Why Households Need To Earn $300,000 A Year To Live A Middle Class Lifestyle Today

In order to comfortably raise a family in an expensive coastal city like San Francisco or New York, you've probably got to make around $300,000 a year. Thanks to elevated inflation post pandemic, the middle-class lifestyle is getting harder to obtain due to rising costs of gasoline, food, housing, travel, tuition, and healthcare.

You can certainly raise a family earning less. Statistically, most do. However, it won't be easy if your goal is to save for retirement, save for your child's education, own your own home instead of rent, and actually retire by a reasonable age.

Although $300,000 is a lot compared to the median household income in the United States of ~$76,000 in 2023, it's not an outrageous sum of money. Once you pay taxes and look at the realistic income statement I've put together for this article you'll see the income is reasonable.

After all, the cost of living is quite different across the United States. Almost half of the United States population lives in expensive coastal cities.

A Middle Class Lifestyle Is All We Really Want

All expenses in my example use current prices. I've also cross-checked the expenses with my family's monthly expenses now that we have a son to make sure they are within reason. I've also cross-checked the expenses with over a dozen other households who make around $300,000 a year.

I use $300,000 in this post because I also believe it is close to the ideal income for up to a family of four to experience maximum happiness.

At $300,000, you aren't paying an egregious amount in taxes. You probably aren't killing yourself at work if both parents are working. At the same time, you're still earning enough to live a comfortable lifestyle anywhere in the world. A middle-class lifestyle is all we really want.

About half the US population lives on the coasts. Therefore, this post is directly targeted at folks who need to live on the coasts because of their jobs, schools, or families. If you don't live on the coasts, you might live in a city like Denver or Austin, where the cost of living is rising rapidly as well.

Finally, this post should also provide insights to non-coastal city residents on how good you've got it if you enjoy living where you are. $100,000 – $150,000 is a rough non-coastal city household income equivalent to $300,000.

Who Makes $300,000 A Year?

Before we look at the income statement, let's go through a list of various $300,000 income households. To no surprise, many of these $300,000+ household income earners live in more expensive areas around the country.

  • A Bay Area Rapid Transit janitor who makes $234,000 + $36,000 in benefits who gets together with a Bay Area Rapid Transit elevator technician who makes $235,814 + $48,429 in benefits.
  • Starting total compensation packages for 22 year old employees at Facebook, Google, Airnbnb and Apple range from $150,000 – $180,000. By the time they are 30 years old, they are making $300,000+ a year.
  • 30-year-old first-year Associate in banking earns $150,000 in base salary + ($0 – $120,000) in bonus. In a couple years, she is making over $300,000 a year.
  • A 26-year-old first year law associate at a big law firm like Cravath makes $190,000 base + $30,000 sign on bonus. By the end of his 6th year his is making over $330,000.
  • A 29-year-old Director of Marketing at a startup makes between $150,000 – $180,000. She's married to a pro blogger who makes $350,000.
  • A 42-year-old college professor at Berkeley makes $235,000 and $279,000 at Columbia and NYU.
  • The average specialist doctor finishing his or her fellowship at 32 makes $300,000. The average salary for a primary care physician is $200,000.
  • A 26-year-old middle school teacher making $60,000 a year plus her $250,000 a year VP of Marketing wife.
  • My 60 year old high school athletic director colleague makes about $180,000 a year plus his wife who makes about $200,000 working for the city.
  • Thousands of employees at tech companies like Google, Apple, Facebook, Google, Slack, Zoom and more.
CEO and employee pay at top companies

The permutations of people making $300,000 goes on and on. If they aren't there now, they will get to such a level of income eventually.

Related post: The Top 1% Income Levels By Age

Living A Middle Class Lifestyle On $300,000 A Year (One Child)

Please study the middle class lifestyle budget chart of a $300,000 earning household below closely. Every expense has been carefully vetted by hundreds of people who live in expensive metropolitan areas like NYC, LA, and SF and who diligently track their cash flow to give you the most realistic budget possible.

I've tracked every line item with my own budget when I had only one kid. All figures are pretty spot on.

Today, with two children, I'm thinking $350,000 a year might be more apt. In fact, based on the 2024 income tax rates, a couple can now earn up to $383,900 in taxable income and stay at the the 24% federal marginal income tax rate.

Why Households Need To Make $300,000 A Year To Live A Middle Class Lifestyle Today

Gross Income Review

With a $300,000 household income, this dual income household of three puts away $38,000 a year in their 401(k)s. The maximum 401(k) contribution is now $22,500 in 2023. Not bad.

With the passage of the Tax Cuts And Jobs Act, they've lost their ability to deduct more than $10,000 worth of state income, sales, and property taxes. As a result, I've used the $24,000 standard deduction for married couples to keep things simple. The standard deduction for married couples increases to $25,900 for 2022 or $12,950 per individual.

For 2023, the FICA tax rate for employers is 7.65% — 6.2% for OASDI and 1.45% for Medicare tax. For example, an employee will pay a 6.2% Social Security tax on the first $160,200 of wages plus 1.45% of all income earned. Since both parents work, both parents pay the tax. At least both parents eventually gain when they collect Social Security, if it's still around.

High Effective Tax Rate With A $300,000 Income

They have a marginal federal income tax rate of 24% and a marginal California income tax rate of 9%. Most of their income also faces a 7.65% FICA tax since both work.

Their combined effective tax rate is roughly 32%, for a tax bill of ~$76,160. In other words, their total tax bill is ~$12,000 more a year than today's median household income. Therefore, hopefully folks who earn less can give them some slack. The effective tax rate could be 1-4% lower with some adjustments.

The family also gets a $2,000 child tax credit to help support their middle class lifestyle.

In the past, the credit began to disappear for married couples who earned more than $110,000 and for single filers with AGI above $75,000. Now, singles and married couples can earn up to $200,000 and $400,000 respectively, before their child tax credit begins to disappear.

Child tax credit income thresholds
Child tax credit income thresholds

Bottom line: their $300,000 gross income gets reduced by roughly 38% after taxes and retirement contributions to $187,840.

Expenses Review

Childcare ($24,000):

A middle class lifestyle often includes kids. There's no getting around this expense if both parents are working. Babysitting and childcare for $20/hour is the standard rate I've found in San Francisco. Some prices go up to $35/hour.

If the parents decide to send their child to private school, this $24,000 annual expense will increase to $35,000 a year for K-8. Come high school, the cost will increase to $45,000 – $55,000 a year. I coached varsity tennis at a boy's private high school for three years. Its annual tuition is now $49,000 a year. It's a shame that so many expensive coastal cities have troubled public school systems.

One interesting thing I've realized is that not all private school families are rich. After meeting 100+ families at my sons school over three years, I realized many are spending a lot more of their income on private school than I recommend in my bestseller, Buy This, Not That. I don't recomend spending more than 20% of one's gross income per child on private school tuition. If you do, then it could put your family's financial health at risk.

In San Francisco, there's a lottery system for the sake of social engineering. In other words, even if you buy a $1.5M median home and pay $20,000 a year in property tax, you are not guaranteed to have your kid get into the public school down the street.

Of course, if you have a second kid, childcare expenses will increase, but probably not double due to synergies. That is unless you want find some 4th trimester childcare relief. Then we're talking $40,000 and up for three months.

Food ($25,200):

When you are a dual job household with a baby, there's little time to cook. Further, given the family is living in a city like New York or San Francisco, food is world class, and on demand food delivery is ubiquitous.

It makes little sense to spend hours cooking when you're already tired. You want to reserve your remaining energy for taking care of your baby. However, food is where this family can cut expenses if they start feeling a little tight.

Mortgage ($46,800): 

A middle class lifestyle should include owning you own median-priced home. Although the payment is $3,900 a month for a $900,000 mortgage at 3.25%, $2,000 of it goes towards paying down principal and building net worth. Therefore, you can add $24,000 a year in forced savings to their $37,000 a year in 401(k) savings.

Their $1.5M assessed house is a standard 1,750 sqft, three bedroom, two bathroom home on a 2,500 sqft lot. For new homebuyers, only interest on up to a $750,000 is taxable.

Here's an example of a typical $1.855M home in Golden Gate Heights, one of San Francisco's best kept secret neighborhoods. As you can see from the picture, the house only has 1,288 square feet of living space. It is a simple two bedroom and one bathroom home. At least it has ocean views from the living room.

This buyer needs to spend another $50,000 – $80,000 remodeling the house because everything is about 25 years old.

The $10,000 SALT cap deduction for individuals and married couples really hurts homeowners in expensive real estate markets. Property tax on a $1.5M assessed house alone is roughly $19,200. Then the couple is paying ~$18,000 in state income taxes.

Now if we look at home prices in 2022+, prices are still elevated in big cities. I've been keeping track of a number of home sales during the pandemic, and I'm impressed.

Bought Their Home Earlier

Further, this couple is lucky because they bought their home several years ago for $1.2M. Now imagine renting a house for $6,000 a month and trying to save up $300,000 for a downpayment on a median priced home. Difficult to do with less than a $300,000 household income. Probably impossible without living in a one bedroom for “only” $3,200 a month or getting help from their parents.

In 2023, this Golden Gate Heights home is likely worth over $2,200,000. Further, mortgage rates are still low. Homeowners can now refinance to a lower rates and save money as a result.

I recommend checking out mortgage rates online. Qualified lenders compete for your business so you can get the lowest rate possible.

I was able to refinance my loan for free to a 7/1 jumbo ARM at 2.625%. But I've seen rates that are even lower. Everybody needs to take advantage of record-low mortgage rates to refinance and maybe buy if you are ready to settle down.

Vacation ($7,800):

A middle class lifestyle includes vacationing several weeks a year. Some will say that spending three weeks of vacation is a luxury. However, I say spending three weeks of vacation is normal for two working parents who want to keep their sanity.

By law, every country in the EU has at least four weeks of paid vacation days. Meanwhile, Brazil gets 41 paid vacations days a year. Yes, their respective economies might be a mess compared to ours, but at least they are enjoying life!

Car Payment ($7,400):

When you have a baby, all you want to do is protect him or her from harm. Even if you are the best driver in the world, one reckless drunk driver might t-bone you one evening.

No longer do you feel comfortable driving a compact city car while transporting your family. Instead, you want a larger vehicle that has the highest safety rating.

How much income you need to afford the median home by city in the US
$349,000 in SF and $418,000 in NYC

Baby/Toddler Things ($6,000):

You can spend as little or as much as you want on your baby. But this family buys disposable diapers, not washable diapers. They buy tons of baby proofing material. They paid up for the best car seat and have two strollers. It's funny, but one of the best toys for our son is a tissue box.

Entertainment ($7,200):

A middle class lifestyle includes general entertainment and nothing lavish. During the good old days pre-pandemic, date night could easily cost $200+ an outing for two once you include tickets to a ball game or a show and transportation.

Entertainment also includes the cost of sporting equipment, memberships, Netflix, cable, internet, and more. If your friends invite you to a weekend getaway, a bachelor or bachelorette party, or a function or two, your entertainment budget will be blown to smithereens.

CPI increase - makes living a middle class lifestyle more difficult.
CPI for all urban consumers has increased by 68% since I graduated from HS in 1995

What's Missing From The Budget? This couple is lucky in that they have no student loans. They paid their loans off by the time they were 35. They are 39 years old today.

Another important concept to think about is treating investments as expenses. Investment expenses include retirement savings and 529 plans. After all, spending money to take care of your retirement or your children’s education is an expense. Just like spending money on insurance to protect your family is an expense.

Ending Cash Flow Analysis

To live this middle class lifestyle, the end result is annual cash flow of only ~$2,920. $2,920 is not a great buffer because something always pops up.

But overall, this middle class family is building roughly $54,000 in net worth each year through principal pay down and 401(k) savings. Plus, they growth wealth with any appreciation in their investments and primary residence.

After 22 years of work with no change in income or expenses, this household will likely amass a net worth of over $2,000,000. They will have the ability for at least one spouse to retire since their son will have graduated college.

However, based on my recommended net worth goal for financial freedom equal to 20X annual gross income, this couple needs to accumulate closer to $3,500,000 to really feel comfortable for both to retire.

A Middle Class Lifestyle On $300,000 A Year With Two Children

To be comprehensive, here is another budget I put together for a $300,000 household with two children. I've updated the 401(k) contribution amounts to $45,000 given the higher 401(k) contribution limits for 2023. Further, you'll see more childcare expenses and fewer leisure expenses.

$300,000 household income with two children living a middle-class lifestyle

One both kids turn five or six, they can both go to public grade school. If they do, that will be a $3,200 a month after-tax savings right there. Kids truly are expensive. But if you can get through the first six years and not be tempted by private grade school, they become more affordable.

With inflation so strong, families may now need to earn $350,000 a year in a big city to live a middle-class lifestyle!

Earn Just A Little More

After analyzing all the numbers above, the ideal household income to raise a family is around a MAGI of $364,200 (after deductions). Any income over $364,200 is taxed at a 32% marginal income tax rate, or an 8% increase. This marginal federal income tax jump is large compared to the 2% jump from 22% to 24%.

Below is a chart that shows the marginal income tax rates and the long-term capital gains tax rates for 2023 for married couples, filing jointly. Know the tax brackets every year to earn the most tax-efficient income possible!

2023 LT ST Capital Gains Tax Rates Married Couples Filing Jointly

Based on 2023 tax brackets, for individuals, a Modified Adjusted Gross Income of $182,100 is likely ideal, from a tax optimization and lifestyle situation.

For married couples, the best income to earn is around $364,200. This way, both incomes faces at most a 24% marginal federal income tax rate. Every year, hopefully, the income thresholds for various tax rates will go up to at least account for inflation.

Based on my experience, happiness did not increase for me when I began making over $200,000 as an individual. Happiness did not increase for us when we began making over $300,000 either.

Therefore, due to the increase taxes and increase stress, it seems pointless to put yourself through the ringer simply to try and make more from a day job.

2023 LT ST Capital Gains Tax Rates Singles

Save Aggressively Then Move

In order for this household to achieve financial independence, they've got to either up their 17% gross savings rate, figure out a way to reduce expenses, or boost income. Their middle class lifestyle might have to take a hit for a while.

Since boosting income probably hurts their quality of life due to more work and stress, the best way is to reduce expenses and diligently keep track of their finances online for free with Empower (previously Personal Capital) in order to continuously optimize their net worth.

If you still don't believe $300,000 for a family with two kids is required to live a middle class lifestyle, take a look at this chart below.

For San Mateo County, which is equally as expensive as San Francisco County, a family of 4 with a $146,350 is consider low income. With rising home prices, it simply takes a lot more income for families to live comfortable lifestyles in big cities.

There are some families scraping by on $500,000 a year in expensive cities. Good financial planning is a must!

San Mateo Income Limits For Poverty

Relocating To A Lower Cost Area Of The Country Works

If you feel the cost of living is too high, then consider moving to a lower cost area. In this new decade, it has become much more acceptable to work from home thanks to the pandemic.

There's a moving truck shortage in places like San Francisco because so many people are moving out of this expensive city and other expensive coastal cities. The trend is towards relocating to the heartland, where valuations are cheaper and net rental yields are much higher.

Invest In Real Estate strategically

Take advantage of long-term trends and invest in heartland real estate. Technology and work from home have made relocating to lower-cost areas of the country permanently feasible for millions of people

The best way to invest in heartland real estate is through Fundrise and CrowdStreet. Fundrise offers diversified eREITs, which is likely most appropriate for most investors looking for real estate exposure.

CrowdStreet offers individual commercial real estate deals, mostly in 18-hour cities, where you can build your own select portfolio. 18-hour cities are very enticing due to lower valuations and higher cap rates. You can sign up for free and review their pre-vetted properties, which historically were once only reserved for institutional investors or high net worth individuals. However, before investing in each deal, make sure to do extensive due diligence on each sponsor. Understanding each sponsor's track record and experience is vital.

Both platforms are free to sign up and explore.


Personally, I've invested $810,000 in real estate crowdfunding to diversify my holdings and earn income 100% passively. Investing in private real estate is one of my favorite passive income investments today.

Thanks to technology, there's no need to grind so hard in expensive cities. You can earn a similar amount of income working remotely while spending a fraction of big city living costs.

Life is so much easier when housing is affordable. The country is large. Go explore it!

Buy The Best Personal Finance Book

If you want to read the best book on achieving financial freedom sooner, check out my new Wall Street Journal bestseller, Buy This, Not That: How to Spend Your Way To Wealth And Freedom. BTNT is jam-packed with all my insights after spending 30 years working in, studying, and writing about personal finance. 

Building wealth is only a part of the equation. Consistently making optimal decisions on some of life's biggest dilemmas is the other. My book helps you minimize regret and live a more purposeful life. 

BTNT will be the best personal finance book you will ever read. You can buy a copy on Amazon today. The richest people in the world are always reading and always learning new things.

Buy This Not That Book Reviews

With the bull market in everything post-pandemic, costs are likely going to continue to rise. Therefore, earning a household income of $300,000 to live a middle-class lifestyle is not far-fetched at all.

Politicians need the middle class to stay in power. And President Biden has said he won't raise taxes for anyone making under $400,000. Therefore, President Biden would certainly agree that $300,000 for a family of four is a middle-class income.

For more nuances personal finance content, join 65,000+ others and sign up for my free weekly newsletter. I've been helping folks achieve financial freedom sooner since 2009.

About The Author

387 thoughts on “Why Households Need To Earn $300,000 A Year To Live A Middle Class Lifestyle Today”

  1. The problem in America is not that people don’t make enough money any more to get ahead, it’s that people’s expectations have grown out of control. Why are you eating out so much, buying $5k a year of clothes, and going on three vacations a year when you have car payment and student loans? You’re right, this is a very middle of the road attitude to finances, but in no way is this lifestyle middle class. Definitely upper middle class, and entitled too.

    My husband and I are a single income family, which we much prefer to when we were both working. Husband makes a little over $80k a year. We own our cars, no student loans, and we are planning to pay off our house in about 5 years. We should be millionaires by the time we are 30. Wake up people.

  2. Alessio Shostak

    Hi Sam, My single mother is a Western European diplomat/FSO, and even though I led a very privileged life in Australia, Switzerland and Italy (something like this), it’s only now while entering the workforce for the first time (in London big 4 audit, though hopefully ER soon) that I’ve realised just how much work its going to take to get my lifestyle back! This is the first resource I’ve ever found that would articulate what I would expect to be ‘normal’ so articulately! It’s been so hard to pin it down given the uniqueness of my upbringing, but thank you for making this post and bringing it to light.

  3. Great chart. My takes comes down to can you do your HCOL job from a LCOL area? I don’t know if you reside in HCOL California Sam, or if you are writing you blog from a LCOL area. Point is my team leader in his early 40s makes your $300,000, claims to be a millionaire before 30 and yet is bothered to death non cessant complaining about paying his ex-wife $3000 a month alimony and a child support. He pays 3000 monthly, so $36000 yearly in alimony and child support. How a millionaire puts so much energy being bothered by paying $3000 a month I cannot understand.

    Here’s how he solved it. He sold his Porsche, moved out of Cali, WFH instead of the office and everything was solved. He lives in an enormous place in a LCOL area and drives a beater car compared to a $135,000 Porsche.

  4. This is a great resource for those looking to build a clean consolidated budget, regardless of the income level. I grew up in a working middle class family with both parents working with 3 kids in a DC suburb. We never had a lot of money and that stuck with me, but it also took me some time to transition my thought process to be fiscally responsible with my own money. I still remember buying my first new car with with my parents (I was 16) and just seeing how far we could extend the payments to make the car affordable, and it was just a Nissan Sentra. The me of today still wants to kick the *** of the me of back then for making that stupid decision. But that was the first bit of financial education I received back then. Focus of the payments… ugh.

    Fast forward and now I’m 44 and married with no (0) children. That was a choice we made. We are a single income family, where I am now at that $300k annually mark including bonus and annual vesting of RSUs. This isn’t uncommon in my field. I have a PhD in engineering and been working for about 14 years post-graduate school. All of my education was based on student loans as my parents fell into the goldilocks income bracket of making too much for grants or other quality financial help and too little to actually pay anything, so I went it alone. I did work close to 40 hrs a week all year during school to reduce those loans, while also commuting to school as I couldn’t afford to live on or near campus.

