids and save on child care. Too many people want to live like Kings but can’t afford it. Live below your means. And move out of CA.
It says that we should need $150k to have a strong middle class existence. We don't spend nearly that much and don't feel deprived at all. My wife home schools our children and we recently paid the house off. We keep entertainment inexpensive. I always tell my kids they are living the idealistic life.
If you do not have home you bought 3 years ago, then you are broke on 150k
Wait for markets to equilibrate and sub 100k will be enough.
@ErinMoriarity- Unfortunately.
You will need at least $300,000 to be in the middle class if you are in the Bay Area. A $400,000 income is considered upper middle class.
Transportation cost of $16k/yr is really high.
Not really if that includes gas, car payment and insurance.
get an economic used car… then average new car payments don’t matter. Insurance tends to be lower too.
I just ran the calculator and it said $139K, but the housing budget they set is impossible to find in this city. Even if you could stay within the housing budget they set, add a 20% savings rate and you're at $175K!!!
Consider relocating to a less expensive area. It isn’t easy but unfortunately cost of living varies widely in different parts of the country.
A six figure income IS a prestigious milestone! ....for an individual.
100k as a household, with 2 kids, paying for child care? Yeah, you’d have to live on the frugal side of life, but that’s 2 people making 50k… literally the median income in the USA.
You also picked Rhode Island, not a cheap area. Why not Cheyenne, WY? Spokane, WA? Midland, TX? Nobody lives in Mississippi? Alabama? West Virginia?
100k, as a household of 4, is absolutely middle class. You can’t do whatever you want, but you’re doing pretty well if you budget.
Life style creep is the problem… and housing prices.
I actually think the median income is more like 70-80K
Feel free to use google.
A couple can have a very fulfilling and complete life without children. And we know many couples whose children have derailed their finances or happiness or both.
Says no one in their 70's with no kids & grandkids
Today's middle class must have income producing assets!
Should clarify this is $100K HHI. $100K does support individual middle class.
"Health insurance is a basic necessity"
Define health insurance. Primary care costs me $80 per month, no insurance needed. And they treat me like a DEITY in that place precisely BECAUSE I'm not using insurance. It's called Direct Primary Care -- look into it.
Now, if you want to insure against actual health accidents and not recurring medical expenses, those plans seem to cost under $100 per month (though you can't exactly just get a blind estimate, so it's hard to say). You'll pay a high deductible which you can plan for, but you'll be inoculated against the $50,000 ER bill (which nobody ever pays anyways - they can always negotiate a payment you can afford)
But the idea that you need every. stupid. little. thing. covered by insurance is why insurance is so expensive -- it's not insurance. It's subsidized healthcare. So get actual insurance and pay for dumb little doctor visits for the sniffles or to look at a wart out of your own pocket. Your doctor will love you for it.
Exactly right! The beginning of "health insurance" happened in California and was actually a pre-paid hospital subscription. They jumped thru the hoops to call it insurance so it would be more favorably regulated. From there it grew into the monster we know today where you "subscribe" to everything.
Im not locked in to my mortgage rate of 3%. Im locked in to my homestead exemption for property taxes. Buying a similar home would cost me 100% more in property taxes.
@ErinMoriarity- Not doing much trading but investing. Been rolling CDs with current cash at 5%+, the economy is not good and want to keep some powder for a downturn, we will see but at least im not losing money on my cash via inflation.
I don't feel much sympathy towards the so-called middle-class when the lower-class is having exponentially harder life; their expenses are not much less (housing, transportation) but they make far less.
15-20% for saving/retirement is very wishful thinking. Real life would be 6 to 8% and over the 25/30 years would be more then enough to have a great retirement., as long as you have zero debt.
These retirement website have a vested interest in your saving along with the scare tactics they use with what use to be, you have to have a million to retire and now who knows what it is.
@ErinMoriarity- I'm retired at this point in my life and after my military, labor, pipeline & plant field work, I retired. It was only the last two (40yrs) that I was able to save and that was all that was needed. Could have retired 10 years early but I didn't.
Good % Of Middle Class ?How to help 350 Millions Americans.For example Fund Raising From Cities Counties .can helpful if Neighbors have Kindness .Thanks nice Topic.
$29,000 for 2 kids per year? I don’t know what people are spending that on. Gold plated legos? lol.
Also, the food costs are way too low, and people waste so much money on cars…
1600 per month for daycare I guess? In Raleigh NC this is how much it cost...
Day care is expensive!!
@@ErinTalksMoney makes sense. It’s unavoidable for some families - I feel bad for them! We were relatively lucky, and never really needed or used daycare. My wife also works at the school, so my kids haven’t needed after school care.
That being said, her wages are basically less than what you’d make working full time at a fast food restaurant. So it’s still a trade off.
A lot of well made points. This Millennial knows a thing or two !
First comment! Thanks Erin. Great video as always
You're the best!
This EPI calculator has some ridiculous numbers for North Carolina. Like $795 for childcare? Lol $1400 is the actual number. $1500 for housing? Roflmao, good luck with that…
*Household income
I’m living paycheck to paycheck… my take home is 6k a month, 4K automatically gets transferred to a HYSA and investment account and I live on 2k per month! That way I can be disciplined with my budget and keep my spending within my self-imposed 2k limit.
Average rent nowadays is 2k everywhere. So your point is null. Unless you have family to live with rent free or somehow we're given a home, NO ONE can do this. You're a unicorn situation.
@@djm2189 BS! You can make more by side hustles or a part-time job and spend less! Then SAVE the rest… that’s how I and millions before did it, not rocket science!
