Surprisingly we had a lively discussion on whether or not $250,000 was enough to live on. I won't generalize and say we came to some conclusions because we didn't (much to my amusement -- the issue seems pretty clear to me), but obviously many people do live on well below $250,000 in annual income. I don't think there's any disputing that fact.
But what income is required to "get by" or to "live" in America for an average family (if there is such a thing)? Well NPR recently interviewed Shawn McMahon, the research director for Wider Opportunities for Women, a group that works with low-income women and families. He discussed their just released Basic Economic Security Tables index, which measures the minimum income workers need to achieve basic economic security.
So that we're clear, they are not measuring the bare minimum needed to survive. Here's what they cover in Mr. McMahon's own words:
"We're not talking about surviving," McMahon tells Morning Edition host Renee Montagne. "We are talking about economic security that allows people to live day to day without fear of a lot of the economic insecurity that we've been seeing in recent years."
So, what do you think the number is? Here's the take from their study:
According to the report, to achieve economic security the average minimum income needed for a family with two workers and two young children is $67,920 — that's with both parents working, and earning just over $16 an hour.
More specifically, here's their monthly budget for "basic economic security" for two working parents, a pre-schooler, and a school-aged child:
- Housing: $821
- Utilities: $178
- Food: $707
- Transportation: $1,019
- Child Care: $1,080
- Personal and Household Items: $460
- Health Care: $443
- Emergency Savings: $170
- Retirement Savings: $56
- Taxes: $1,060
- Tax Credits: -$334
- Monthly Total (per worker): $2,830
- Annual Total: $67,920
IMO, it's pretty interesting to compare this budget to the $250k budget.
And if you don't have a family, here are the results:
A single worker with no children needs to make about $30,000 a year, which means working full-time and earning twice the minimum wage.
And for perspective:
- Median Family Income: $61,265
- The Federal Poverty Line for a Family of Four: $21,756
- The Federal Poverty Line for an Individual: $10,956
Just to state it again, this isn't the minimum required to survive. It includes money for emergency savings and retirement for example. That said, it doesn't include some expenses that many Americans consider "necessities" such as vacations, eating out, flat-screen TVs, cable TV, movie tickets or other entertainment.
I also found this interesting:
The biggest expense is generally housing and utilities. However, once a family has two or more children, then child care is often a bigger expense.
As you might imagine, the comments on their post are all over the board -- from some saying their numbers are way too low to others saying they are way too high -- very similar to our $250k discussion. The one thing that seems to be the differentiating factor: where people live. As you may guess, the New York, Boston, and similar residents think there's "no way" to live on that kind of money (too low) while others (no location given, but I'm guessing it's not a high cost-of-living locale) say it's way high.
Here's one comment I thought was worth sharing:
Money management is what is really important. Knowing where to shop, having a budget, and knowing when to say "no" are the important concepts that must be mastered to survive on a low income. It can be done, and it is done every day. Someone that is buying candy bars and pop is not in poverty.
I think "poverty" is not what this article is about, it's about living comfortably. "Poverty" in this country is nothing like what many other countries consider poverty; where families survive with no running water, no electricity, and farm the food they eat.
There are several points here worth noting IMO:
- No matter what you make, you need to budget/plan to live within that amount. If you don't plan and/or don't have any discipline when telling yourself "no", you're going to be in trouble no matter what you make.
- One more reminder that the numbers above are not meant to be "just barely making it" figures. They are for a family that's doing at least "ok."
- It's all about perspective, isn't it? In America we're discussing whether or not $68k is enough to get by on. Much of the rest of the world would feel extremely wealthy earning a fraction of that amount.
There's no real conclusion here, just more to think about in our on-going discussion of what income constitutes "enough" in America, but I'm sure many of you have some thoughts. Please share them with the rest of us in the comments section below.