    As for locations, we started out in the Boston area for 10 years and now live in New Jersey, relatively close to NYC. Positions in my field don’t seem to be anywhere besides these HCOL cities, so have to suck it up for the time being. I will say that with children our budget and savings rate would be vastly different. As of today we have a net worth just under $1M with a home that has appreciated nicely these past few years. We keep ~14 months of cash in emergency funds (again one income) and save close to 25% of my gross (not net) between maxing my 401k, both IRAs and continuing to contribute after-tax money to the 401k plus another $25k or so in a brokerage account. My biggest regret of all of this was not learning these lessons on finance and compound interest 10 to 15 years sooner.

    In all, most would consider us upper middle class, and honestly I don’t know what I would say we are (so subjective). We enjoy going to Europe, but most often I try to couple those trips with business trips so the airfare for me is covered and sometimes the hotel. We hope to retire early but since we started saving so late we don’t know how early that will truly be. We do know that for retirement we are looking to relocate to lower cost areas to make our savings go farther.

  5. Hi Sam,

    I just want to say how much I enjoy your articles (first time commenting). As a CPA living in LA, I can attest firsthand that your numbers aren’t outrageous. I am a Controller at a non-profit organization (funded by LA County) and my wife is an elementary school teacher. We have two young daughters and together bring in about 170k per year (We are in our early 30s).

    It’s amazing how much income it takes to just live a middle-class life here. My wife has been able to stay home (she was doing substitute teaching on and off) as my daughters grew old enough to start school. So we were living off maybe 120k for a while. There is always give and take. If you have more time with your kids you might sacrifice income. If you work at a higher-paying job you might sacrifice time with the kids.

    I think ideally the goal should be to make the most amount of money, with the least amount of stress possible. I wish I had a way to target those positions, but I think I’ve done well so far. Currently, I never work over 40 hours a week, work close to home, and have about 25 days of vacation a year (including a one-week Christmas week closure). But, with the rising inflation, I am now getting the itch to seek a higher-paying job, but I fear losing out on my great work-life balance. It’s been great getting perspective from your posts and others, they motivate me to do better.

    Some additional details. I grew up in a low-income family, so 100k was making it in our mind. But as you grow up and understand how expensive coastal cities are and everything you’re responsible for (saving for retirement, kid’s college, home repair, etc). You realize really quickly how much income you need to just be middle class in LA.

    The way we’ve survived on 100k-150k living in LA is we were fortunate to buy a 1350 ft 3 bedroom 2 bath house (7,800 sq ft lot) in 2018 (our mortgage is $2,450 a month (including property tax and insurance), the interest rate is 2.5% 30-year fixed), we were fortunate to buy in an ok neighborhood with a decent public elementary school (after all, I went to public school why can’t they). Why drive 2 paid for 10-year-old cars, and currently save about 6% for our retirement in addition to a 3 percent match. Again, we probably aren’t on par for a stress-free retirement according to your metrics, but is the best we can do at this time.

    One thing my wife and I do wonder though is, for those of you with children and working high-paying stressful jobs, how do you manage? We find it hard enough, with relatively decent schedules. Would love to hear people’s thoughts on this.

    Also, how do we raise our children? Do we encourage them to focus on earnings or work-life balance? Tough choice since work-life balance doesn’t always pay the bills.

    1. Hi Mark!

      I really appreciate you sharing your background. “I think ideally the goal should be to make the most amount of money, with the least amount of stress possible.” Absolutely. This is the dream goal for all of us. But of course, it’s easier said than done.

      The irony of me having to work 60-80 hours a week for the first few years out of college was that it was miserable. It forced me to save and invest as much as possible to get out! It also made me try to make as much money as possible. If I had worked 40 hours a week or less, I wouldn’t have had that same sense of urgency.

      $170K is a nice household income, especially if you like your job and are not stressed. But I will say that working harder in your 20s and 30 to maximize income and wealth is worth it b/c your energy and interest for your job will likely fade in you 40s.

      I’m trying to figure out how to raise our children as well. Ideally, they always work hard doing what they enjoy that gives them purpose.



      1. Appreciate the response. I’ll be buying your book just for the reply (haha) and of course for the awesome content.

        Its funny you say that. I do kind of feel a sense of FOMO of not having worked at the big 4 accounting firms which is suppose to be your badge of honor and set you up for higher income jobs. At least you have that 60-80 hour work week experience to pass down to your kids.

        I do respect the work ethic that these type of jobs demand and I do agree with you when you say we should take advantage of our 20s and 30s to increase our income and wealth. Of course all that depends on when you get married and have kids. Ah, so many moving pieces in life.

        But yes, definitely teaching our children to work hard and pursue work they love (that can generate good income of course) is a must.

        How does your work week running FS compare to those 60-80 hour work weeks?


        1. Thanks Mark. I’m sure you will love the book. But of course I’m biased. I literally read 10 other nonfiction finance books as research on what makes a great book. BTNT is gonna be it!

          I try to limit my work to 20 to 25 hours a week on Financial samurai. And I try to spend about four hours a day with the kids. So that’s a full week right there.

          Example, today I took my daughter to the zoo for two hours and then I took my son to the beach for two hours after picking him up from school. Then we spend some time together for bedtime.

          It’s a simple, but nice life. All I really want is for us to be healthy and my children to be happy.

  6. The trouble is 98.9% of US households make less than $300k…80% make less than $100k!
    So with only 1.1% of American households making over $300k…
    How do the ~98% survive?!

  7. Malt Westwood

    300k is upper middle, but agree it’s not what I’d call “wealthy” in a HCOL city. We had to game the system to get ahead. Moved from NY 15 years ago (earning ~60k as a couple and racking up a ton of debt) to the Philly suburbs and eventually worked our way up to ~250k. We bought a 4br home in the low 300’s, but that took 10 years to scrape together a down payment of 5% in our mid 30’s. We eventually paid off both cars, and are now just about to finish paying off a 20+ year old student loan. So we know how to live on a budget because most of the journey to where we are now involved paying down debt — 30k credit card debt, 45k in student loans, and 40k in car loans. Did the $1200/mo daycare, $5k+ summer camps, etc. We are still not quite maxing the 401k’s but did take advantage of ESPP and contributing to 529.

    I say we gamed the system because we DIDN’T buy the 600k house the mortgage broker said we should buy and we left the HCOL city, but we are still close enough to Philly and NY to get there when we want. We picked a town (and a state) with a low property tax rate (~4k/yr). And we’d probably be labelled as living in the lower-end part of our town, which has plenty of multi-million dollar estates.

    The scary part of all of this is that it wasn’t until we started to get over $150k that we were REALLY able to start to feel comfortable with our ability to pay for emergencies (like a new washing machine, or a random car repair) without panicking. America has become a place where you need to have higher than a six-figure income to feel like you can even survive. The system is designed to keep 90% of the population from ever getting ahead. Many who are brought up lower middle class may never get out of that tier and the same is true of someone who came right out of school and got a $100k job in Finance — it’s hard to relate without having been in the other person’s shoes. I’m grateful to have had the journey I’ve had — where I can remember needing to fish for change to pay for a meal and my wardrobe consisted of a few 3-packs of Hanes White T-shirts. Makes me appreciate what I have now so much more.

  8. Well, If You are not in the major cities like San Francisco, LA or New York/ New Jersey for that matter. hundred thousand would be a fair number if your love by your means. I am a stay at home mom and we are comfortably living in Upstate New York with my two little ones aged 5 and 9 year old.

    1. Yes indeed. One’s budget depends on where one lives. Trade offs for sure. However, The income required to live a middle class lifestyle is going up giving inflation is running about 7% for the past couple of years.

  9. The numbers for housing and utilities look correct for a middle class lifestyle in San Francisco (3 bd house). Cell Phone service could be cheaper, but your numbers are within reason.

    I don’t think maxing out 401k (38k total) for both people counts as “middle class” though… Reduce that to $8k to $12k each and I think you’re closer to what normal middle class can save as compared to their expenses.

    These people are living extravagant lives though because they’re paychecks allow them to waste money and apparently feel good about themselves.

    $400 per month on clothes? This can easily be reduced to $200 / month and still be living a life of excessive consumption. Get a few pairs of good jeans, a few dress pants, a couple nice suits, a few to several nice evening dresses , shoes, 2 or 3 purses/handbags. Take care of them and your wardrobe is mostly (or completely) provisioned with one year of $4800. Then no more than $100 to $200 per month to maintain / make small additions…. justifying spending any more than that on clothes is NOT middle class. Middle class is making some sacrifices, but having reasonable good quality goods.

    $1200+ per month for food is also not middle class. This is again the “screw it, we can afford it attitude”…and they clearly can’t afford it. This could easily be reduced to $800 per month even with restaurants / “date night”…..Date night doesn’t imply every meal is $200….Even still, $800 / mo with lots of eating out is not corr “middle class” behavior. Hardcore cooking at home can be done with decent quality food (some organic choices in the mix) for $400 to $500 per month (I did exactly this for YEARS in SF)…This leaves $300 to $400 for restaurants.

    Childcare too expensive? Make actual friends with at least one other family with kids..take turns babysitting…Save money, create a sense of community.

    Car:. $600 per month for a car payment? Just because advertising tells us to consume, consume, CONSUME, doesn’t mean we should. Same car, drive it for 8 to 10 years and you can halve your effective car payment. Buy a lightly used car of the same model and you can quarter your equivalent car payment and reduce your insurance. I’ve had my car for 7 years, paid it off 3 years ago, and hopefully will drive it for at least 3 more.

    I was making $73k per year when I bought a 2 bed, 1.5 bath 1100 sq ft home on 4000 sq ft lot in SF for just over $500k at the end of 2009 (good timing, I know). My daughter started going to preschool when she was 2 1/2, part time, ramping up until she was 3…Full time was about $1000 per month…but this was for about 2 1/2 years until she entered Kindergarten. After school care was only $300 or so per month after that… sometimes less. We made friends with our neighbors and traded playdates instead of paying babysitters.

    At this point I was making almost twice as much and my mortgage went up 25% because I refinanced to a 15 year mortgage… I’ve since nearly doubled my earnings again…..I haven’t doubled my spending…I don’t “keep up with the Joneses”… I’m saving closer to $50k to $60k per year (including maxing one 401k)….I have middle class roots. Well, lower class really, was born to teenage parents, but they managed to work hard and be financially responsible get to middle class. However, I don’t delude myself into thinking that I’m still only middle class.

    You’re right in that they’re middle class in terms of spending like the upper class when they can’t afford it..that is TRULY one of the hallmarks of the American middle class. If they cannot manage their spending and finances better at 300k per year, they cannot become “upper class” even if they doubled their income because they would clearly just double their spending as well .

    Also, I’m aiming to save for 2 to 3 years of my daughter’s college.. hopefully my ex-wife will save another year’s worth…. But I don’t consider “painless college experience” to be middle class….Some help from parents, some working during the summer or the school year to pay the difference….THAT is middle class.

    I guess I can thank the people who spend like this for driving up wage inflation that I can benefit from via increased savings.

    Also, just for the record, I’m not living like a tightwad either. When I was married ,we did 7 to 14 days of “nice vacation” per year (Hawaii, New York, Miami, often Europe because my ex has family there)..another week or so was more modest (week in Tahoe hanging out at the pool / hiking for example). We did go out for dinner, we did go to the symphony, opera, etc. But in moderation.

    Look, I’ve read these types of articles about the SF Bay Area in the past .. There is little to be done about exorbitant housing costs. Everything else is much more under your control. The people who “can’t make it” even with high paying jobs aren’t failing because of housing costs … they’re failing because of their spending.

    1. Also, the 401k maximum is now $20,500 for 2022. So a working couple can now contribute $41,000. Not bad!

      I think it’s safe to say we can all judge other people’s spending habits and make improvements. It’s why we should never tell anybody how much we really make or spend. Stealth Wealth!

      1. I live in the bay area. It has always been an expensive area to live, mainly due to the cost of housing. Housing costs have always been ridiculous but people pay it. Maybe, they shouldn’t. The longer they own their homes, as salaries rise, the less of a burden it is to pay. I agree with Bill, what you are describing is an upper middle class lifestyle. Only the very wealthy would use a private jet. 300k wouldn’t be in that category.
        I question how can a Bart janitor make a salary like that? The train conductors don’t make that much.There is something seriously wrong and needs to be reviewed.
        Programmers making 300k are senior level & would be a little older, even if it’s Apple. A lot of the tech industry workers make money from the stock options they receive.
        A couple with a mortage, property taxes, charities, etc would be not be taking the standard deduction, besides they would adjust their W-4 to bring home more pay if possible. Those working for a company would most likely get their life insurance thru their company, paying a lot less. I checked with some friends about the company health insurance. They said it was high for a family of 3. These friends make around that salary. They own a Tesla & newer Lexus, their daughter goes to a private school. They aren’t living paycheck to paycheck. Not only do they have savings but investments.
        As for your suggestion of moving to the midwest, etc. They wouldn’t be making the salary they are now. The companies that are allowing full time telecommuting are adjusting salaries to the location they are moving to. The company I worked for was doing this over 20 yrs ago. It is only fair. That is why it is more expensive to live in a coastal urban area, demand. Otherwise, a lot of people would live in the midwest, living the lifestyle of the rich & famous making coastal urban salaries.

  10. There are many things about this post that just seem so out of touch with reality.

    First off, the professions listed:the janitor and the elevator technician…if there isn’t a better example of the rampant abuses and insanity of some of these state and local governments I don’t know what is. A guy making $235k to mop floors, or if he is a supervisor, to sign the time cards of people who mop floors? This just truly makes me sick…in the America of yesteryear, this was a working class job.

    The other examples of surgeons, big law attorneys, Apple programmers, senior tenured academics…in what world are these middle class professions? The salaries these folks are pulling in are in the stratosphere for 95% of Americans, and by nature these folks have always been considered “upper class”.

    Middle class folks are K-12 teachers, cops, firefighters, engineers, accountants, insurance salesmen etc. Are we just saying that all of these regular folks are just broke and scraping by?

    What on earth happened to this country?

      1. I own a home in one of these “expensive” coastal cities. I’m a mid-level federal government employee and reservist and my wife is a CPA. We both have graduate degrees and collectively bring in about $200-220k a year depending on her bonuses each year. I just turned 30 and she is 29, we do not have kids yet but will start trying soon.

        I’m the first to say that we spend extravagantly—currently we are living overseas and have been since the pandemic started so we travel internationally often-usually once every other month. Before we moved to Europe we would average about 3-4 international trips a year, luxury goods, etc etc.

        To think that we would maintain this lifestyle once we have kids is insane. Middle class families don’t go on vacation to Europe every year, they pack the kids in a van and go camping or go to the beach. Middle class families do not eat out multiple times a week, spend thousands on entertainment and drive luxury vehicles that would necessitate a car note of nearly $700 a month (especially when living in an expensive coastal city with accessible public transportation)—they drive a used car until the wheels fall off. The nearly $50k in vacation, entertainment, food and car expenses is exorbitant. $50k in alot of cases is your truly Middle class, college educated individual’s after tax income, especially if they are in public service such as teaching, social work, the military etc.

        The expenses listed and Middle class “salary requirement” are disingenuous and unattainable for truly Middle class individuals.

        This article should actually be titled “Why Households Need to Make $300k to Live an Upper Class Lifestyle”.

        1. Hi Josh – Is there a tax benefit of living overseas where the first $95K is tax free? That may help.

          One of the biggest things people without kids will realize is how expensive kids can really be. Most of the big costs go way up. It is very hard to understand until you actually have kids.

          If you do have kids and end up living in an expensive coastal city in America, please come back to this post again. You might have a different POV.


          1. There are not any tax benefits in my situation—actually the opposite as my wife is subject to German income tax on her gross salary and it’s exceptionally steep. The extra benefits I do get here (housing) are a wash since we are in the red on the rent we are bringing in vs. our monthly mortgage back in Boston.

            We have plenty of friends with kids in expensive east coast cities who make far less than $300k and are doing just fine (Boston and DC).

            In fact I know of only one individual that fits the bill for earning over $300k (1 income household), and that is my friend who is a big law attorney. Again, though this is not a “middle class” individual. Middle class folks don’t finish in the top 5% of their graduating class and land that kind of job.

            All of the couples you discuss in your original post highlight exceptional situations and high earners (doctors, big law attorneys, Apple programmers, tenured track professors, VPs, investment bankers, and the 2 scam artists of the century in the janitor and the elevator tech).

            If this is the new middle class, what about the remaining 95% of the American population?

  11. Brazil does not get 41 paid vacation days per year. In Brazil we get 30 days, but they are different from the us in a sense you need to take them in blocks of days, which means you take vacation days during weekends. 30 brazilian days approximately equal to 22 US days of vacation, removing the weekends in a month.

  12. Robert Carpenter

    There are several issues with their budget. Here are the biggies..

    Their 401 K contribution is huge — most people can’t afford to put down 12% into their 401k. I suspect the average is more like 6%. So if they reduce their contribution to say 8% which is still decent they now have an extra $1000 per month.

    Their childcare cost is huge — we live one of the most expensive cities in the country (Wash DC) and we found a decent daycare/preschool for $1200 / month. So lets say they move their kid out of Gucci daycare and get something more mainstream for $2000/month they now have another $500 / month extra.

    Their mortgage is huge — They must have a big house in an expensive neighborhood. A $3900 mortgage would be about a $900,000 house with 20% down payment. We live in an expensive housing market but we choose to live in less expensive neighborhood and in a moderate sized house and our mortgage is $2300 / month. Lets say they downsized a bit and moved into a less expensive neighborhood and settled for around a $750,000 house their mortgage could be reduced by about $500 / month.

    So just those reasonable changes they now have $2000 month spare money. Who has that??

    1. FYI, I’m basically the person he is talking about here in nice part of bay area and can basically confirm the expenses. (did someone hack my Mint?). My daycare was cheapest we could find at $1750 per month. Tag a few babysitting hours and were are close. For mortgage, I bought early so am LUCKY to have a house 1600 sqft with leaking roof and rotting bathrooms for almost the exact amount mentioned. Just did the renovations and remodeling, that part is much higher than what was budgeted in the article. I just did review of last 3 years, and am about 5-10% below the expenses listed here (depending on error bars of my records)so its pretty spot on (

      1. Sorry but no, the lifestyle described here IS a wealthy lifestyle. The majority of expenses are way above what a middle class family would spend. 15k a year for vacations and entertainment? $300 a month for charity?

        And maybe childcare cost that much in some areas but that’s not a fixed cost for 18yrs, by school age the expense is cut in half to cover just after school and summers, and by 10 it disappears entirely… unless you go to private (rich people) school.

        Look at 401k contributions…. 20%? Every year of your working life? For 35years? Assuming 9% returns that would give them 9-12million at retirement, even with inflation that’s rich

        And probably the biggest flaw here is the assumed tax rate is double actual effective tax. A family of 3 is not going to pay $75k in EFFECTIVE taxes. It would be closer to $35k.

        So basically I’ve just found about $90k in expenses that could be cut, that’s $7,500 a month in cash they could cut from their budget. Ya, if you can cut that much you’re rich!

        1. Matthew Canterbury

          No idea why he calculated with marginal. That’s completely pointless and misleading. The effective is what they pay, not marginal. We have a progressive fed inc tax. 350k may be in 24% tax bracket, but their effective will probably be somewhere around 17%. 240k AGI. Somewhere around 39k. All his other tax percentages were accurate though.

          1. Of the tax description in the chart that says Effective Tax Rate isn’t clear I will make the font bigger and bolder. I’ll also write it bigger in my post. Thanks for the feedback.

        2. Interesting point.
          Bur imagine an immigrant who started earning 300k at the age of 365 once moved to US.
          There is no millions on 401k

    2. Actually, I live in the Bay Area and this is almost exactly our budget. Even down to the “lucky to have bought an old fixer for 1.2M 4 years ago.” The renovations costs are under like the other commentator mentions. I actually found this article searching for budgets because I’m so frustrated that we make what feels like a lot of money but we don’t have much saved. Also, preschools are $2200-2500, and we have two kids. It’s crazy!

    3. I live in the Bay Area. We bought a 1700 sq ft fixer upper for 1 million. Our mortgage is $5500. We could not put 20 percent down but we had looked for a house for over 2 years. We started out with a 750k budget. After multiple rejected offers, we raised our budget to 850k…followed by more rejected offers. We finally got lucky with this fixer, which we put an offer on 4 days before Christmas at 250k above our initial budget. Also, there is no daycare less than 2k where we are. I actually think the most unbelievable thing about the article is $4,000 for a mortgage-I don’t know anyone whose mortgage is that low, and that includes people who bought their houses 5 years ago. The cost of housing in the Bay Area is simply ridiculous.