Has anyone actually earned $100k in a year?
@ErinMoriarity- This is probably going to be tl/dr, so the summary is my long positions are SMH, VUG, and XLK (all of which are too high for me to recommend others to buy into right now). My long positions which are unrealized gains (I don't realize gains or pay taxes until I sell) are currently up around $165k (24.69%) for the year. I've had around $25k of gains in CDs maturing. Money markets are 5.2% interest, but I don't know how much growth those have had. I'm still in my 30s. Not including my personal house, my net wealth is whereabouts $1.8m.
I graduated into the 2010s recession and there were literally no jobs in my field within 1,000 miles. I really didn't know what to do. I had worked throughout college and had about $25k on the other end. I asked my parents to co-sign a mortgage and bought a rental duplex. Money earned within and outside the rental dwelling went into buying more rental dwellings.
About 18 months ago, I got burned out and have been selling buildings and investing the proceeds (described above). I'm down to three buildings - 1 of which is selling on July 15.
While people might be envious of the money, this job has been very lonely. An occupation that ate up most of my time & one where I could not make friends with anyone I worked with / worked around. I was asset rich and cash poor. Monthly income was not guaranteed which forced me to save, budget, and constantly stress about money. I learned a lot about construction stuff that I had no experience in prior to my business. I also learned a lot about contracts, title searches, and deeds. Basically, I traded 10 years of my life to be very stressful years with the ability to retire early*. *As long as I keep living like I have been living. If I go crazy with spending, then I'll run out of money and have to rejoin the workforce. I also have to be very careful what to invest into and when to invest into those things. Day trading scares me. Buying single stocks scares me. I don't want my investments to go to 0. I want super conservative investments where the money cannot go down and super high growth index funds that have a long history of good performance (long positions mentioned above). I also want to learn from others - wide spectrum of people / views - to see what they're doing right, what they're doing wrong, and how I can do self improvement based on their lived experiences. Your channel falls into this category. I want to learn from you. You're clearly smart. You're articulate. Your videos are interesting. It is clear to me that you try really hard and are good at what you do. Thank you.
Last year was my first year my taxable income was over $100k. I've had a couple years prior where gross revenue was over $100k, but never net. I genuinely don't understand how my accountant lowered my taxable capital gains last year. Despite selling 7 houses, I only paid like $60k in taxes (fed + state). So far this year I've sold another 7 which guarantees this year to be another year with over $100k in taxable income.
I hope you have a great evening.
Excellent video...$175,000
You can probably get away with 100k in my state Louisiana. Biggest reason is housing here is so cheap. 250k for your average home. Louisiana is suffering from brain drain tho which is horrible for the state. It makes sense though, why stay in Louisiana when you can go to Texas you right next door and you get better education better pay no state income tax and just a better life you dont have to deal with the threat of hurricanes as much. I know a lot of Texas suffered from tornadoes. I scared of both of them and dont wanna be there for a hurricane again hearing those winds hot the side of the house is some scary stuff. 120+ winds make some scary sounds
Depends on debt. I have no debt and the house is paid off. We could live just fine on even $85k in our area and still invest. But we're not spenders, drive cars until they die and don't take lavish vacations.
Sorry your point is null. Your home is payed off... That means you got it when it was way cheaper. Get that home today, what's the cost? What would your income need to be in today's dollars? Starbucks and treats WILL NEVER compete with the home price inflation. Simple. End of story. I'm 29, earn 120k, no debt and still bet I couldn't afford to buy your home or be in your area. Economy is a joke and y'all need to understand if you were in our shoes today you'd be so screwed.
Kid off formula - pay raise. Kid out of diapers - pay raise. Kid can access sports in school vs private teams - pay raise.
So the EPI Calculator says that I need $185,607 for a family with three kids at home. I was thinking that we would need closer to $300,000. We do save 15% of our income and have been doing that for almost 27 years now. We own our home so the amount needed for a place to live was lower for us because we own. We never paid child support as we chose to work different shifts at the hospital that we work at. So that worked out well. Now the youngest is 17 and the benefit there is that we end up spending less with our kids making their own money, buying their own clothes and things that they want.
Luckily I'm single with no debts and no dependents. About 60% of my income goes to investments and savings. I have no idea how a family making the median income can even survive these days.
Child care cost seriously needs to be addressed
Seriously. The $3500 childcare tax credit isn’t enough. The government should cover all the cost because our children are the future.
Just stay home. You save those childcare costs.
@@LadyUpstart that’s not a solution
@@ericnewman254 yeah it is. Having a parent stay home with the kids saves 20K-25k a year. Not to mention why pay someone to replace you or to do your job? They are YOUR kids. I stay home with mine. So all this that you guys complain about not being able to afford, we do just fine. It's not as bad as the media says.
@@LadyUpstart you sound like a duck quack quack!
You need at least $120K/year income just to afford a run-of-the-mill median priced house in the USA today, though it does vary a bit up or down from that depending on exactly where you live exactly. The median price individual income today in the USA is around $60K. See the problem? It's the same basic situation with regards to being able to afford a new vehicle today, & that list goes on & on.
Middle class 100k? You are not thinking. Just call the military poor I guess
I can’t reduce 401k investment to spend on daycare because the money difference is now taxable income which calculators don’t account for - the triple hit of child care costs, lost long term investment, and higher tax burdens.
You can put that money into a tax free dependent care FSA to pay for child care tax free.
Good thing we only had 4 kids. The MIT site only shows up to 3…