      To punctuate this, our first house is 1100 square feet in a starter neighborhood purchased in a city quite far from SFO-which means one of the cheaper cities in the Bay Area. Last I checked, due to COVID, that house is worth 1 million; we purchased it for 260k in 2010. Our current house ballooned from 1 million to 1.7 million. The cheapest house in our city is 1200 square feet for 1.5 million.

      1. I just want to add, the rest of this budget is incredibly accurate and it is refreshing to FINALLY see a budget posted online that reflects the cost of living in the Bay Area with children.

        1. Thanks for sharing. With inflation, people are finally coming around to the reality that the cost to raise children in an expensive city does cost as much.

          We’ve got to continue to invest for our future. Wage inflation is not keeping up for middle to higher income earners. But at least it is increasing faster than lower income earners.

        2. Yeah,
          Even in a cheaper location,
          The correction would be on mortgage and you can save on vacation.
          But the rest is the same. You cannot just stop eat

  13. Ralph Weitz

    I have counseled and training many in personal finances. Personal finances are very personal and unique to our preferences in life. Many I have worked with have been in significant debt, a few close to bankruptcy. My observation on this budget is from assisting people to live better and avoiding the debt trap.
    1. Doing a standard deduction is a very poor choice especially with $22,800 in interest and $19,200 ($10,000 permitted) property tax needs to be considered for itemization. You note “I’ve used the new $24,000 standard deduction for married couples to keep things simple.” This costs these people thousands of dollars especially in their tax bracket.
    2. A possible Health Savings Account could also help reduce taxes.
    3. Charitable giving reflects our life values. This low level of giving could be improved and itemization will help make this productive.
    4. To protect against debt there needs to be a savings line for future needs (car purchases, home repairs, etc.).
    5. The clothing line seems very large and there are other options to keep this lower.
    6. The 529 plan seems too high, especially since 529’s are designed to grow over time. There are many resources for college expenses.
    7. There are cheaper vacations possible – for example pair up with other family members for a vacation home which would be cheaper than a hotel.
    There are other possibilities to reduce expenses and still live a “middle class” life style.

    1. 1. what kind of deduction can you take if you don’t own property? Even the itemization seems to get minimal savings with interest deduction, but it’s something–not a lot. What else can one deduct?

      2. HSA is good in some cases. I opt for HMO but my healthcare is basically free so I put remaining savings in after tax deferral account. When I was single HSA was the best, wish I had more years I could have maxed that out.

      3. I’m torn on charity. I believe in it, yet I don’t think it makes sense to give until I am fully financially stable. My plan is to invest and give a chunk to charity when I die. I may do a donor-advised fun sooner given tax deductions. I will be able to give more if I invest wisely now vs give a small amount now.

      6. there are few resources for college expenses if you make too much to qualify for FAFSA. Loans are not a good option. I feel if you have kids you should plan to pay for four years of public school for them. That’s about 150k saved per kid today if kids are babies. That’s what I’m trying to do.

      7. pairing up with other families for a vacation home does not = “middle class lifestyle.” When I was a kid, my dad worked FT and my mom was a SAHM. We had a very typical middle class lifestyle. We did not have to pair up with other families to go on trips. We did if we wanted to, but it wasn’t a requirement. This is not to say it’s a bad idea, but I don’t think a typical middle class family would “have” to do this.

  14. Sam, I really I enjoy the detail you put into this article. However, I do think there are some goods ways to save on this budget and was able to cut off almost $3600/month without sacrificing. Per your rules I won’t post the link to my article about this, but if you want a good read check out milliondollarbum

  15. I was taught that your goals should be inline with your life style, which leads to the amount of income you need. Seems most that post here, make and income and then chose to live on less.

  16. Boston Proper. Dual Incomes, One infant. 31/30 yo. Own 3br/1ba 900sf condo. This is almost identical to our budget (minus the car payments/clothes/vacations/entertainment). We also househack to reduce our mortgage by 70%. Great analysis for an HCOL city.

  17. This is kinda hilarious to me. It should really be titled, “How to live an upper middle class lifestyle in one of 4 specific metro areas” (those being NYC, Seattle, SF, and SoCal).

    I live in Philly, yes, it’s not as expensive as the above, no, it’s still urban and more expensive than a lot of places. I don’t know anyone here who makes anything near 300k per couple (*maybe* a few that are 200k as a team, most are well below 100k together), let alone anyone doing it solo. Not saying those people don’t exist, but they are the exception, not the rule. Exceptions to me belong in the upper class. None of the examples you described seem to me like the middle class occupations of friends and clients I know- really they seem more like upper middle class to upper class.

    I know that you write what you know but it would be awesome to see more content in 2020 geared towards the 99%…er, maybe like 80ish%? Something like that.

    1. Philadelphia is pretty darn cheap in comparison. Feel free to share your budget and your net worth figures by age and tell us how you made it happen. It’s all about sharing to build wealth.

      1. Sure.

        I was making $10-20k/yr until this year, 3 to 4 years into a career change. Was piecing together a couple part time gigs until one of them gave me enough opportunity to quit the others this summer (it’s still part time, which I prefer, although full-time is not an available option anyway, 40 hrs guaranteed is rare in that career). This is something very typical with most of my friends/colleagues btw. I just recently looked over income, it was $37k before any biz deductions (~$3k) but not other stuff like trad ira. I’m considered self-employed in both of my careers.
        I don’t recall having any classes in school on financials, I grew up in a somewhat poor, somewhat rural area. So financial planning is very new to me. I’m 38, my net worth is $7.5k, although all of that is as of October this year when I paid off the last of biz startup expenses (70% of income is from acupuncture, which requires a bit of licensing, inventory, and insurance up front, though could be worse). 30% of income is from music and October had a lot of big checks from all the fall weddings and Octoberfest gigs so that helped me catch up bigtime. I used to be a musician full-time, definitely making more now. The friends I know anything about their retirement have very little- it’s either from a job they had once with a 401k they no longer work (or benefits got cut), or they are saving would-be retirement money to buy a house or more reliable car, etc. Or, it gets wiped out by emergencies (one friend had to replace roof earlier this year, another had dishwasher and washing machine break the same month. Another had windshield/car windows replaced 3 times this year). I’m known as very frugal among my friends, who also are generally quite frugal.

        I rent a VERY cheap tiny studio in Fishtown (skyrocketing real estate there) @$640 including all utilities, except phone/internet (too much, right now it’s $80). It took me a good 6 months to find something like that, and only because I could read between the lines and understand it was an illegal apartment (super not to code, also no kitchen- they rent it as a “room”, it took a few tries to convince them I was cool). I was looking all over neighborhoods that were bikeable and got really lucky and also was right on it when I found it. Rentcafe describes the median 20% of apartments being $1000-1500, though doesn’t specify size. For my neighborhood it’s $1730. Many of my friends rent rooms in houses, including couples who try for a suite-type situation (example- a floor in an apartment). One friend owns, but he lucked out (um, sorta?) in his first marriage where his ex’s parents bought them a condo in SD, and when they broke up, he got half. Another’s grandma bought a house for them. Another’s husband bought a house in a bad neighborhood 15 years ago (his mom was a real estate agent) that now is considered hip. Another married a doctor. My boyfriend owns, but he lived at home until he was 30 to save up. I don’t know any others in my group who own a house. Most of us have bachelors if not master’s degrees.

        Most of my group value good food, and the occasional hang. I looked last month and my groceries were $250, but I did more entertaining than usual. But going out and gifts were $400. That sucks. November was less than half these #’s.
        Seasonal expenses hit the lower and middle classes hard and I was thrifty even. My boyfriend and I have been tracking budgets lately and are planning to eat out less since I cook better than most restaurants anyway :P

        Transport is much lower- you live in the city, no need for a car. I average $150 between public transit and uber/lyft pools. Many friends do have cars to get to work, they tend to spend a lot of money repairing them, but it’s a cycle that’s hard to get out of, since where do you come up with the chunk of change to buy something better? Or qualify with lower income?

        Many of my friends don’t pay for health care any more since the penalty is gone unless they have kids. Many of us can’t afford to/don’t want to have kids so it’s a moot issue. Often one person in the partnership is the one who takes a junky job to have benefits for the family if there are kids. Friends sit for kids a lot, so hiring a babysitter is minimal for most people I know, people try to set up play dates instead. It’s hard to afford it. Any spare money goes towards stuff for the kids. Philly schools suck mostly so it’s important to live in a good area or try to get a job at a private or Friends’ school.

        Vacation is a must even if it’s camping for most of my peers, gotta escape the grind. I think I save more than friends here because I use miles and points. I also go to cheaper places- went to Colombia last time. I got dental work done there since I couldn’t afford it in the US ($300 vs $2k)

        That being said, when you are used to living on so low of income, it’s easier to save if you make more, as long as you don’t get too stressed. Just have to prevent the lifestyle creep. It helps to have like-minded individuals to support you and I think that’s one of the biggest things honestly. I can read all I want online, but it really helps me that I can talk about these things with my boyfriend, or best friend, and come up with solutions. Right now I’m researching grants for first time homeowners, who are low-income. I never thought homeownership would even be possible, I think it could be a good step for me if the price is right and now my income is steady to building and I have a plan (airbnb, which I have experience with). Quality of life is important too, and often it’s easy to say- just make more! when the job opportunities are simply not there. One can only hustle so much, I’d rather put my efforts where they are giving fruit (with financial education, it’s seeming).

        1. Dizzy,

          So, I’m not sure why or how I ended up on this post/reply yesterday but it caught my eye for some reason. The exhange stuck with me into the night as well. There are a couple things in this reply that I do not understand. Maybe I am naive… but I can’t seem to understand the situation you have found yourself (along with friends) in.

          Looking quickly at the average income in philadelphia, and it shows $65,090.00, looking at the median for a better accuracy I suppose, and you see $43,744.

          The post said you were making between $10-20k for the first couple years?

          I’m confused on this situation, I made more money than that in highschool working for a grocery store. I had a second job as well that I worked off hours at. Each of them paid between $8.50 and $9.50/hour and both part time. I think in the summers I would get up to 38 or 39 hours at one job, and work 78 hours over two weeks with off hours.

          The basic calculation considering a flat wage, is hourly wage x hours worked x 52 weeks. Assuming you were working 37.5 hours (since you said not full employment) to make only $10k, you are talking about working for $5.12 (roughly) an hour.

          I’m glad you made the life change to increase that. $5.12 is a hard pill to swallow considering that in some places they are paying $15 for minimum wage. So looking at the case again with say a grocery bagging job you could potentially make $15/hr or roughly $29,250 gross as a part time employee. This seem to only be about $8k less than what you claim as your current gross salary of $37k, and it takes zero “skill” and minor training.

          Anyway, looking at your scenario gave me pause last night. Why would you choose to live this way? I sort of understand the “starving artist” mentality but at somepoint you need to shift pipe dreams into action. The music ability once earned will always be there, but if its not putting food on the table, perhaps its a hobby and not a job/career.

          It seems like you have taken this step with potentially opening an acupuncture business of sorts, and supplimenting with your music gigs. however, I again don’t understand this. Looking simply at average for acupuncturist online, and you see something like $20-74/hour and/or $43-$110k per year. So if you are certified as an acupuncturist, why are you “selling yourself short”? Looking at PA in general the average acupuncturist salary is $71,042/year. looking at the bottom 25% and you still see $50k. I see the goal in owning your own place, but maybe working for another establishment for a couple of years might help you a bit more. At a minimum you could grow a client base on someone else’s dollar, and then try and sway them to your new operation.

          So what is it exactly that you are doing, or choosing not to do that only brings in $37k with skills/talents that you have?

          It seems to me that you (and potentially some friends) are choosing to live a more restricted life than necessary. Have you considered moving to a new area? The skills that you have, acupuncture, and music ability seem highly transferable. The state around PA (and including) are all in the $35/hour range for full time acupuncture.

          Surely there are other options than $37k per year in part time work? Since you are looking at a financial blog, perhaps you should review some of the suggestions again and consider implimenting them.

          I would suggest finding new employement for one. Looking at a location change for two. and finally I would only take a job that provides full time work with benefits. Doing less than these is only stacking the deck against you.

          The last comment I have is associated with your friends and people arround you. Everyone (I believe) has a choice to stay the course or make a change. You note that your friends already consider you the frugal one. Maybe now is the time to show them you are more than just frugal, by going out and making a life change. Put those skills of yours to good use and pull down a salary that is more aligned with your ability.

          Time is short, in a sense. Why keep yourself in neutral when you have limitless opportunities out there.

          Good Luck.

          1. So I definitely wasn’t working anywhere near 40 hrs/week, just not possible. My first year I had worked on a cruise ship (ok, so that was actually 52 hrs/week). I made 20k over a 7 month contract, I needed the rest of the time that year to recover mentally from it. Unfortunately I was so stressed I blew through a lot of it recovering/paying prior debt/moving to new city and starting up biz expenses). Was told I should be getting 50-100k there but really it seems like few get that, you have to get very lucky with your placements.

            Then when I moved back to Philly, there are not a lot of acu jobs there. I honestly have never wanted to start my own biz but I was approached by a local yoga studio to do so, figured since nothing else was going on, sure. They of course made it seem like I would have tons of patients and would help more with marketing (they didn’t, naive me).

            I literally have applied for every job I’ve seen since I moved there and have not been not hired for any of them (tho, the jobs I did get I actually did not apply for, so there’s that). There are very very few FT jobs in acu let alone with benefits. Most “jobs” are compensation based and you are 1099. 1st biz, was myself, I barely profited over 6 months (learned a lot tho, and have what I need should I start another biz again) and decided to call it when offered another job @ $20/hr. It was 11 hrs/week, was promised more hours eventually, but never manifested. Eventually got another job that gave me another couple hours a week in addition to some rando other one off acu-gigs at other places. The two main jobs started to conflict and I left other job since I made a bit more than staying at the other job and working more hours, by just working the one job.

            I’m still only 20 hrs/week tho (now down to 5 hrs/week reopening after COVID this week. We will see what happens, my boss expressed real concerns we will survive. He already let go 2 of the other 3 acu’s there so I’m grateful for anything). Yes, I was also applying for other non- acu jobs but having already gone thru this years ago (I’d applied for close to 2k jobs in 8 months in the aftermath of 2008 nonsense without getting anything that lasted more than couple weeks) maybe you can see why it’s hard to keep banging my head against the wall. I did finally figure out the delivery hustle tho it’s been difficult since I was reliant on my partner for a ride to the city where I could do it (I have just bought a car tho so probs will start again this weekend; last week was shut down mostly w/protests).

            That $70k salary you mentioned, as I’ve learned eventually, is from an average. There are a few people who are making tons of money. Everyone else is in the $20-50k range generally. I don’t know anyone here making anything near 75k excepting one practitioner who’s been in practice 20 years and 2 people who own multiple clinics (one of which is my boss). Most people I know are in the 30-40k range. Still a step up for me tho, better than when I was a FT musician!

            Some of your numbers seem wild. $15/hr working grocery? Where can you find that. I know $13.50 is Trader Joe’s rate in the city (not burbs, my bf applied last month and it was $11/hr, not bad tho) which is the only place anywhere near that; I’ve applied for them many times over the years without getting hired, it’s very competitive. Everything else minimum wage. And of course, you have to get hired.

            All in all I’m doing light years better than some others I graduated with who continue to live in a HCOL area. I saw classmates at a wedding last year, half of them had given up on acu completely and either were panicking, or had children/able to be full-time stay at home bc their partner made $$$. I at least moved to a lower COL area (Philly) where I had some contacts and made it easier. I cannot move now (nor would want to) since I am in a relationship with someone who owns a house in the burbs (have since moved into) and he does not want to move.

            I do play music for a profession too make few grand a year. I *need* to do this. This, as well as my other side interest (long distance hiking, which yeah, I even get paid for this on occasion) are really critical for my mental state. Quality of life also beats money, I’m having enough of a hard time adjusting to suburbs life where I’ve recently moved.

            Honestly tho, my expenses are v low. I’m now down to $650/mo fixed expenses including for car, if I include money for fun/vacation/etc it’s maybe $1k/mo. I’m self employed so I can have solo401k to dump savings into. I don’t have to work full time, I can do things like my job treating refugees (tho cancelled until fall, it’s only couple hrs a month); play music gigs, have time to develop other side projects, maybe take chance on a new $$ job if I got one (and then feel free to leave if it sucked) and most importantly for myself and now my partner. Most of my friends who don’t have kids are in the same boat. Not having tons of $$$ can be tough in some ways but also is good in others.

            Anyway point of my post before was that the numbers in this blog just seem wildly high, I don’t see a lot of numbers that reflect the middle class people I know and/or treat on a regular basis. It seems like #’s here a lot represent the upper class. $300k in SF is $165k in Philly, which I know VERY VERY few people I’d say are middle class here make per household. $60-120k for Philly would be more realistic (for fam of 4), which is 108-217k there. Pewresearch dot org has a calculator, it says 300k/fam of 4 is upper class there, their cutoff for upperclass is 200k. That’s a 100k difference!!

            1. I don’t know, reading all of this stresses me out. I’m not sure how you can go day by day or weeks on end with only 5 hours of work here and there. Don’t you get nervous without having a safety net?

              As a side note, for the acu business… While I believe there is a market for it, I don’t think it’s one of those just sit back and wait things. I think you might need to push a bit more to attract clients and not just wait at a yoga studio. I know a couple people who are very successful with doing acu in the DC area. They have a couple of arrangments with other specialty care professionals. However, another key is they advertise with all of the endurance athletes, and groups of that type. Find a couple runners with issues and fix it, and suddenly the word spreads like wild fire. Similar with the triathletes, and likely cross fit and all of that. I feel like you should be going to visit those various establishments and trying to get a couple people to take it on. If they have success and see the benefits, then word of mouth as well as the positive reviews, etc on media can do amazing things. Something to think about, if you haven’t tried that route already.

              I suppose i’m intriqued by the whole scenario. I started out of college with a job making around $52k plus benefits, and in the first 5 years, I bumped that to over $110k, the following six years I bumped that to over $150k, and from there it kept going. Also married my wife who was on a similar track pulling down six figures as rising as well.

              Thinking about living on a $650/month budget stresses me out. Granted my rent at one point in college was $225/month so I understand the living style, but as you grow older and gain more skills ideally so should your quality of living.

              I feel like with a trade that you have, you should be able to find something more profitable elsewhere. I understand the BF factor, but if they are living on $11/hr jobs as well…the future looks rough. Maybe you should both move.

              Have you ever considered going into the construction field? PA has scaled rates and you could get a pretty huge increase in pay by going that route. It’s pretty easy to get specialized too, equipment operator, etc. Again, locked in rates which can get your dollars up.

              I would have to say going back to the original post, the numbers are spot on depending on where you live. In a HCOLA $300k doesn’t go far. Sure there are plenty of optional spending in there, 401ks, 529s, etc. However, if you are able to set yourself and family up for future success, you should do it. So, when you start breaking it down as FS has, you see that the money gets allocated quickly.

              I just think that in a time such as this, with the internet, and apps and gigs etc available. Dog walking, law mowing, house sitting, etc. All the task rabbits, and similar jobs. Personal shoppers etc. I think with all of those options out there, that anyone not making $100k is by choice. Sure not every salary is going to get you there on the base, but you can stack a couple of them and get to the $100k, easy.

              Anyway. good luck out there, hopefully your business works out.

              ** I suppose one alternative idea, is you could go the whole MMM route and similar and talk about your frugal life style. Maybe start a website, or write a book – who knows you could be raking it in while talking about how you balance life with a $1k budget per month.

              1. Patrick M Croft

                You need to make $11.44 to only 14/50 states have minimum wages high enough that you could make 100k+ by working literally every hour of every day for the year. I should point out that you would literally die from this, but it is temporally possible.

                You yourself spend 4 years out of college, I guess making a choice to pull in less than 100k a year. I wonder why you chose, that?

                You got on a good track and you stayed on it and I’m sure you worked very hard, but San Francisco, LA, OC and New York don’t have enough room for 320 million Americans to follow similar examples and the price of an entry ticket and the simple ability to hang (psychologically, intellectually, financially or otherwise.) is outside of the ability of most people. Even if they could, professional labor is valuable because of scarcity, so if everybody could do it, nobody could get paid handsomely for it.

                GDP per capita is only 62k dollars in the U.S., so everyone getting 100k+ a year faces a structural supply side problem.

                Your not going to make it to 100k picking up odd jobs, and there’s little possibility to “grow” in that kind of gig centric career.

                I’m lucky to make a good salary and be in a good finical position myself, but I know that everyone can’t have what I have because I’m getting more then my “share” of the total available economic activity in our country. There’s no way around that.

          2. Irish, your math does not work. I do not see how you made over $20k a year working part time @ $8.50 – $9.50 an hour.

          3. Freedomgirl24

            I can definitely relate. Hang in there. I make less even, living with family has helped a lot.

  18. I make $150k plus I have a company car. We are a single income family of five and live in Orange County, 3 miles from the beach and we are doing fine. I am 45, I have $500k in 401k, $50k in college savings $50k in cash. I am putting away 12% into 401k, $1000 into college funds every month and still have $10k left each year. Your standards is just too high and only the top 3 percent can make it. That’s no middle class.

  19. This really just looks at big city living… That’s the crutch of the problem.

    I live in a non big city. The mortgage is 1400, and day care is 7200 a year. My SO and I pull in over 140k together, soon to be 170k together.

    Our total expenses in a month total less than $3700. Bring home is more than $7500 together. Thats with a $550 truck payment and $200 car payment, her student loans, day care, utility bills, etc etc.

    A $4000 mortgage is kind of ridiculous.. Where we live we can get a 3500 sqft house on 5 acres for less than $2000 a month. Homeowners insurance is less than 1500 a year and property tax is less than 1500 year (all included on mortgage via escrow anyways)….

    I work as a web developer pulling in six digits with a 30 minute commute to work and no traffic as I don’t work in a big city. My SO works in marketing making 50+k and on the rise in her career and on track to get to where I am eventually.

    If you live in NYC, San Francisco, yeah I get these numbers, but the majority of the US population does not live in these areas.

    I don’t understand the appeal to living in big cities. Everything is outrageously expensive. Traffic is absolutely insane. Air Quality is horrible… And for what, a good paying job?

    I have a good paying job with affordable living and amazing work life balance and I live next to a national forest with great air quality and I get to look at mountain views on my way to work every day and there’s virtually no traffic in my way on my way there. I haven’t seen a traffic jam in years. And I still have every store you could want or need within 15 minutes of my house.

    1. Yes, it’s about making more money and then saving more money and then investing more money so you can retire earlier and move to a lower cost area of the country. That’s what a lot of people want to do.

    2. If you don’t mind me asking, what’s your current experience and background look like now? I’m an entry level web developer, mid-20s, single income family of four and I don’t have my degree. I entered this field because of the possibilities of a future similar to yours (based on your comment). How long did it take for you to get to your income?

  20. As one who took issue with the couple “struggling” on $500K in Brooklyn, I actually think this analysis is pretty fair. I grew up in a mid-sized midwestern city and currently work in Manhattan, commuting from the suburbs. The thing I’d point out to the naysayers is that it’s not really how much you have, but what you’re able to do with it. I grew up in a nice and quiet tree-canopied neighborhood of brick homes, in a 3-bedroom home with a big yard that still only appraises at ~$120K, and getting anything comparable in size and neighborhood out here would be ~$500K minimum in the metro NYC suburbs I live in. And in Manhattan such doesn’t really exist, but in, say Brooklyn, you’d still be looking at at least $1MM.

    Also, if anyone wants to actually retire in one of these coastal cities, planning to have bought and paid for a home is an important factor. You don’t want to be on the hook for $3K+ per month into perpetuity if you’re no longer earning income.

    Overall, there seems to be a dynamic socially where people are pressured to become accustomed to less and less. (Saw an article about people renting bunk beds in SanFran for $1200/mo.) Even if most people only make $50K per year, all that means is that most people have to accept a lower standard of living in these areas than they would elsewhere or that more people enjoyed in the past. I’m more interested in figuring out how we can make a higher quality of life more accessible for people than in chastising people for trying to figure out what they need to do to maintain what in every other area of the country would easily be seen as a middle class existence (as in neither struggling nor luxurious).

    1. NewCheesehead

      It sure is easier to do so now that I’ve moved from San Francisco to Milwaukee, Wisconsin. Gorgeous 2800 sq ft. waterfront condo with boat slip from tiny “luxury modern” 1000 sq foot closet with nice view in SF. Going out here is so affordable and there is so much to do; however, the best thing is it’s cheap and people are much much nicer. Loving it in the heartland.

    2. I’m supporting a family of three on 56k and we aren’t starving or going without…you hit the nail on the head these new generations are just over spending over extending and credit living like no other I’ve ever seen..we have no credit cards no loans and aside from cable internet and cell service no extra added unnecessary expenses..if I brought in 300k at this point wouldn’t even have a mortgage as I’d just buy a place outright in two to three years..don’t need a mansion just 2bd an a bath.. financial samurai ha more like financial sumo as their out line is bloated with extras that are completely unnecessary….

        1. I also comfortably support a family on 48k. I’m single with 2 kids and a grandchild. We do live in a small town in Mi so that does factor in. I work full time and I do take a lunch to work. We rarely eat out but have a pizza night once a week. We work together as a family to keep cost down. There is no child care because with our work schedules someone is always available to watch Layla. We also go on a yearly vacation. We don’t have charge cards. I think it depends on what’s important to you . We do what’s important to us and we plan and save for it. It can be done it just depends on what you want. We don’t struggle but we have to budget and be careful with how we spend. It works well for us

          1. I live in Michigan. I earn $53k and we’re a family of six and it’s hard. I have an MBA so I know that I should be earning more but I feel like I’m on a hamster wheel. Do you mind me asking what small town? I’m learning a lot from this blog. It’s inspired me but I’m always looking for more advice. Thank you.

  21. Money Ronin

    I’ve lived on both ends of middle class which is a subjective concept. I grew up lower middle class and now my life is much closer to the budget posted by Financial Samurai. What is presented here is the top end of middle class. My friends and I don’t see ourselves as wealthy but objectively we are. Whereas most Americans can’t cover a $400 emergency, we can weather financial catastrophes in the tens or possibly hundreds of thousands. We can always cut back on our 401Ks, 529s, vacations, gym memberships, etc.

    I think the point here is that people making $300K have a lot of “optional” expenses that lower middle class people would opt out of, but there are not a lot of extravagances. We’re not sailing around on our yachts or flying business/first class on our family vacations.

    What separates us from the truly wealthy is that if we lost our day jobs for more than a few months or year, our lifestyle would dramatically change. Our collective wealth is not yet self-sustaining despite not being extravagant spenders.

  22. Aaron Staley

    This isn’t completely unreasonable for 2 kids – for 1 this feels far too high, with expenses amplified by likely $20k.

    1. $10k a year into a 529 plan? UC cost of tuition is $140k over 10 years. With any reasonable returns, this is going to overfund the the 529 ~2x. $5k/year is sufficient if investment returns beat fee inflation by only 3%
    2. Someone paying $23k of mortgage interest is going to itemize. On the other hand, your mortgage payments are extremely low for a place like the Bay Area, so if anything this is too low — all in I think the housing costs about are on par with downtown SF renting ($72k/year).
    3. $8,400/year post-tax for health care for 3 is extremely high. I doubt most families would burn though an HSA’s annual contribution limit ($6,900) which is pre-tax federally anyway.
    4. The childcare expenses are basically assuming a private nanny. This is about the costs until the kid can go to public school at which point it drops dramatically.
    5. Car costs @ $9k are really high. You might not really need 2 cars if you live say in SF. Can realistically cut $5k off here.

    $180k is easily doable, but you are living quite affluent if you are spending that kind of money. The type of life (still reasonably affluent) on the spreadsheet can be done for perhaps $150k.

  23. Sam, great article as always. I don’t thing there is value in picking the details, but more in stating the obvious: the top 2 expenses in your life as reasonably well off wage earners are mortgage and taxes. If you take into account tax trends, like elimination of SALT deduction, gas tax increases going to general tax funds, congestion tax, attempts at local income tax, sales tax, etc, and review which states dip into the red and fight it with new taxes, along with housing costs, the answer is to move from the expensive locations. Your map of housing prices tells half the story. The same map of tax rates will tell the other half. Refusing or putting off the obvious and correct decision, when you have options, is the most expensive thing you will ever do.

  24. I think this is still off base. 250k for a family of four will qualify you for public housing in Pali Alto. You need HHI of ~ 400k to live comfortably (buy a house, pay for day care & tuition, plus have money to invest)

  25. This was an interesting read. I run an online business and earn $300,000+ per year in profits from home. I was scouted by a few companies in the Bay Area when I was a freelancer a few years ago to work in-house but I turned the jobs down. Both jobs were starting over $150,000.

    I’m a 27 year old Canadian and earn 100% of my income in USD. I thought it’d be an interesting perspective to show how far the dollar can be stretched in low cost areas.

    I grew up in a small city (100,000 people) on the East Coast of Canada. The wages where I’m from are very low in comparison to the Bay Area. Most people are very happy with a $50k salary here. A decent sized house costs $200,000 on average.

    We purchased a 2200 sq/ft House within city limits for $107,000 and put $70,000 in renovations. We gutted it down to the studs, put all new black steel windows & dark grey wood siding, modern kitchen, all new floors, doors, walls, walk-in showers, completely finished basement, 400sq/ft deck & a 6 foot fence around our back yard. After the renovation, our house was appraised at $300,000 ($120,000 in equity). So a little bit of money goes a long way here. The same house in Vancouver or San Francisco might cost $2,000,000 or more.

    Our monthly living expenses:

    Mortgage: $950 (Including Property Taxes)
    Heat / Electricity: $250
    Internet: $100
    Phone: $100
    House Insurance: $70
    Range Rover Evoque: $700
    Car Insurance: $75
    Gas: $250
    Food: $1000 (My wife loves to cook and we only eat out rarely. We’d rather host)
    Total: $3495 Living Expenses AVG

    Earnings: $320,000.00
    After Corporate Tax: $272,000
    Personal Take Home: $60,000.00
    Left-over in corporate tax per year: $212,000 (most of this gets invested)

    Typically though, we don’t save $212,000. Realistically I probably save about $170,000 per year.

    We like to travel. So we typically spend about $30,000 per year on travel. Last year we went to Yosemite & Big Sur for 2 weeks, Toronto for 1 week, Newfoundland for a 2 week road trip and Mexico for 2 weeks. We also went on 2-3 weekend getaways.

    We typically spend about 8-12 weeks travelling per year. In 2019 we plan on going on a bunch of week long trips throughout the year to Yukon, Iceland, Alberta, Utah, Mexico, Florida and some other weekend getaways.

    We also plan on saving / investing $150,000 per year while travelling.

    My point is, $300,000.00 is a lot of money where I’m from. I have some friends tell me that I should move to NYC, LA or SF. But to me I’d rather just be where my friends and family are. Plus, living in a low cost area is great. It’s extremely safe where I’m from. Barely any crime. I think we had 1 Murder in the last 5 years. The biggest annoyance is putting up with the winters. But sitting in a hot tub on the deck while it snows makes up for that. Summers are fantastic, I live by the ocean & beaches.

    NYC, LA & SF are great places to visit. I have friends who live in large cities, so I go to visit a few times a year. But at the end of the day… They’re just going to work, watching Netflix, and living the same life that most other people live. People like to romanticize or glamourize large cities. To me, they are great spots to visit for a concert, comedian, or just staying for a 7-10 days to hangout. But I couldn’t live there. I find that cities are dirty and claustrophobic. NYC looks incredible, but also smells terrible and the interiors on some apartments are awful. I’ve seen $4000/month Manhattan apartments that make me laugh. It’s like throwing your money into the fire. A $4000/month mortgage where I’m from, would get you a private beachfront modern house with 20 acres of land and a 4 car garage.

    In the end, everything becomes the new normal. NYC, LA, SF, might seem incredible for the first 2-3 months. Then, it’s just day-to-day stuff. Watching Netflix, Eating Take-out, going to the same coffee shop over and over. Going to and from work. Except, you’re paying a premium to do all of those things. As this article stated – you’re making $300,000 to live a pretty normal middle class life.

    There is nothing wrong with normal things, like I listed above. I love TV, Coffee, Take-out, hanging out at home. But my wife and I do it for $3495 per month.

    We work from home. Wake up when we want, go to sleep when we want. Travel on a whim. & save $150,000 per year. This is obviously a rare scenario as high incomes are usually achieved by living in a large city. But, a few years ago I almost took a remote position for $150,000 (starting salary) from a Bay Area company. One of my friends just moved home from a city and kept their job, now working remotely on the same salary as they had in Toronto. It can be done & it’s becoming more common.

    I find it amusing that so many people feel the need to move to a certain location for tech jobs. There are tons of remote positions available in the tech industry. This allows you to be location independent and not fall into the trap of living in a high cost area.

    This article shows that financial success is relative. Of course you’d feel broke if you make $300K per year and average houses cost $1-2M. Of course you’d feel like you’re middle class if all of your neighbours and friends have $300k salaries and you’re only saving a couple thousand per month. It’d be easy to feel like you’re average if you’re making $300k while knowing 5-6 people who are making $750K+.

    To me, I would much rather live in a low cost area and travel regularly while saving fast for the future. NYC, Chicago, LA, SF are great vacations. But on the regular days, if I’m going to watch Netflix and eat take out, it’s going to cost $3495 per month (All-in) – Not $7000+ per month. I wouldn’t take advantage of living in a city like New York enough. I might spend the first 2 months exploring and going to events, but I’d eventually just end up at home doing exactly what I’m doing now… except pay a premium to live in a terrible apartment. So, I figured it’s smarter to just go on trips and keep those places exciting.

    It’s all about how you want to live your life. Maybe, you like the city vibe. That’s fine. You’ll pay a premium for it. No judgement from me. I just wanted to share a different perspective, from somebody who would rather just visit a City and live in a smaller place with a much lower cost of living. The more free you are financially, the more free you are in general. The more free you are to travel or save for retirement. I’m not saving for retirement – I’m saving to make work optional. I love what I do. Retirement is for people who hate their jobs. But whatever your financial goals are – Living in a high cost area is slowing you down.

    I know people who are living for $1000 a month, everything included, overseas in a nice condo on the beach working online. Everything is relative. You can either stretch your dollar and get the most for your money. Or overpay for everything and retire when you’re 67.

    If you’re struggling to retire early earning $300,000 per year – you’re clearly drastically overpaying for everything in your life. Is your location alone worth $100K per year to you? If not, why not look into other areas? I feel like location has become a status symbol now. As if being middle class in Manhattan beats being completely financially free and being able to go / do whatever you want, whenever you want.

    1. HSSS, what a great post! Thanks for sharing. What kind of online business do you have? I’m a lawyer in the San Francisco area, and dream of having more freedom!

      1. Loved your post too! My husband had a big job in SF so he asked to work remotely and they said yes. Talk about a winning move. There were already 4-5 others on his team that were doing this and I think its becoming much more common in SF. It’s so true that we were living the everyday life there, waiting for the elevator that was always stuck in a brand new bundling paying $7K a month in rent for what? Visiting is great – we kept our vacation home near Tahoe so we can go back when we want. But so far (it’s summer) we haven’t wanted to! I was also an attorney in SF now I’m an attorney in Wis, making less but everything is less expensive, and I’m also working less hours….

  26. Over the top. The vast majority of folks in this country do not make that kind of money, that includes college educated. No sense of cutting back and trying to be honest about wants and needs.

  27. I looked at your expenses. I live in the Bay Area not San Francisco but in Fremont Area, House worth over a million. I took out the expenses I don’t have, like a mortgage, childcare, all the major expenses I don’t have and I came out just below 100k. I estimate my expenses to be 92k which was almost in line with yours (which includes 15k of travel).

    Wrote a blog on how Texas is 15-20% cheaper than the Bay Area not counting housing. Would move there if I could take the kids. Unfortunately, can’t do that.

    1. Do you think it’s because you and your wife are in your 60s and have vastly different expenses than households with families? Perhaps it’s because costs 30 years ago were much less?

      How old are the kids?

      1. One is 31 and 28. The 28 year old is in her second year of being an ER nurse. My son works for AT&T.. He and his wife struggle a lot more.

        1. Thoughts on helping them financially given your $3.6M net worth excluding your house?

          How do we decide when to help our kids and when not to when they are adults? This is something I’ve been thinking about now that I’m a dad.

          1. Yes I plan to leave a sizeable inheritance (I hope they don’t read financial samurai lol) because like you I do not intend to touch principal during retirement.

            I had my trust set up for them to get certain amount at different ages but now they are more responsible.

            When to help our kids is a tough one. With my daughter I have helped her less because she has a high earning potential. She is still renting though. She works in Bakersfield but salaries are much less. She can double her salary in the Bay Area but as you well know houses are in the stratosphere. Her husband just got out of the military and plans to go to school so they only have one salary

            My son we have helped a lot more. We helped him get into a house at the bottom of the housing crisis so his house has doubled in price but he doesn’t have the same educational level as my daughter.

            So we often help them when they run into trouble. He works very hard and I see him struggle sometimes 10 hr days.

            When you start saving you never realize you will be helping your children once they are gone. I am just fortunate (even with a disability) I have the resources to help them.

            My wife says she would rather see the smiles on their faces while we are alive then when we are dead.

            We also pay for vacations for them when we all go, and I like to be generous at Christmas time.

            They are very appreciative.

            1. Hello. I am the child of parents who have a net worth in the millions. They helped me out financially for 100% of college and for maybe 50% of grad school (the rest I had to take out in student loans). I told them I want to start my own business and they have provided me with little help so far. Looking back, I wish I didn’t go to grad school and asked if I could use those funds to for my business instead… I would have a thriving business right now and a more than comfortable income. (I don’t really need grad school at this time in order to run my business.) I think if you’re going to help your adult children out, it should be for something that improves their future and where they can see a return on the investment like higher education or a business opportunity. Buying/owning a franchise like Starbucks would be a start even.

  28. Hi Sam,
    I’ve been an avid reader of your blog over the years. Thank you for putting things in the right perspective with this post.
    As someone who has lived in the Valley for over 10 years now, I can attest to the prohibitive cost of living. My husband and I work extremely long hours to pull in 300k + each and I don’t see how we could be comfortable on one salary here. We have one toddler and school and after-school care bites a little into our savings. That said, I certainly count my blessings and have come up with a plan to live off 80% of one salary and save the rest.

    One thing you might want to factor into your calculation is school district. A typical (read decent) home in a good school district in the Bay Area costs nearly 2 million. And property taxes run up to 30k per year. We’re in the market for a new home (since my son will be starting elementary school next year) and I don’t see anything that costs 1.5 million that is decent sized, at a short distance from work or new enough.

    I might sound entitled to some, but is it unrealistic to expect a decent standard of living or want a good life for your children after several years of hard work at school and after?

  29. at the end of the day, you have to be incredibly stupid to keep “fighting” against the current just to live in SF or NYC… if you claim you travel and all your money is created by not working you should’ve figured out where to live like a millionaire anywhere in the US with $300k/year. complaining about it in a blog just to make ends meet seems pretty stupid to me.

    at some point you have to use your noodle. even if you work for a living you should be able to figure it out anywhere in this great nation of ours… you shouldn’t be complaining about earning $300k/yr because you live in NYC or SF.

    1. I’m definitely not that smart, which is why I write to learn from others.

      Do you mind sharing something about yourself and providing some guidance? You seem very wise and have your stuff together. Thank you.

    2. A couple making 300k a year, living in a coastal area, can afford a 1.5 million dollar a year…how? They can’t. It’s simply not enough money. You’re looking at a house cost 5x gross income in areas that were already high-rent/high cost living. How are they coming up with the GINORMOUS down payment needed to reduce PITI to where you have them paying? The rest of the budget is a joke. You think this 1.5 million dollar house couple is spending only 7500 a year on 3 vacations? Are they not flying? Are they staying in 2 star hotels? You’ve way over budgeted housing. This couple needs 1/2 a mill, at least, and then some solid tax deferments to live the lifestyle you’re denoting. Also…really…the Gap? Is this the 1990s?

  30. Accountant on Fire

    Great post! I think one part of your net income calculation is slightly off. In the GOP’s effort to make the tax code simpler (sarcasm) while it did increase the child tax credit to $2,000 the max refundable portion is $1,400 therefore no more than than should be added back to calculate net income.

  31. If you try to keep your expenses within reason, such as:
    -Auto Loan @8% of income
    – Student Loans @10% of income
    – Mortgage @28% of income
    Total @46% of your income is gobbled up here

    You have not even eaten yet. Let alone pay for utilities, gas, food, clothes, vacation, etc.

    I notice that the only debt is a mortgage and car payment. I have to assume that all other debt has therefore, been knocked out. That sounds great. However, if much of America (last I checked it was around 76%) living check to check, I just wonder if the people described are really putting aside the max in retirement accounts and have a 529 for the kiddies. With inflation hovering around 2-3% annually a family like this should really be able/want to save more than $375 per month or $4500 per year. It’s a shame that living on the coast costs so much.

    From what I have read you need to save at least 20% of your income to be able to retire one day, which this couple is in 401k/529 accounts, but they will be more house rich, cash poor. Since the 401k and 529 is not easily liquid how will they afford to pay for the what if’s in life? Like when junior needs braces for $8k or the Volvo needs a new engine for $11k. That wipes out the $4500 cash flow for just 1 item. If they are actually banking that money every year, then it’s great. However, if they decide to buy a vacation home, send the kids to private school, or certain other purchases could push them into using credit and possibly scaling back 401k/529/savings contributions.

    I also notice the more prestigious the job title usually the more expensive the neighborhood the family may live in. Then they want the Range in the driveway to keep up with the neighbors, the gardener to keep up with the curb appeal set by the HOa, etc. etc…

    And gentrification may push housing through the roof! Making your $300k feel like $75k. Ugh!

    The jobs may pay well, but the expenses tend to go up exponentially. It also negates the extra pay. As you say, this is a sad story indeed.

  32. Well, all I have to say is that I’m glad I live in a more sensible part of the country then. Our family of 4 monthly budget is around $6K. And $800-1000 of that goes to charity because it’s a lot of fun to give it away. My truck and the wife’s SUV are both paid for and the combined insurance is less than $1200/yr. We spend less than $3K/yr on gas because work, school and play are all within 10 miles of our house. Our mortgage is less than $100K on a $400K home. We contribute to the retirement accounts, my brokerage account, and the 529 college accounts. We try to plan a nice vacation every year with some side trips here and there within the region, spending between $3-4K. We have a net worth that ranks in the 80th percentile nationally. And oh BTW, last year (2017) was the first time our combined gross income cracked 100K…. So $300K is NOT necessary to live a comfortable middle class lifestyle in the more sensible parts of the country… and the biggest perk… LESS STRESS! That’s priceless.

  33. Mike damato

    300k minus taxes, deductions and your take home 12-13k per month. About 1/2.

    In the time it takes for a Ceo to go to the restroom they make that much. Many make in one year what people don’t make in an entire life of working .maybe they deserve it, and glad we live in a land where people can really excel .
    In my mind 300k is a decent living. No you aren’t flying jets wherever you go, but you can live comfortably and meet your obligations.
    No Ebenezer 300k is not excessive , it’s middle class.

    1. 300k is not excessive, but by definition, it’s not in the “middle”. Not even in the Bay Area. Median family income in the Bay Area is something like $120k. So if you take middle to be +-25% from the median, you won’t have families making $300k in that class. And of course in the majority of the US 300k is top 2%.

      1. Don’t confuse middle class income with middle-class lifestyle. If you have a middle-class income Of $120,000, it is extremely difficult to afford a medium priced home of $1.5 million and raise kids.

  34. Edward Longshank

    Family with 4 kids. Midwest. 3000 ft home. Newer cars. 2weeks of vacation.
    401k savings, paid for kids college. Over many years went from 15k to 300k in pay . Expenses rise up to meet income.
    No vacation home, no toys . No country club. I consider myself middle class. Kids went to good schools , all of which are public. Neighbors college educated. Engineers to business owners and executives. 300k is not rich in my mind. It’s a level where you aren’t struggling to pay your bills . Have health insurance . Suburban life in the Midwest. Seems like unexpected bills always arise, and updates to your home etc.

    1. …Expenses rise up to meet income…
      You nailed it. Let me rephrase this, “We allowed our expenses to increase with our income” This is the root of the entire debate, IMO. Families that controlled expenses, banking increases see ther 300k as the high life. Whereas, the families that allowed their expenses to increase with income have slowly increased their wants and expectations making 300k, meh.

      1. So maybe you start out with a used car. You keep it 10 years. You have one car. Then you splurge and buy a new Ford. Later you have two new cars. The kids need cars and you get something for them.
        Same thing occurs with Houses etc.
        you could refrain and sock every dollar away. That’s your choice.
        Can you live below your means, sure.
        It comes back to what is middle class.
        I could survive on less than 300k. Plenty do.
        Is education important? Well it varies by where you live. Better live in a more affluent area because that’s where the best schools are located. College costs money, are you going to educate your children or saddle them with an anchor around their necks when they start out.
        You going to live on social security in retirement? Or do you want to maintain your lifestyle in retirement .
        You want to drive an old clunker, deal with breakdowns and repairs .
        I grew up modestly with parents that grew up on the depression. They were frugal and never on the government dole, as they called it. My parents didn’t make what I do today . They were middle class.
        I enjoy a better life financially. But I think I am solidly in the middle class.
        In my opinion the middle class is eroding because incomes for many are not keeping up. More are poor. They have downgraded their own view of what is middle Class life.
        Decent home•
        Retirement money•
        Decent education •
        College education•
        Decent clothing•
        Financial security•
        Life insurance•
        Home maintained•
        Not living paycheck to paycheck
        Kids sports and activities •
        Food on the table •
        Going out to restaurants •
        Decent quality of goods you buy •
        Both parents working• wasn’t always necessary in the past•

        1. Sam, I’m re-reading this article again (it’s April 2019), the scarry truth is, these numbers start to align more and more in Seattle. Ordinary 3/2 house in good area starts to fetch $1M, thus the mortgage item aligns.

          Child care is expensive too. Even our food budget for a family of 3 (with 1yr old son) is more than $1,200/Mo and we don’t eat at expensive restaurants a lot (we do buy organics products for our son).

          I earn ~$250k/yr in tech. We drive paid off, older Japanese car. But the $300k budget above starts to become reality for middle class in here too.

  35. While I agree with you on a few points, I disagree with you on many others.
    First, I live in the northeast(coast) and $300,000 is not a middle class salary. It is higher and yes, our taxes and costs are high. Most people I know earn about $100,000 a year. That’s middle class, with two incomes.
    Second, many of the expenses you cite are elective, as in vacations and recreational choices. So, many of us do not spend our hard earned $$ as you describe. Life is about priorities and smart financial choices. Your portrayal does not describe most.

  36. We (2+2) live in a nice town in Bay Area with ~1.5 jobs and make about this a year. After taxes ~ $15k, but our “free cash flow” that we save and invest mainly in SP500 index funds is about ~6k a month. Some things that we do much cheaper: 1) We don’t have a mortgage but rent a really nice house for $3500/mo, so obviously no maintenance or prop tax. 2) We rarely eat out so food is less than $1000/mo 3) Our two Japanese cars are also ~6-7 yr old (paid in cash) so there are no monthly payments. 4) And $500/mo on clothes??! It’s California.. t-shirts and jeans/shorts is all we need, so maybe $150/mo. 5) We don’t do much entertainment either, so a couple hundred there a month. 6) And as we have really flexible schedules our childcare costs are about $800/mo. We lived as well when we were making $150k/yr, but obviously not saving anything.

  37. John Tuckbill

    This is how it goes. Your manager says Your getting a 2% raise. So aren’t you happy your getting an extra $800 annually. Oh but your healthcare insurance just went up, so don’t expect much in your paycheck . Press just announced your Ceo’s pay increase is 30%, and on list of highest paid executives.
    The government does nothing to control the slave labor coming from South America. Largely they talk and talk and nothing ever happens. Republican and Democrats alike. Because the rich don’t want them to do anything .
    Then in the guise of the law of comparative advantage they flood the country with goods from foreign countries . All the while the Fortune 500 benefitting from the effect on earnings. Ceo wins , stockholders win, but your neighbor is broke. Look at some of our cities. It’s disgraceful
    I am a lifelong republican , grew up republican and conservative . I always believed in our great country and that through hard work and sacfrifice one could better ones life.
    Our country worked because all shared.
    Our country worked because people thought they had a voice.
    Look at the sacrifice of our people in the wars, look at how they stood up. Proud of their country, proud of our ideals.

    Too whom much is given, much is expected . Spread the wealth.

  38. Your numbers don’t seem that far off to me in most categories. I pay $1,300 a month for full-time pre-school for my one son, $3,100 a month on my mortgage so those two expenses eat up most of our salary real quick. We have lived in Denver almost 20 years and are cashing out this month and moving back to the Midwest. We’ve loved our time here but it’s time for a change and this move will allow for much more freedom in our lives. The Denver market may continue it’s rapid growth but we are taking the money and running while we can.

  39. Which is why the “democrats” are working so hard to convince you that you are all “privileged” anyways and don’t have any right to complain. They need you to feel too guilty to stand up for their destruction of the middle class.

  40. I don’t see a single sacrifice in there at all. That is living very comfortably at all levels. I think $15K/yr on recreation and vacation is a bit extravagant. $1K/mo on clothes and baby seems rather high to me.

  41. John Tuckbill

    Corporate MBA definition of middle class -broke. Small home, 10 year old car. Social security for retirement . Kids borrowing for college. No vacation. Scrapping by to make ends meet. Both parents toiling away. Fear of losing job.
    That’s not middle class. Frankly the middle class seems to be eroding away.

    Sorry to sound jaded, but look around you. We are increasingly moving toward a rich and poor society . The middle class
    Sadly seems to be going away. Our country was great because all shared in the wealth . Not just the few. You might not have been rich , but you didn’t struggle like people do today . 300k is not excessive even in the Midwest.

    1. This is absolutely right. Sadly this is right and society evolving into two classes. Haves and have nots. Obviously those that are on this site are likely more educated on financial issues and likely higher earners. But next time you’re at the airport or a public place look around…love the comments

  42. Bill Ford Iii

    Saving for children’s college. Home maintenance, remodeling etc. I live in Midwest and have 4 children. I think 150k is very low. 300 would put you at comfortable and not living the high life.

  43. Sam,

    Your site is peerless and one of the few sane, informative places left on the blogosphere.

    I wanted to shed light on why people have such emotional reactions to your “middle class” or income based articles which non of the 300+ comments seem to quite capture.

    The issue is not about differing lifestyle or cost-of-living strategies, rather its a visceral envy; they know its actually is quite difficult to make $300k for a family even in NY/SF/coastal metro.

    I graduated an Ivy MBA program 5 years ago.

    In my class of 200, ~100 went into consulting or finance. Five years later, only about 25 are still at a top consultancy or bulge bracket/PE firm. That means only 13% of the my elite (using that term relatively, I’m by no means anything special) class are still on track to be conventionally ultra-high earners.

    Passive income, smart investing etc. are the true ways to establishing wealth but most people are delusional and hope to just go into the office and get a fat paycheck every 2 weeks.

    Going back to my class, only 25 people will be partners or managing directors making the real $500k+ paycheck year in, year out. What’s left is a of people toiling at the corporate wheel to hit $175-200k. Very few couples can maintain the dual-income high earning commitment once kids get into the picture and are thus 1 income. I guarantee this scenario describes countless law school grads as well.

    Some readers take your advice and start their own business, do rental property etc. but I guarantee, most are just looking around at high earners green with envy (like your old golfing friend!).

    Anyway, sorry for the rant but no one had said the obvious and wanted you to know. Keep up the good work!

  44. While you have touched on numerous salient points, you have no clue what you’re talking about when it comes to “middle class.” The people in the middle class do not spend $6k/yr on clothing, $8k on vacations, waste several thousand on food, nor drive a $50k luxury SUV. A middle class family has to make choices on where to spend and where to cut. They don’t say, “Hey, I’m blowing 8k on a 3 week mega vacation” and it just magically happens. They’ve had to spend their money to make ends meet so do something local, or some camping, or whatever other cheap alternative they can come up with. You have a baby and you’re going to do everything you can to protect him/her? If you’re middle class and that’s your mindset, then you’re buying a used Explorer or CRV at best. And you’re not having someone deliver your food to you every night, you suck it up and loose family time because you just can’t afford to do it any other way.

    Just because you need $300k/yr to make your life of luxury work for you doesn’t suddenly mean you are somehow middle class. My household income puts us solidly in upper class (top 10%ish range) and we don’t spend anywhere NEAR what you suggest for most of these line items. Now if you want to say that it costs 300k to live comfortably (I’d argue very luxuriously), then that’s arguable. To somehow claim that this is “middle class” just makes this all nonsense.

    And if you were paying ~$600/month on $40k in student loans then your interest rates were over 13%. That doesn’t add up either unless you were financing it irresponsibly.

  45. I am having trouble rationalizing this relative to actual income statistics. Based on US Census data, the median HH income in NYC is 53k and the 95th percentile of NYC households earn 240k. By stating 300k is needed to be middle class, you are implying that 95% of the population in NYC are below middle class, or lower class. You also imply that the middle class makes up less than 5% of the population in NYC (the 95% – 100% of HHs by income). That doesn’t seem to be at all ‘middle’ to me. Can you please define what you mean exactly when you state ‘middle class’?


    1. “As the migration speeds up, it will raise real-estate values in low-tax states and hurt them in high-tax states,” the authors add.

      Ahhhh, my thesis of investing in the heartland is going more mainstream!

  46. I am self employed, live in the Midwest with a little over a $300k self-employed income. I did a spreadsheet inline with what you had laid out Id be happy to email it to you and collaborate on an article about living in the midwest living if you are interested.

    It is much cheaper to live in the heartland but at the end of the day money come and money go – especially when you have kids and hobbies :)

    I max out the sep IRA every year, live in a modest home with a pool and on acreage. Life is good in the heartlands. We have 2 kids and my wife is able to stay at home but we still like the development social aspect of daycare so our oldest son goes a few days a week.

  47. Its a good article but what these articles always leave out is the time cost of quality of life for your years on this earth. I work a civil servant “middle class” job but I do in the middle of the country. I commute 15 minutes a day in a metropolitan area. I can live in a 5 bedroom house and afford it on a two parent working salary. But I’m not always stressed out with the cost of living and the over crowded SF city like area. I’m two hours from the mountains, the beach, or D.C. but I can come home from work and actually enjoy raising my kids in the neighborhood we live in. I actually have time to spend on the things that matter. Maybe those coastal cities are fun when you are single and just starting out but when you have a wife and kids, and don’t want to pay for private school (you want your taxes to just pay for the school you live at) and want a safe neighborhood that is not an ultra-wealth gated community, you got to move away from the left coasts.

  48. Yeah I get this budget it hits close to home. NYC suburbs, housing is expensive but even more so is property taxes I pay almost 40k in property tax, so my housing expense is 80K before talking about maintenance, utilities, etc. So basically my big cost driver is 100k in housing expense, childcare, commuting costs, and insane insurance costs(car, house, liability, jewlery is 9k for me) everything else is pretty much in line with the rest of the country. I’m cheap so at the end of the day I can save 50k hard cash plus the 401k max(with company match it’s 50k for the 2 of us), I have a 2 bedroom condo on the hudson river that has no cash flow but is on a 15 yr mortgage being paid down by my tenant so I make 20k per year in principal. But yeah food costs are high we both work and commute, and daycare is very expensive, healthcare is also a killer it’s not only the premiums but the fact that you need to spend 6k before your insurer really picks anything up.

  49. Here is what my P&L looks like at $300k (which is very close to my 2018 total – next year higher), rounded to nearest $1k

    Income – $300k
    Taxes – $70k
    401k + Def Comp – $30k
    Healthcare – $5k
    Housing (all related) – $25k
    Cars (2x, with ins/tax/gas) – $17k
    Food/Bev – $20k (yeah, we like to eat out)
    Vacations (3-4x intl) – $12k (usually 1-2x to Europe, 2x Carib)
    Life Insurance – $1k
    Household Items – $3k
    Student Loans – $6k
    Clothes/etc (90% wife) – $8k
    Other -$10k (gifts, entertainment, etc)

    Net Savings $93k

  50. This is a controversial post! I live in Toronto and I feel the 150 per person is only necessary if you’re maintaining both a high savings AND spending percentage. At this time my focus is more on saving so the spending is more restricted.

    But I think what the point of this post was to depict a salary where you don’t have to struggle day to day. For that, I would consider 150 k a person to be a good fit, even in CAD. Certainly you can make do with much less however.

  51. My wife and I live in the small-to-medium sized midwestern college town (a very blue town in an otherwise red state, the latter of which sucks) in which we went to school, loved it, were fortunate to get well-paying jobs we loved here and never left. We’re what James McMurtry sings about in his song, I’m not from here.:

    I’m not from here
    But people tell me, it’s not like it used to be
    They say I should’ve been here, back about ten years
    Before it got ruined by folks like me

    She worked for a giant telecom company and I worked in the physics department of the university. Together we always made a six figure income – in a town where a family of four could live a pretty nice life on $50K – and have owned all our own homes since we married a few years after school. We’re in our third house now, a 2,800 sq ft ranch on 3/4 acre in a nice neighborhood half a mile from the edge of campus that has been paid for for ten years.

    We put our two boys through college as far as they were willing to go (one with a post grad degree and one who did not finish his undergraduate studies) and we retired early; she at 56 and me at 57. We each had six weeks of vacation for most of our working years and took the boys on many theme park, beach, desert and mountain vacations and even to Europe. We spent a year overseas while I was on sabbatical and my wife and newborn oldest son were able to join me because of her company’e generous maternity leave program.

    I coached youth sports, including four years of youth football, five years of basketball and twelve years of baseball; from Little League T-ball through Babe Ruth. As well as typical family vacations, we also spent a couple of weeks every summer traveling to all-star baseball tournaments. Those were some of the best times ever!

    Because of our busy schedule with work and kids (and their myriad activities) we dined out a lot, but once the stable life developed when the boys were older we cut back on that behavior and it’s hard to believe how much money you can burn along with all those excessive calories! My wife kept track of every penny we spent with her own spreadsheet and when we decided in our early forties that we wanted to retire early, we started cutting back on a lot of other non-essential items, like the ~$400 per month we were spending at the book store, and similar amount for wine and spirits. I also stopped upgrading my beloved BMW motorcycles every year or two. :(

    We had always been good at tucking extra cash away but since we both had decent pensions to look forward too, we weren’t fanatical about saving. But by deciding to retire early, we knew wouldn’t have SS to supplement the pensions for some years, so the savings plan picked up speed. Plus, we had a few windfalls that most folks aren’t lucky enough to enjoy. On top of my regular job I picked up some extra work on the side helping out a large Internet company for four years, and put about $250K away from that. Plus, I owned a popular enthusiast website which generated an extra $25K – $50K a year for a number of years (most of which I invested), and I eventually sold it for $250K. So before we were fifty my wife and I had already built a solid and fast-growing portfolio.

    Although she didn’t expect to get out quite as early as age 56, in an effort to shed older, more costly employees, my wife’s company offered her a lump-sum early retirement supplemental income package (SIP) of nearly seven figures in lieu of a monthly pension, and along with a $180K 401(k), she (we) were giddy with delight!

    I’m a year and a half younger than my wife and – feeling we had secured some measure of financial independence – planned on retiring at age 56 as well. However, the only other person in the world who was familiar with my systems (strange, one of a kind nuclear physics apparatus) took a position with another lab, and not being one to leave my own lab in a lurch, I stuck around for an extra year, training others on my equipment and writing over 800 pages of technical documentation for that as well as for a SQL database for which I was responsible.

    Also, at about the time I was ready to retire I was struck with an unusual physical disability that, although not life-threatening or limiting in mobility, does interfere with some of the activities I used to enjoy. The Social Security Administration agreed that I am indeed disabled and therefore granted me SSD. We would do perfectly well financially without that income, and I would be especially grateful to not be disabled as I am, but coupled with my pension, it has afforded my wife and I the luxury of not touching our investment portfolio, which has allowed it to experience significant growth over the past seven years (I am now 61 and my wife is 63). Our financial adviser just last year insisted that we begin to withdraw monies from our account (we’d be forced to do so at age 70 anyway) and we have taken his advise although it’s not making much of a difference in our quality of life. We’ve both always been able to afford to drive late model cars (my wife owns a 2018 Volvo XC90 Hybrid – haha, Sam!) and I just bought a new Audi Q5 SUV. The difference between now and ten years ago? We paid cash for the new cars.

    Thank you for your financial advice and everything else you provide to your readers, Sam. Good luck with your long, long retirement!

  52. Sam,

    Love your blog but I think this post is way too generic. A middle class income and mortgage in San Fran is crazy different than in Cleveland, Indy, Pittsburgh, Detroit, Columbus, etc. There aren’t any “middle class” families in the Cleveland area that are paying over 2,000/month for their mortgage. Most of my friends live in houses valued from 200-350k. Depending on the suburb. 350k can get you a pretty decent home. A $3,000/month mortgage in this neck of the woods is almost unheard of unless you are a doctor, attorney, etc. that is at minimum income statement affluent.

    Again, I love your blog and learn something every time I read it. I appreciate your perspective. I just think you’re comparing apples and oranges here however. Your numbers are probably right for crazy places like Cali where you pay loads for something of no value. But who wants to live in Cali anymore anyways? The taxes, home values, and traffic are terrible. I know several affluent people moving to NV and TX to get out of there.

    Thank you as always for such a thoughtful post.

    1. Sure, no problem. If you would like to write a post about the middle-class lifestyle in Cleveland and those other cities I welcome it! Thanks for sharing and helping diversify the content on the site. Please share your background and expenses. Thanks

    2. I agree with this point. I live on the east coast, but most cities are no where near as expensive as NYC or San Francisco. For the median reader $300,000 per year is going to be solidly middle class or better.

  53. Sam’s definitely really close on his call that 300K/year is middle class. I personally consider this the lower end of upper middle class, but again it depends on where one lives. The government wants people to believe that if a family of 4 makes 50K, they are middle class. This is absolutely false! Don’t let the mass media and government try to fool you. 125K in the midwest is middle class. 225K-250K is upper middle class. 500K+ is upper class.

    Again, a great point that Sam makes is that lifestyle needs to be factored in along with income to better define class. In my opinion, there are some line items in Sam’s budget that seem high at first glance, but someone from SF at a similar income level should really submit their financial profile for comparison.

    I will submit my midwest budget and we will see where it lands!

  54. Living in NJ, I find these expenses to actually be on point or if anything too low. They do not include a 2nd car for the other spouse (5k per year) and once you have a 2nd or 3rd kid in the equation you will still have the childcare expense plus school payments for an older child of 5k-15k per year. Add in another 5k of summer camp each year and birthday parties for ones own kids as well as friends kids + holiday hosting and associated presents (5k/year).

    In the end though the typical family that would be identified above would find themselves being in their 50’s with a fully paid off 1.5 million dollar house (in todays dollars) and several million in 401k (which I suppose would not make them middle class in retirement). So perhaps struggling a bit now but very much ok/”rich” in retirement.

  55. The anger in many of these posts are ridiculous.
    The bottom line? It should be to work hard, be frugal, find ways to enjoy life with your family, and consider ways to retire well. If it takes $300,000 to be middle class and attain these basics on the coasts, then I have no problem with them being middle class.

    I was upper class in a third world country, and now I am making over 8 times my annual salary here in the U.S. versus the third world country, with lower capacity to take vacation and travel. It is a choice to be made.

  56. The vacation expense is way too low IMO if you have to fly somewhere. Living in NYC doesn’t allow that in February…

  57. Hey Sam-

    It’s interesting how so many of the comments get frustrated with 300k as a middle class benchmark because it’s higher than what middle class technically is.

    I think what you’re basically getting at (which is exactly how I feel), is that making 300k allows you to be comfortable and save some $$. A lot of successful people consider being comfortable and saving some $$ “middle class” even though it isn’t. They would consider people who sold companies and made millions, make over 1M a year at their jobs, or inherited a ton of money to be wealthy.

    I’m in the top 2 percent of income earners for people my age, and top 1 percent in terms of savings. But I don’t feel upper class at all. I feel like I’m just grinding away trying to save as much money as I can. I know I’m wrong but it’s just how I feel. It’s interesting how comparing yourself to other people can make you feel.

  58. I live in San Jose California and we make close to 300 K a year. I would consider myself upper middle class in the way we live and toys I have. We also save close to 200 K a year after the expenses are paid. We do not have children so I guess that makes up for many thousands of dollars and serious amount of free time. Moved here 10 years ago and have Less than 20% of the house to pay off. I feel a lot of Sam’s so called expenses are really true luxury and not anything resembling middle class lifestyle. If you choose to live small when it comes to housing, restaurants, and automobiles your paycheck will be going into investments instead of wasteful spending.

    1. Saving $200,000 a year after paying taxes that’s quite impressive. Do you guys live rent free? Please share your expenses so other people can learn how to save such a high percentage of their after-tax income. As you can see from this example, the after-tax and after retirement contribution leaves this household with less than $200,000. Thanks

    2. You don’t pay taxes? Making $300k in San Jose is less than $200k after taxes. And no matter how frugal you are, you need at least $50k/yr for living and expenses for two.

  59. I think the mortgage number is a little off or there is a huge assumption about a down payment. Your property tax is based on a 1.5 million house. If one puts 20% down, the mortgage is $5700/mo on a 30 year amortization at 4%. That is substantially higher than the $3900 figure you mentioned.

    Are you suggesting this family put $600,000 down on the house? If so, then the parents must have been saving for a LONG time or had help.

    Even if the savings was done before children, that would be, at best, another $50,000 a year towards a down payment.

    What am I missing?

      1. Perhaps a more accurate title for the article needs to be “Why Households Need To Earn $300,000 A Year To Live A Middle Class Lifestyle SEVEN TO TEN YEARS AGO”.

        In other words, if a young couple who is renting decides to invest in property TODAY, they would need nearly $2,000 additional per month to cover the property. Maybe you need to change the middle class threshold to $350,000!

        By the way, I’m not knocking your premise AT ALL. I’m in an east coast suburb, 850k house with a 650k mortgage. I don’t have kids (yet) and our monthly spend is around $11,000 not including contributions to retirement accounts.

        Our income is around $400,000

      2. > But there is no doubt parental help is strong for buying property in expensive cities.


        And the plural of anecdote is not ‘data’.

      3. > Sure. They bought earlier at a lower price and saw the value of the house rise.

        Oh, great, so they took out a loan of almost $1 million with minimal money down?

        They ‘need $300,000 to live middle class’ is only because your hypothetical family was astoundingly stupid with their money.

        1. Turning a $200,000 down payment on a $1.2 million house, into $500,000 + the principal paydown over several years isn’t too shabby. I’d take it.

          How much has your $300K house increased over the past several years?

          1. Nice to see you respond with derision to people questioning your example.

            In your ‘example’ your couple took out essentially a million dollars in debt for the house and car with – as your example shows – essentially zero leeway in their budget. That’s one job layoff, medical emergency or real estate crash (pretty sure it’s happened before) from total financial disaster.

            I’ll repeat – the reason your family ‘needs’ $300,000 is because it’s an example of a family being incredibly stupid with their money.

            > How much has your $300K house increased over the past several years?

            Completely irrelevant to the point at hand, but since you asked, roughly 10% over the past two years. And I don’t owe a dime on it. Thanks for asking.

            1. A $27,000 gain in two years on your home is great! Not sure where you think this derision is coming from. Just look at your initial comment. Making a $300K gain is pretty good and I think many people would take it too.

              I think the key to happiness is minimizing the comparison of one’s situation with others. Be happy you paid cash. No need to say someone who took out a mortgage is “astoundingly stupid.” Be happy with your $27,000 gain in two years. No need to say someone who made 11X more in the same timeframe is a fool.

  60. $6,000 spent on some clothes? Good grief! That would be insane. Imagine how many hours somebody would have to spend shopping to bring home $6,000 worth of clothes. Wandering about in stores and spending money is not a productive use of valuable time. In just 5 years they would amass $30,000 worth of clothes. Furthermore, where would they store all of that? Will they be renting a warehouse?

    1. I think the $6,000 is for 3 people. Just to put it in a little perspective, you don’t necessarily have more clothes with a bigger budget, just better quality. High quality classic clothing lasts and looks great for a very long time. I have some things 20-30 years old and they are still cool. Some people would spend that on kitchen appliances or sports equipment but I prefer clothing. It can be time consuming to shop, but I have 3 favourite stores and buy 2-3 times a year. I am looking for specific items that I have wanted for awhile, not just wandering around in malls buying random items on impulse. As for storage, I don’t have a lot of items or closets, and I cull regularly for charity, so my closets and drawers are not stuffed and I wear everything, and most of it for many years. There have been years (e.g. big mortgage, no job) when I stretched every dollar, bought cheaper clothes and wore one pair of jeans and 5 tee shirts, and that was okay too.

  61. I’d say that the numbers are about right, obviously its more on the higher end of middle class for San Francisco. If you put the numbers in any cost of living comparison calculator, it makes sense. I’ve lived in Manhattan for over 10 years prior to living in Indianapolis, and I ‘d say a family of 4 in Manhattan would need about 400k to be upper middle class.(That income level you should be able to afford 2 million dollar apartment, nothing luxurious) In Indianapolis it is about 150k. (Which would allow a 700k house, which is not a mansion in Indianapolis but nice upper middle class house) When I put these numbers in the cost of living calculator it actually is almost exact. For example compare Indy to San Fran, if you made 300k in San Fran, you would need only 150k in Indy for same lifestyle. I think the point is making 300k in San Fran or 400k In NYC your not considered rich by any means for a family of 4. Now if your single and making that much then your having a grand time.

  62. The numbers seem about right, but that’s why I’m glad I took your advice when first starting to follow the site. “You need less than you think to retire.” Still retooling while I figure some things out, but the single best decision we made was to get a 10 year mortgage in 2001 for the co-op that has tripled in value. We can live on one income in Brooklyn for 1/3 of that and still have access to everything. I’ve seen this city radically change with a lot of foreign money and mass gentrification in every corner of the city. I think passive income development in the midwest is a good idea, but I think the “flip-up” strategy that some people mention could remain flat for an extend period of time.

  63. Late to comment, but have a few thoughts: Geo-Arbitrage (love that term) is alive and well in our home. My husband is an MD, and we live in western NY. Although we do pay HIGH NY state taxes, as well as extremely high real estate taxes ($10,000 for a home assessed at $325,000), the actual cost of homes is relatively inexpensive here. Utilities are also reasonable, as well as auto and home insurance, entertainment, maintenance services, etc. Our home is 2,800 sq. feet, on 1/3 acre, 4 bedroom/2.5 bath. We have lived in it for 30 years. Just recently have home values begun to increase. Because they had been basically flat for 25 years, our area did not suffer in the 2009 real estate downturn. My husband earns a very decent salary (probably comparable to what an MD would earn in a large coastal city) and we live cheaply. He grew up here and we loved raising our family here. The schools are top notch, and my boys attended Ivy League colleges.

    Being from the tri-state nyc area, and having a son and sister living there, I think your numbers are on target. So I guess we are lucky to have been able to avoid the rat race and live an upper class life. We can get to Toronto and NY fairly easily, so we have enjoyed the best of both worlds. Not sure where we will go in retirement, but I have a feeling we will at least keep a small home here, and maybe leave for the winters. To be decided.

    1. We’re probably neighbors. A number of people rag on Western NY–“Can’t wait to leave”, but what they don’t understand is how much we have here. At this very moment there is a developer selling brand new 4 bedroom homes on 1/4 acre lots starting in the high 200’s in one of the best school districts in the state (and ranks well nationally–97% high school graduation rate). That house is 5 minutes from the interstates, 15 min from the airport. Tons of colleges around here and unemployment is low as well. A million people in the greater area but no major traffic problems.

      But, the area is not “sexy”, so people instead grind out an existence with $6k mortgage payments, living on top of each other, in a 1200 square foot living space in a big city like NYC.

  64. Ditto others’ comments on the heartland being more appealing in this scenario. I lived in Singapore for 5 years (consistently ranked no 1 in total cost of living worldwide) and came away from that (pricey) experience telling myself I will never live in a high COL area again if given the choice.

    It’s incredible how many people in other countries have no choice but to live in their country’s high cost of living areas due to various factors outside their control. Geo-arbitrage is truly one of the mightiest tools in the US that MANY people elsewhere simply do not have, or not to the same degree.

    Some people are forced to go where the work is, but is the quality of life in the expensive coastal cities so great to offset the total life cost? I’ve seen that lifestyle and for me it’s simply not worth it. The number of life options given to me in a lower cost of living area far outweigh the downsides, in my view. If I reach financial independence far faster living in flyover country for a few years, I can then spend my time visiting expensive areas and enjoying their amenities…

  65. If you’re willing to slum it a little, living in a not-so-nice neighborhood can save money.

    I bought a home in East San Jose in 2010, still close to the bottom of the market. We are not in Evergreen, which is where the upper middle class types live; we’re a few miles south.

    Given living in a poor school district, there is an after-school program that both my kindergartener and second grader qualify for. They go into it directly after school program for free, although we have to pay about ~$70/mo for the 1.5 hours D5 gets out a little earlier, they watch her on campus. We pick them up at 6PM. I estimate this saves us ~$1200/mo in child care expenses.

    There is also a summer robotics “camp” in the same district. It is 7 weeks and costs $4.50/day, and it includes meals.

    Another interesting thing is that their primary school is the first in the county to put all children on and “all kids go to college” track, starting in Transitional Kindergarten. The Asian kids in the Evergreen district don’t have to worry about that since their parents will make sure they all go to college (*wink*) but for the rest of us, it’s an interesting program.

    I make in the $120k-130k range (depending upon bonus and whatever stock I liquidate each year), pay some child support, and do just fine here. I anticipate paying off my home in about 10 years, after which I either retire, or have the liquidity to pay for my kids’ college. I only put $150/mo into their 529s (I originally put $100/mo for every month since they were born, but increased it this month), which will pay for tuition at a local college if they choose to live at home. My thinking at this point is that they need to take ownership of the funds I’ve set aside for them. If they choose to blow it trying to go out of state, good luck to them. If they choose to take AP courses and/or get their AA/AS in high school in order to eliminate time at a 2 year or minimize time at a 4 year college, then even better.

  66. Sam – I thought I did with my link to the AP article and the stats from the last recession. For 99% of people in the world, there are 2 keys to success:

    1. Resilience
    2. Education

    Sure, if you are born a billionaires kid you probably don’t need either to get by. From my experience though, a large majority needs both. A vast minority does not need education but the earnings statistics prove the value of a college education. There are problems on the cost side. That is clear. For me to have to spend $165K for 4 years of Penn State (all on the main campus though) is incredible.

  67. Hi Sam,

    Could you elaborate on your decision to save $700/month in a 529 plan? I’m investing a similar amount for my two children and was wondering what your thought process was behind that amount.


      1. It’s actially each parent can deduct $4k per account, so really in VA if each parent had an account for each kid you can deduct $16k. With 2 kids. Also note that you can open a VA529 in any name at any time so you could start saving for yourself and then switch to kid.

  68. A couple of things immediately stand out. The median middle class household does not pay property taxes of $19K a year and live in a $1.5m house unless they live in San Fran or NYC. Anywhere else and the range is probably from $2 to $8K a year. $24,000 for child care and baby-sitting? For 1 child? That seems high as well. We paid $15,000 a year total for 2 kids and had an au pair. That was a long time ago now but still this seems excessive to me.

    I live in a coastal area, suburb of Philly and have 2 kids. Saved for college for both. Committed to funding 4 years for each one if they are reasonable. My first will start Penn State in the fall. I estimate the 4 year cost with increases to be around $165K. Yes, for a state school. So, saving for education is rough for the middle class. I made great sacrifices to do that. In the end, where I live I fully believe $200K can get the job done reasonably for a family of 4. However, our cost is not has high as San Fran or NYC so $300K may be necessary there.

    This really illustrates how society has become a small amount of haves versus a large amount of have nots. I am in the haves category so I guess I should not complain. However, what we are seeing politically is an expression of have nots being extremely angry. I don’t think it is exclusive to the right or left. The next big shock may be from the left. Society needs to figure this out.

    1. What is the median cost of a home in the suburb of Philly where you are? It’s $1.5M in SF.

      Cost of childcare has risen over the past 18 years.

      Finally, thoughts on choosing Penn State instead of U Penn?


      1. A LOT less than 1.5m, granted. My oldest is a decent student but not quite U of Penn material. My youngest may be headed that way. Straight A’s. We will see.

        However, my oldest is also a hard worker who knows how to make money. My younger one is good with the books but struggles with jobs. So, each has their own strengths and weaknesses.

        1. Can you elaborate on what “a lot less than $1.5M” is so I can run the numbers? It’s the best way to quantify instead of go through just opinion. I got so many folks saying my expense chart is unreasonable, but they can buy a similar house 3/3 for $500,000!

          I’m thinking that by the time my son goes to college in 2036 or so, college will be obsolete. If it’s not a top 10 ranked college, I’m not sure if college is even worth it. Thoughts? I plan to teach him everything about business and various types of jobs due to our online business.

          Related: How To Stop Worrying About Your Child’s Future In This Competitive World

          1. $500,000 is probably a good figure for where I live. I also disagree with you on the “if it isn’t the top 10, it won’t be worth it”. Look at the last recession. The UE rate was 3x higher for non college grads than for college grads. Not that college is the end all and be all. I get that. I think college is important for certain fields. Trade schools for others or none at all if you are part of the .001% who can create without the need for education. I actually think college is more important today than ever before. However, it is too expensive for many reasons.

            1. I’m thinking about 18 years from now, not so much now.

              It’s great your son is going to Penn State and he’ll probably have a great time. Congratulations!

              I don’t even know if going to college 18 years from now to any school, even Harvard, is worthwhile b/c I’m questioning its use now in the post: What If You Go To Harvard and End Up A Nobody

              Please elaborate why you think college is more important now than ever.

  69. Charles A Sarahan II

    The charity is a bit low. I realize this is personal but charity should be around 2-3% of your take home. Some people give 10%. I don’t know how they do it but they do. I also see no provision for long term care. You not have it now but you should start saving for it now given the costs.

  70. I have no children in a HCOL area. Our budget for 2 is around $76K (post tax) – I could imagine adding kids would easily bring that to $120K/yr.

    One category I always see missing from people’s budgets are gifts. I currently budget $200/mo towards gifts (family, friends, birthday parties, holidays, weddings, etc)

  71. When we had our first child in the expensive central California coastal city, I did the calculations for my wife working vs not. When her salary was added to mine as taxable income with Federal, California, Fica and loss of deductions with rising income, worthless health insurance contributions since we were already insured through my work, added childcare costs, added commuting costs then…

    it turned out that my wife making over 100k per year was essentially working for 17 cents on the dollar– and for that benefit we would have seen our child raised by strangers.

    Thanks, but no thanks. She quit work.

    Who says taxes don’t affect incentives to work and thus a country’s prosperity? Anyone wonder why those European economies with the mandatory four week vacations, the flatter effort/reward curves, and the much more educated populations… have trendline growth rates that are less than half the world average — that is they are locked into deterministic trajectories to decline?

    1. We did a similar calc, but one thing to consider is that usually leaving work is a one-way street. Being out of the workforce means losing relevance and it’s hard to get back in at the same level. It’s not fair, but it’s a reality.

      I respect your decision, but people sometimes think of it as short-term (i.e. net after-tax earnings vs. childcare for the next few years) and don’t consider the consequences of giving up a 40-year career.

  72. This is an interesting post. I am from Sydney, Australia and can somewhat relate to this article given Sydney is one of the most expensive cities to live. But the major problem i see with this article is that the expense column has a lot of “good to have’s” vs. necessary expenses. Surely, someone who is on the path to financial freedom thinks and acts differently compared to someone running the rat race and trying to keep up with their peer group.

    $300K is a decent amount of money anywhere in the world. I agree it is not enough to be classified as wealthy or rich in SF (or in Sydney) but its enough to give you the ammunition to continue on the path of FIRE whilst leaving a decent lifestyle at the same time.

  73. Financial Orchid

    omg – that sold place in outer sunset is near ABC Bakery – my favorite Chinese restaurant on Noreiga St! Love those sweet buns! mmm

  74. Financial Orchid

    Wow $25K for food,or $1K per month per person including baby. I’m just trying to stay under $400/mth per person (including dining out) in a high cost of living west coast city.

    1. Dining out is killing you.

      I’m looking at this month’s budget, we’ll be about $160/person for groceries. That’s buying decent food, we don’t eat ramen. Our restaurant budget I have cut to virtually nothing, so it’s not really covering for a smaller grocery bill. Eating out for me was the easiest way to trim fat off the top.

      1. +1 re dining out as budget killer.

        We are a dual income, Outer Sunset San Francisco family of 4 (the kids are under 5). Sam’s numbers are spot on. Childcare costs are killer, yes. And yes, we are exhausted. We started pressure cooking using a multi function device and it is a game changer. Solid frozen meat on the table in 30. Rice in 15, steel cut oats in 9. Our food costs have come down drastically by going out/taking out much less. Both time and money saved.

        1. We got one of those recently, but freezer to plate I think I can get frozen chicken breasts done in 25 ;) It’s a great tool. Truly amazing to turn a frozen hunk of meet into soft food that quickly.

          Often we’ll have either meat or some beans thrown together with rice and frozen vegetables. It costs almost nothing, and it doesn’t take a meaningful amount of time, so time is no excuse. So far this March our restaurant bill, which includes 100% eating out and even vending machines and coffee drive thru, is right at about $145 for 5 people. I’m proud of that and think we can stay within our $200 I budgeted for it. $800 for groceries, at least $50 of which is frozen blueberries (not kidding).

          Eating out = budget killer
          Trips to Target = budget killer

          1. I buy 10 lb. boxes of blueberries at $22 each straight from the farm (no spray) and freeze enough for a year. It saves money and the blue berries taste much better than store bought and you never get a moldy one. Same for all the other summer fruit. Takes a couple of minutes in the evening to get a box into the freezer. You eat local summer fruit all year round.
            I can make a tray of roasted chicken thighs (or pork chops or steak) with vegetables in 30 minutes tops (less for fish). For flavour, add any one or more of garlic, lemon, olive oil, ginger, salt pepper, fresh or dried herbs/spices. Preparation time 5 minutes. If I forget to thaw meat, I microwave for a minute.
            I make coffee at home but that’s a big cost item for me even though I buy Kirkland espresso beans.

            1. My blues cost me $3.40 lb frozen :( I don’t have the room to store them all, though. My freezer is full of venison :D

            2. Giles, not much game in the city that you can hunt (although lots of deer, eagles, coyotes, the odd cougar, and other wildlife in and near the city). Although there is a bird sanctuary where some hunting of migratory birds is allowed. I am not up on hunting regulations but people that hunt deer or moose usually go “upcountry” once a year. My hometown on the prairies, people can easily hunt close to home, and when I visit, I enjoy BIL’s bounty. I have read that Canadians eat the highest proportion of wild foods (fish, clams, game, berries, mushrooms) of any country. Although many Canadians never eat any. Some people in my area (right in the heart of the city) forage in the parks for nettles, dandelions greens, fiddleheads, etc. Vancouver is actually pretty wild with sea and mountains and forest right around and in the city.

          2. I am jealous of the venison. I grew up eating game (venison, all sorts of birds) and don’t get it often nowadays. I need second freezer for meat. Small one to tuck into a corner somewhere. Blueberries + venison = pemmican, the traditional food of natives on the prairies. You can’t trade money for that lifestyle.

        2. Absolutely. It’s a recurring cost that people don’t think about with all the other high priority items but I’m cognizantly trying to manage this line. It can be a big challenge in a city with lots of yummy diverse choices tho. Easier to cook at home in remote towns with less temptations.

        3. Financial Orchid

          I hear a lot of high earners in the bay use Blue Apron and that seems really expensive.

          Slow cooker is fantastic to come home to for gourmet soup and hot food in the winters, but what do u do for summers? Can’t just feed the family salad and fruits every day right? Sushi gets expensive regularly. Fresh fruit can’t last week. Frozen smoothies alone isn’t filling enough for kids. Hot dogs aren’t too healthy.

  75. It’s interesting how people from the Midwest and people without kids hate this post and hate this budget. Why can’t they understand that life is different with kids and in higher cost areas of the country? I don’t think people on the coast hate the people who live in the heartland.

    1. In the heartland, with $300k, people can live like the wealthy and in a huge mansion. It’s just hard for some of them to understand that $300k in the coast are just comfortable middle class. Housing and childcare are the biggest expenses in the coast. $2500 per month is the cheapest daycare I can find in the Boston area. $1M only can get you a 1700 square foot townhouse. $250 in HOA fees, Groceries for fresh foods are $700 for 2 adults and a toddler. Car insurance is about $125 for 1 car etc….Sam’s numbers are pretty close and spot on. He actually forget, gift giving is also a bug Expense category.

  76. A great demonstration of why geographic arbitrage works. No way I’d stay someplace like that long term. Too hard to build wealth.

    Always fun to look at other people’s budgets, even if they’re hypothetical. Some of my expenses are higher and some are lower but back when we had a mortgage that was about what we were spending. We didn’t (and don’t) pretend it’s a middle class lifestyle though. The median household income in this country is $55K. What they can afford is a middle class lifestyle. Assuming they have to pay taxes and save, that would suggest that spending more than 3X+ that amount is far from middle class, no matter what is put as the title of the blog post.

    I’ve lived on $20K, I’ve lived on $50K, I’ve lived on $120K, I’ve lived on $200K and I’ve lived on $1M+. You can do a lot on $300K, even in a big city.

    1. A lot of people have mentioned geographic arbitrage, but I’m not convinced that’s the answer for many families making $300k+.

      For a doctor, software programmer, Youtube content creator, or someone like Sam, sure. But for the vast majority of us working in corporate America, or for the government, I’m not so sure it’s feasible. Remember, the majority of these families will be dual-income (way more earners making $150k than $300k). That means both spouses have to be able to either find a job in podunk, Arkansas, or work remotely.

      In my case I do work remotely (and have for years), but my wife is absolutely unable to, and never will be. So we’re stuck on the coast in a hyper HCOL area.

      Sure, there are the lucky people making decent salaries as Target or 3M executives in Minneapolis, FedEx execs in Memphis, or P&G execs in Cincinnati. But the vast majority of jobs paying $150k+ are going to be located in HCOL areas (which is how those areas got so expensive in the first place). I’m just not so convinced they’re all that portable. I know a lot of people who have asked their NYC firms if they could relocate to Burlington, Vermont to be closer to the family, and got a big fat no in response…

      1. Agree. Most jobs cannot be done remotely.

        I still don’t understand why people live in these coastal cities. I kind of get California because of the weather, but paying all that money to live near NYC I do not get. My house is worth $240k right now. It’s just over 10 years old, 2700+ square feet of living space on a good sized lot in a spectacular school system, and close to the city.

        Or, I could get some 40 year old 1600 square foot house in poor shape outside of manhattan for $800k and spent an hour commuting each way to work? No thanks.

  77. As a life long resident of SF and still living in the city, a $300K income sounds about right for being middle class around these parts. In terms of expenses, we do not spend as much as what you put on here Sam. For food, spending over $25K seems a bit too much even for a family of four living in SF. We are a family of three and fortunately we don’t spend even half that amount and thats with groceries and going out to eat combined.
    For entertainment, over $7K(around $600 a month)seems too high as well. I think splurging to watch a sporting event or broadway play is fine but it shouldn’t cost that much unless you do it constantly.
    Child expenses at $6K($500 a month) can be reduced by providing more books than toys. Babies can get attached to a book as early as 12 months based on my experience. Plus you can get borrow children’s books from the library in which they can get free entertainment with the weekly baby rhythm time they provide.
    All the other expenses you have seems pretty spot on. Your right about childcare expenses, their is no way to get around it unless you have family close by that is willing to take care of the kid(s).

  78. All I can say is “ouch”. We made no where near $300,000 a year, but I have to say we have accumulated the amount you said required for retirement for maximum happiness on much lower earnings, but we are in our 60s. But, I am waiting for the stock market to go up a little further before derisking a bit more. – Thanks Facebook.

    My house is crazy though. We live about 40 minutes south of San Francisco definitely not in the high-cost city of S.F.. I purchased my house for 121,000 dollars in 1984, and now it’s going for almost $950,000 according to Zillow. Redfin has it higher. We just received a notice from Redfin stating houses in our area have increased by 37.2% since 2017. What the heck is driving that? At the height of the housing bubble, our house was 650,000. So is there another bubble around the corner? If there is I wonder where it would come from since credit standards are much tighter? The property taxes on a house this expensive will be higher than my mortgage was (when I had a mortgage). We go to open houses, and they are flooded with prospective buyers in even the tiniest of homes.

    I am selling some stock in hopes to by a rental property near my son. Homes there go around 400-500,000 dollars.

  79. I think you’re low balling the childcare. How are they doing 25 hours per week if both parents work? Not to mention a weekly date night. For us to swing childcare at home it would be $15/hour * 40 hours (we are lucky and don’t really have a commute to speak of, plus slightly staggered hours). Add a date night you’re looking at 42 – 45 hours per week. That’s about $2,700/month here in Denver, and I think that’s low with nanny taxes, vacation, etc. which is expected. You can go the Au Pair route and cut that to $1,500 + expenses per month, but it’s too big of a risk IMO. We have chosen to go the daycare route, which is $2,250/month for two, which is a great deal (I choke as I write that since it’s $27,000 annually). Kids are not cheap but they are worth it!!

  80. ciaran murphy

    I think you have it pretty accurate. We are at the same number in Portland Oregon. Myself 200, Wife 100. Both Engineers. 3 young Kids. You could nit pick at numbers here and there…but its not worth it. Many ways of doing it but I fully agree….If you want to retire well and on time, own your own home and help/fully fund the kids through college, you need this kind of money. We are on a 15yr home load and save a bit more than your example but that is primarily because we went live in childcare and a lot of home cooking. Bottom line….We will W2 330K next year and I don’t feel well off. I’m comfortable. But we both work hard. Too tired to shop!

  81. Great post Sam! I think you are missing CA-SDI – state disability insurance payments of 1K per person in taxes line. NY, PA has one as well which are mandatory. This will increase taxes by 2k. I can totally see someone spending at this level.

    To add a personal perspective I live in San Mateo less than 30 mins from you. Here is the view from a savers perspective. We top at 90K in expenses. Major differences are:
    Food $800 We go out once a week to places like chipotle/smash burger/The habit/Panera. Our bulk shopping is costco plus asian grocery stores. The remainder falls to Safeway/Lucky. I am not sure how one spends $2K per month unless it is completely organic and at whole foods + each date night costing $150. Please do post more on it, as this number is something I cannot absorb for median level.

    Daycare $1700
    Rent – $2800 Pure luck, Very slow increases over years.
    Baby items – $150 – there are always crib like items but only 2-3 per year. so per month has not been that high number as you posted. plus it depends on individual.

    Healthcare – FSA – 100 (atleats one earner has excellent plan/kaiser)
    Dependant FSA- 5000 pre -tax PER YEAR. above the line savings of 2k.
    Clothes – 100 (H&M, vanheussen in sales; carters/gymboree in sales)
    Car – 300 (Hyundai/KIA/Ford – 2 year used)
    Entertainment 250 (a museum membership allows 50% off at lot of places.)

    I also would draw your attention to this user case study post on frugalwoods from San Francisco. Some line items like rent/daycare are not possible but I would say a very frugal folk on their quest to FI. We got inspired.

  82. It’s crazy how some areas of the US are so very expensive. Now more than ever one should pay attention really hard to all matters in relation to finance:
    – How to save;
    – How to invest;
    – Create new sources of income;
    – How not to lose money on bad strategy.

    With this sudden drop in value in ETFs of real estate (special US), maybe we have an opportunity to invest.

  83. SF is pretty expensive. A few of my coworkers came from the Bay Area becuase of the high cost of living (home price, and high rent). A friend of mine just bought a ~1500sqft 3bd, 2ba – compete gut (it was a mess) for $1.9M up there. Yes, it’s in a nice neighborhood with a few rebuilt homes. But that same house would sell for $700k-800k (maybe 900k-1M if it was turnkey) here in San Diego.

    That said, our household makes $320k (and still growing), but we don’t feel rich. Maybe upper middle class. Most/all of our friend would beg to differ since they make a fraction of what we do.

    Income is a funny thing. Both our families came to the US with nothing, so my wife and I went from low income (assisted living) to high middle class in 40 years of our lives. After reaching each higher income bracket, we still don’t feel completely secure. We do donate more than we do in the past, but we still worry about saving for retirement, and college for two etc…

  84. Denver should be added onto “expensive coastal cities” category. It’s gotten crazy here with property prices in particular. With unemployment so low here, inflation is being pressured upwards at possibly a higher rate than the rest of the country. I heard recently that for the first time in a while there were more people leaving the Denver/Boulder area than coming in. However the mountains and large, cosmopolitan city living offer a great alternative to coastal living.

    I come from Los Angeles, and I get the difference. You can still technically find a dump of a house in the Denver metro area for less than $300k, but they’re far and few between. But the trajectory of property prices is concerning nonetheless.

    However if anyone’s reading this, and considering moving to Denver …. don’t do it. It sucks. It’s not worth it, and we’re full anyways.

    1. I moved to Denver almost 2 years ago and It’s funny that everybody here sounds just like you. Really crazy that people living in a major metropolitan think that nobody should move here and feel entitled since they were “here first”. Denver housing is expensive to buy but I rent in the heart of downtown and manage just fine.

      1. Well Alchemist, you’re right about the ‘entitled’ vibe being unbecoming. I was going more for a lighthearted, tongue-in-cheek attempt. I am welcoming of all, and frankly the influx is great if you’re a property owner … but can also be frustrating for a local of meager means who in other parts of the heartland might be able to purchase a modest home. I get that frustration and empathize. Sometimes life just ain’t fair.

        1. Damn Millennial

          Colorado native here! Fun to get some local perspective. Denver is so crazy changed that people who are saying don’t move here most likely haven’t lived here that long.

          I grew up on the western slope of the state where all the true outdoor fun is had! My folks were split so my dad lived in Denver in the 90’s. It was not a massive hurdle to own a SFH in a core neighborhood. That is no longer the case. I absolutely love Colorado and being in Denver with all the changes has been fun.

          This city is no doubt on the map though and I would not hold off buying if you want a peice of Colorado.

          I purchased what I could as early as I could after getting out of school and am happy I did.

          The reality I face now is does it make sense to buy the second one and keep the first as rental. Or sell the first to buy the second and invest in better income producing properties as everything has appreciated so much?

          Good stuff enjoy Colorado, go see a red rocks show this summer.

  85. Where do people come up with the $600k for a down payment on the $1.5 million house to have a $900k mortgage?

    1. Hi Jay,

      It takes time. What we did was live and flip. Bought a starter home and sold 2 years later, bought a bigger place and sold 2 years later etc. Luckily the appreciation worked for us and we have made money each time to off set selling costs. We also worked with the same realtor who gave us a discount for using him several times. We bought our first place in 2001 and we are in our 4th home worth over 2 million but we only have a 760,000 mortgage at 3.275%.

      1. Thanks for the response Terri, that’s great. I just seems like such a chore to save that amount given you’re already living in a high cost location. I live in the Midwest so we don’t see that type of appreciation but also don’t have the dips when things go the other way.

      2. Yes, I agree. The first house is not your dream house. I bought in a suburb at first (I learned that commuting is a killer and would do anything to avoid), and slowly moved closer to one of the best areas (paid $900K, with $300K down, now assessed over $3M.) If you have two young people earning good salaries, just cut expenses to the bone, and save everything, then buy when you see something that will appreciate. When it happends fast, it will not seem like a chore, it will be exciting. Always try to get something with a “mortgage helper”. Have foreign student boarders, anything to get ahead. Do not have babies until you have a house. If you do all this when you are first starting out, do not ever get into debt (except for mortgage debt), you will make that snowball that will keep on rolling for the rest of your lives. Or you can do it the other way, and spend when you are young, go into debt, and then spend your entire lives living a high middle class life, working, commuting, not having time to cook dinner for kids, and making do with a 3 week vacation. Now that is a chore.
        I have been preaching compounding effect all my life, and it works. Every few years your net worth can double (rule of 72 is divide your average annual gain into 72 for the number of years to double, so that $500,000 that took so long and so much work to save, doubles to $1M just before you retire). Anyway, this can be done on much less than $300,000 a year (especially if a lot of your income is business, rental, and investment income). On $300,000, it is easy. With two, the work to maintain a house and cook meals is minimal (I am single and I find it easy and fun). Don’t succumb to lifestyle creep. Personally I would rather spend money on travel than eating out every night just to avoid 10 minutes of cooking. When you buy cars and houses, think about upkeep costs. Be practical. Now I can afford luxuries but still rather travel than buy $5,000 appliances, luxury cars, etc.

  86. I remember talking to some people at work about my stay-at-home mom friends that live off their husband’s low six figure salaries and everyone was appalled that they could survive (we don’t even live in SF or NYC). This is definitely the mentality on the coasts.

  87. Reading this thing over again…scary stuff. This isn’t a Middle Class Lifestyle (but maybe I’m just behind the times since I live in the past).
    Numerous responses about “Property Maintenance” – For me it’s about $0 despite living in a 60 year old home. Why? Because I DON’T KEEP UP WITH THE JONESES! Just because Mr. Cool next door has lawn guys come 2x each Week doesn’t mean I do. I do everything myself. Roof maintenance? Gutters? It’s all self-maintaining for me! I’m going on 20 years without a new roof–you get a new roof every year? Probably, as you hire people to hand-polish your pylons and custom paving stone driveways! Don’t forget, Mr. Jones Esquire next door has Crews come to blow off each and every leaf and pick up each and every twig! You gotta do that, too, to be Accepted as an equal! No excuses!
    Oh, and did I mention that YOU DON’T NEED A LAWN! Try it sometime. Natural ground coverings which grow via Rain! Wow, what a concept! Oh, but you’ll be the oddball on the block (like yours truly) but who cares? It’s Natural, it’s what the Environment is all about! No poisons, no fertilizers, no annoying twits jumping around with chainsaw-loud machinery. Peace, quiet, and nature’s animals love it as they should. A few weeds here and there getting a little high, take out a push lawn mower once a month or two. Do it yourself, you lazy bastards! Don’t act like King $hit and proclaim “that’s Work for Peasants! Send in the serfs!” Around here people don’t have acres of grass in any case. They have Strips and they wouldn’t Dare be caught doing “ghetto work” associated with Leroy, Muhammand, and Pedro (yes, they’re closet racists!).

    Hundreds for Clothing? All that money spent Per Year? Dunno about you lot but I wear the same clothes over and over again–across years, even Decades! See, I’ve this thing in my cellar called a Washing Machine. It takes out the dirt and the stuff looks like new. So long as the garments are not ripped or (over-)stained you can use them over and over again! Wow! What a concept! (I wish I could do this with the waste material I excrete!) But you’ll probably hit me with Fashions going out of Style and all that other yuppie crap you sincerely require to feel Accepted in the Non-Thinking Group-Mind called Conformity. I feel sorry for you, honestly I do. $0 on clothes for me for the past year. Just think of all the money saved there–money making money via interest! Wow! What a concept!

    Childcare can be $0 as well if you take my advice and don’t have kids. Kids are The fastest way to go broke in our society. The greater the number, the faster. But, hey, it’s your choice. I’m the guy bitching about overpopulation all the time being one reason for the fall of humanity. But that’s just my opinion so I’ll just shut up now.

    Consumerism. Sheeple. Follow the herd, programmed by commercials, TV, movies (Product placements!). Comparing yourselves to your neighbors. No wonder everyone’s screwed in this country today. Weak crybabies. Take responsibility for your actions and SAVE Money if you want to become financially independent like yours truly here. You follow the $$$ distribution here, you’re not going in the right direction.

    OK, here’s what you don’t want to read…
    Let’s go back in time (wow, what a concept!) to a younger, more mature, less spoiled, less “sheeple-ized” Eff Ess… Before status and entitlement addled his brain–Before The Disease took hold:
    I rest my case, dear readers!
    You see, since then, Eff Ess has…changed.
    I can only imagine he’s been infected or bent by his mate. I’ve seen things like this happen before.
    (That’s one reason why I’m not married–the other reasons include social phobia, alienation, and erectile dysfunction, as well as a fear of being Mined by a gold-digger, and my tremendously high standards of perfection required in female organisms which don’t exist in this reality!)
    Eff Ess must be Saved!
    If he cannot be parted from his mate or his offspring, I suggest we create a Save Eff Ess Fund…
    I’ll give you guys an address where you can mail your checks to…

  88. Bay Area- two kids -we’re at 10K/mo, 5K of that is childcare ($2400/mo, both under 2 yrs). We are super frugal, except on daycare spending. We want the “best” for our kids, but are seriously reconsidering what value the fancy daycares are actually adding to our lives. We lived comfortably at 5K/mo before having kids.

    When I was pregnant with my second, I got many ugly comments on how we could afford “a second” when costs were so high. I didn’t expect to hear that, but thats what people implied around me, and it makes me want to earn so much “more money” just to prove them wrong. Assholes.

    What we’ve found is you got to make the system work for you if you want to keep your costs low, you cant scale with 1+ kids linearly just like you did say when you were single.
    1. Live in flip in a way that you make an extra 300-400K every two years.
    2. House hack or downsize or rent if you’re desperate to lower expenses.
    3. Au pair for childcare or an option thats not the best of the best high end daycare
    4. Real Estate Professional Status so you can get some tax benefits on one high income earner while the other stays home or works part time.

    1. I find all these replies interesting. We do live in a divided country in so many ways don’t we?

      The more I visit SF and interact with many of the people who live there, the less I care for the place.

      Do people really challenge and opine at pregnant families as to how dare they have a child because of cost? REALLY!!! Is that what kind of society is there?? If that is the case, the place can’t drop into the ocean quick enough.

      I also find all this tacky commentary about how “I only want what is best for my child” and “my child is everything to me” be over the top. You will just be raising spoiled brats who think they are the freakin center of the universe. Worse case – they won’t be able to function.

      You have a duty to raise strong, willed, emotionally intelligent people who can fend for themselves and not be taken advantage of by others. This can be done with $30,000/yr or $300,000.

  89. I live in San Francisco and a 300K combined family income is so common. Two decent Tech jobs and a 15% bonus is all you need. My household income is just over 350K and while I’m comfortable, I don’t feel anything but middle class. It is expensive to live here so your money simply doesn’t take you very far.

    The traditional definition of middle class also had been shifting…It historically has meant home ownership, savings, vacations, health care coverage etc. With the widening gap in income equality I think more people really are working class and just don’t realize it.

    Great post Sam!

  90. For those who doubt Sams numbers but don’t live in bay area, we do live here and his numbers are right in the ballpark. Our spend is ~$13K/month, and we don’t even have cable or Netflix! Our only kid goes to public school, we cook most of our meals, we have 2003 minivan + 2005 prius. The only extravagant things we do is 3 vacations a year which costs ~$20K/year, but we don’t stay at four seasons or eat in nice restaurants, more than half of the $20K are just airline tickets + car rental + cheapest airbnb we can find, and even if we vacation in northern Cal or Yosemite, it wouldn’t be that much different because of the high costs in Cali,

    So where do the money go? They’re very similar to Sam’s itemized numbers. Yeah we can cut out the vacations all together and replace them with day trips and staycations, for the next 20 years. Then why live here at all? Might as well move somewhere half the costs, with must less interesting jobs, and retire early. But unfortunately that’s not something we want to do.

  91. Brandon wood

    I don’t live in SF and I’d be a bit shell shocked if I needed 300k to do well. However, I don’t disagree with the above example but there are some clear luxuries that aren’t really middle or upper middle class. A luxury SUV? It can’t be a used pilot/Highlander it has to be a Swedish 60k SUV ? The food budget is out of control. Moreover, what’s the point of having a remodeled kitchen in a 1.5 million dollar home if as another poster above replied “parents aren’t home till 730 so there’s no time to preheat an oven and make a meal”.. it sort of feels the point of living is being missed. If having to eat take out every night at 8pm because there’s no time to cook or enjoy your kitchen is happiness then that is sad. But hey who am I to judge? There is more then one way to live life and hopefully be happy.

  92. Getting consistently above 300k networth increase per year is a preferred goal for me. Family Household income plus networth increase above 300k already has has been done. Haven’t done household income above 300k, by itself. My preference would be for networth increases, by itself, to be consistently above 300k. Think I could do that before the household number. Consistent 300k networth increase in one year is a nice goal.

  93. Never lived in SF, but spent 13 years in the Bay Area (Fremont, Santa Clara). Our income fits your profile, but our expenses were significantly less until we chose to buy the big house on the hill side with the pool. Our savings rate was approximately 50% until we bought the big house, approximately 33% after purchasing the house. Living in the normal house, I felt very middle class, and comfortable. Living in the big house and spending starting to approach your totals, I was very aware that I lived more comfortably than most and would consider myself upper middle class.

    A couple other observations:
    -I now live in a small city near the East Coast and my home insurance premium is 75% more than my home insurance in Fremont for a similar sized home. (Sink hole coverage is a large portion of that, but insurance rates are higher here)
    -Many of our friends in the Bay Area had incomes and expenses similar to your example. The difference in savings rate was really about life-style choices. Expensive dinners, professional sporting events, shows, etc. add up fast.

  94. Financial Samurai- hope u read this. Your analysis is spot on. I used to live in Cali and sold my place and moved to Chicago. It’s much cheaper and I think by the time I’m 40 I could have the option of retiring. Impossible in SF even making >$300 k / year. I think what people miss is that money should give u options but in expensive cities it takes a lot more money to get those options. I’m looking at investing in real estate here in the Midwest but I’m concerned bc there’s A LOT of space in heartland America. Rents in Chicago actually fell y/y and looks like they’ll be down again. Overbuilding! I want to invest with Realty Shares – they apparently will have a new fund soon. Any thoughts on this? I was reading online that their performance hasn’t been good .. a lot of complaints about returns being under comparable REITs and some investments not panning out. Thanks!

    1. Trying to get ahead

      Do you have any links to these articles showing Realty Shares investments haven’t been working out? I have a decent amount of money invested with them now and have been getting my distributions but they are all in the early stages and not close to exits.

  95. I think semantics may be causing some of the disconnect here. The title of the piece indicates that 300K gets you a middle class lifestyle, not that it is a middle class income. 300K isn’t a middle class income, either nationally or in these coastal cities. 300K near the top of the upper class. If you want to live like upper class, then 300K will do it almost anywhere in the country other than these few ridiculously overpriced cities. If you want to FEEL like you are living a middle class life, on an upper class income, then take your 300K to San Francisco.

  96. Coastal living is definitely expensive and I can imagine how it’s hard for folks who’ve never lived and worked in these areas to imagine and understand. For me the lifestyle and expenses are worth it for now. Great analysis and examples!

  97. Great post that makes sense to anyone living in prime parts of Manhattan, SF, LA, Boston, Miami, Seattle, DC, etc, but may seem out of touch to those living in other parts. The numbers are roughly accurate although there is a wide range. For ex, the suburbs of Boston and prime Manhattan lifestyles also have vast economic differences. I would actually move the numbers up for prime areas.

    However, those living in the middle of the country may understand this better knowing that most of the rest of the world feels this way about the US. Many in Asia and Africa live on $1-2/day and to them, someone making $30k/yr seems insane and is EXTREMELY wealthy not middle class.

    For ex, when my father moved my family to the US in the 1980s, his original plan was to buy 1 kitchen appliance every year. Toaster on yr 1, oven yr 2, etc, because where we lived, only someone really wealthy could afford all of these. Of course, once we bought our first house, it had everything in it. He was shocked that he could afford all of this as a nuclear engineer, relatively easily. He joked to me this year that he hit all of his 10 yr goals in a month when he moved here.

    Also, I would like to add that if you can still buy a 2,000 sq ft house with 3 bdrms 3 bas in SF for $1.5m, real estate is still dirt cheap on a global city scale and you should buy. You would not be able to buy that in prime Manhattan for twice as much.

  98. Interesting discussion…if it takes being in the top 2-4% of all earners to raise a family, how the heck is anyone going to retire? Feels like a retirement crisis is on the horizon…

  99. Calamity Jane Austen

    First time commenter.

    While my personal experience can’t confirm that $300,000 leads to a comfortable middle class existence in a high COL city (as I’ve never earned that much), I can certainly say that my family’s $130,000 annual income certainly doesn’t cut it. I was very frustrated with Sam’s post last week about how buying is always better than renting, and his assumption that one could just “save up a 20% downpayment.” In my experience, it’s just not going to happen for me here in DC anytime soon. My income (I support my husband, who’s home taking care of our son) just cannot cover rent, retirement savings, etc., and then still have enough left over to save 20% for a downpayment on homes in this area. You can find a nice home here maybe in the $800,000 range, but that’s still $160,000.

    So I have to prioritize, and housing and vacations are where I save. We fully fund my 401k, Roth IRAs for both my husband and me, and put away a few grand annually in my son’s 529b. After that, I have a few thousand a year leftover for after tax investments/savings, but that’s not totaling $160,000 anytime soon.

    So I’m looking to move. But as a Federal employee in a very specialized area, it’s hard finding jobs that fit my skills in the heartland. Still, I’m not giving up!

    1. In interested in how you find an IRA on top of a fully funded 401K. I thought that was not allowed.

      1. IRAs and 401(k)s are separate. If you qualify for each, then you can fund both up to the limit. I’m not exactly sure where this surprisingly common belief comes from, but it’s inaccurate. Fund away!

        1. Reverse Engineer

          You can fund an IRA, but can’t deduct at higher incomes. Maybe that causes the misperception? And Roth IRAs do have income limitations for funding.

  100. Nicoleandmaggie

    I always hate these posts. You don’t need 300k to live a middle class life even in SF. We know plenty of people who do it for far less. These posts always insist that things that are luxuries (like 3! week vacations) are necessities. You live in the Bay Area—that’s already a vacation destination. There’s more in a days drive than most people dream about in a lifetime. There’s also a ton of free entertainment. And daycare only lasts 5 years.

  101. Interesting that the responses split between “you’re out of your tree” and “this is totally on the ball”. Suggests your readership are definitely skewed towards the top end of the income scale, but then there’s still a reasonable number of folks for whom 300k is an insane household income and spending 25k/year on food similarly egregious.

    For me these amounts seems toppy and indeed symptomatic of excessive consumerism, which drives misery because of the wages needing to be earned to pay for this lifestyle. Cutting back on the eating out, the SUV and the 1.5m house would, amongst other areas, help to bring this back to reality.

    I’d like to see how a budget for the SF median household income of 96k works out.

  102. I do not think the numbers are way off. We live in SF bay area in east bay which is more “affordable”. A similar sized townhouse would be about 900k to 1 M. You would have to deal with hour plus commute each way (assuming you take BART). We are lucky to make close to 400k/year, but that level of income is quite common in bay area, esp double income households working in hi tech. For us the food, clothing, car cost are far lower than projected here. But our vacations are far more expensive. We take 3 vacations: Spring, Summer and Winter breaks. A summer trip to France can easily cost 20k per family. But on the other hand, I am still driving my 1997 Nissan Sentra I purchased right after college in 99. We shop for clothes at Target or online and its not very frequent.
    Having said that, I don’t think 300k is middle class by any stretch of imagination.

  103. Long time lurker, first time poster.

    As an engineer, I spent a lot of time trying to find the appropriate tone for my commentary.

    Instead, I’ll just ask you to presume that I mean what I say below in good faith and without rancor, so I can get my thoughts out.

    So here goes.

    This budget – while no doubt well-intentioned – explains all sorts of problems related to consumerism in modern American life.

    Putting the ‘move somewhere cheaper’ argument on the shelf – which is a pretty good argument, really – the entire budget is predicated on a career-centered, child-outsourced and family-sparse mode of existence.

    Perhaps most of your respondents are in this camp. But for those who aren’t, allow me to propose a much cheaper path.

    1) Homeschool your children – you can kill $40K of expenses with that alone, more once the kids are older and you’re tempted to put them in a $50K/year private school
    2) Get rid of what you think you need vs. what you truly need – Check out the USDA’s guide for food budgets and adjust yours accordingly. It will be easier with your wife (presumably) staying at home and making much cheaper, healthier meals. That’ll save another $10-15K a year while increasing your life expectancy
    3) Get rid of “3 weeks of vacation” and replace with quality & quantity time with the kids
    4) INCREASE your giving – If you can’t give more than a West Virginian evangelical who makes $12/hour and tithes, you’re doing it wrong

    I’m happy to follow up with details and suggestions if anyone truly cares. But if not, at least I’d like the lurkers to know that even with high housing costs, you can absolutely, positively live on much, much, much, MUCH less than $300K a year. Even if you have (oh, hypothetically speaking) 8 children.

    1. Cool. I’ve never seen a zero vacation solution. Especially after spending all that time homeschooling. Who will spend the hours homeschooling since both parents are working? Or how do you make up for the lost income if one parent homeschools?

      Can you share your expenses and how many kids you have? What do you guys live? Thanks

      1. Hi Sam,

        First, thanks for responding. Love the blog – even when I vehemently disagree with it! So I’ll start out by saying I could absolutely, positively 100% be wrong about what I’m going to say. But at least I have hard data (Source: 10 years of tracking all of my spending/giving/saving, by category, in Excel) to back up my perspective.

        Answering your direct question, vacations can be cheap. Very, very cheap. It depends on what you want to get from them. It also depends (which may be part of your expense) on whether you have family far away that you have to spend tremendous amounts of money just to locate yourself to see.

        But the root cause question here is this: What do you value in life? What is most important? What next? How about the top 5?

        Once you have those nailed down, your spending will follow. And you may have already done this in another post; if so, please refer me there and I’ll check it out.

        For me, my value system drives a desire to spend as little as possible so that there is both financial cushion and the ability to help others significantly.

        I also am blessed by the opposite of what most people have: a desire to declutter and get rid of just about anything that I don’t use, with a corresponding desire to make everything as efficient and cheap as possible.

        So let me share my spending on categories for a recent year for which my spending was moderately above average.

        Automobile: $3,481
        – Gasoline was most of the expense (~$150/mo). Insurance was a decent chunk ($50/month) with a significant amount for maintenance ($75/mo). Repairs were negligible.

        Charity: $49,985
        – My primary charities are Churches & the poor. Most of the churches I support have significant benevolence funds that also help the poor, which is as it should be. I used a Donor Advised Fund (Fidelity’s is amazing and has a low initial deposit requirement) to minimize my tax liability and maximize the ability to give.

        Child Care: $4,495
        – One child in diapers ($30/mo). Use Kirkland brand and Huggies, since the latter often have crazy sales/rebates that took the cost per diaper in the single cents. Above-average spend on toys & games ($125/mo) because I have a ton o’ kids, they like games and I use them to teach them math/stats/probability concepts. Overspent on Christmas this year ($1,000 total); future years I budget $100/child. They loved their gifts just as much in past/future years – even in years where I spent half as much. I put my life insurance ($50/mo) in this category since if I had no kids, I’d have no life insurance.

        Education: $9,494

        For 7 children. A quarter of this alone is for piano lessons. Since we homeschool, this demonstrates a pretty efficient level of expense: about $1,400 per child. I expect this to rise modestly as the younger children get older, offset by the older children leaving the house and/or entering college.

        Entertainment: $1,188

        Music and movies total $73. Pandora music ($48) was the majority. We don’t watch TV, when we rent we use a local video store or Redbox ($1/night). Vacation spending was a significant part of the rest ($50/month). One trip to visit a friend’s farm. One trip to visit in-laws. No spending on hotels due to mileage cards signed up for (Thanks Marriott and IHG!) or staying with relatives.

        Food: $15,756

        Eating out was $2,064 ($175/mo). This includes Eating Out when on the road – we mostly pack a cooler with sandwiches, fruits, veggies, nuts and other reasonably healthy foods. Once in a while, we’ll go for ice cream but given our family size, it will usually be a McDonald’s $1 cone. This year, there was a 50 cent Frosty special (score!) so we hit that a few times. Cost each time for 10: $5. Spent an embarrassingly large amount of eating out on… coffee. About $400. We shifted to home coffee 80% of the time in the years following to save a few hundred bucks.

        Home food was $13.5K. Per person it was about $140 a month. This includes everything bought at a grocery store – shampoo, garbage bags, toilet paper, etc. Costco was our friend here – cheap in bulk. Sales are great too – there are no double or triple coupons, but around holidays there are great deals. Aldi’s is also amazing, especially for staple items.

        (continuing in next post so that your spam filter doesn’t think I’m trying to kill your site)

      2. (continued from last post… hope they post in proper order!)

        Health Care: $10,100

        Premiums were almost half this total. Got a gym membership for $300 a year by negotiating – best money I spent in this category. There were a couple medical issues for my family which together cost ~$4,000. Some basic doctor & dentist visits, combined with prescriptions, eye exams, glasses for two (Zenni Optical is great here) and two dental issues (boys like to play rough) rounded out the bunch.

        Housing: $14,203

        Gas/electric/internet/water/sewer/phone ($500/mo), home insurance & taxes ($325/mo), furnishings ($2,000), supplies ($2,000), repairs ($500)

        Notable here: no house payment due to aggressive paydown of home debt. That saves at least $12,000 a year.

        Miscellaneous: $925

        All other stuff I couldn’t figure out where to put. Gift for non-immediate family were the vast majority. Postage was a little over $100. Everything else was < $200.

        Savings: $75,138

        Total spend (excluding Charity): $61,644
        Charity: $49,985
        Savings: $75,138

        Total dollars in (after taxes): $186,767

        So I spend about $1 out of every $3 after tax dollars, give about $1 out of every $4 and save the rest of $2 out of every $5.


        Note that I make about 4x the median household income, but live as though I make slightly more than the median.

        So for those who 1) Keep their charitable giving low and 2) Who can live frugally but not miserly while 3) Having fewer kids (99% of US households have fewer than 8 kids)….

        …..there is a very, very strong opportunity to live on much, much, much less than $300,000. Without being deprived, although without a lot that most people spend money on.

        1. I suppose this is just a case of differing values and priorities. One priority that is very admirable is your charitable giving – something I’d like to do better at. On the other hand, I value good schools (I think it’s important that my child(ren) are influenced by other educated adults besides our family who can teach them things that I can’t), travel (I live for our adventures), skiing, club sports, fully funding college accounts, etc. These things are expensive, and in my mind, part of a good life for our family, and I wouldn’t want to give them up to live on a $62,000 per year. Moreover, we’re around enough wealthy people to know that there’s a pretty big difference from how they live and how we live, which is why I agree with the premise of the post that $300,000 in annual income is more of a middle class existence a HCOL area. At a $300,000 income with kids, you probably still have to make many financial trade offs (personally, it’s no luxury cars, careful with clothing budget, never fly first class, try to eat in as often as possible).

          1. You can have (about) anything you want, but you can’t have everything you want.

            If you want your children influenced by other adults, you can easily – very easily – do that through homeschooling. And at a higher level of diversity than in a classroom where they will be interacting with overwhelmingly education majors. And save hundreds of thousands of dollars over their childhood doing so.

            If you want travel, you can do that too. You just can’t go wherever you want, whenever you want, as often as you want. You can buy off-season. You can go to exotic but not-as-popular locales. You can subscribe to travel deals – this past week, a round trip flight to Ecuador was $300. Previously, it was $350 to Amsterdam. If you’re in a HCOL area, the deals on flights are even better.

            You can do skiing, sports, etc. but you can’t do everything. You can’t spend thousands on travel leagues and coaching when your kid will (probably) never get a scholarship to pay back that investment. You certainly can do pick up games for next to nothing, go skiing at off-times and at less glamorous places, etc.

            The big problem here is a shifting of the goalposts. For example, “never flying first class” – other than a sympathy upgrade, I’ve never flown first class. And I’ve been a C-level exec for a billion dollar organization. “No luxury cars” – I’ve driven a 10+ year old Corolla for decades now, upgrading once to my current 12 year old model which I’ll keep for another 8 years, God willing. Insurance is dirt cheap, I get 30+ mpg and by doing the preventative maintenance I’ll never have any significant repair expenses.

            First class, even once, is overwhelmingly an upper class experience. Travel of the kind you’re discussing is an upper class experience. Skiing, fully funded college accounts, etc. are upper class experiences. Being a new car, although even the lower classes do it, is a luxury experience. Sam talked about the 1/10 rule for cars – he’s absolutely right. But how many people who make $250K would stoop to ‘only’ buy a $25K car?

            There’s nothing wrong with any of your interests per se, but pretending that these aren’t lower echelons of the upper class is just diluting the definition of middle class to the point where it means nothing. And trying to do all of them? Definitely upper class.

            If you want a middle class life – by which I would mean financial security and stability except in the most extremely unlucky of circumstances – then you can do it easily on $100,000 a year, even in San Francisco. You may not FEEL middle class because marketing, your peers and your neighbors are going to encourage you to live larger than you can really afford, but you are absolutely able to do so.

            The choice, really, is yours.

            1. I agree with pretty much all of the above, except that I think you define middle class more narrowly than I do. For me, middle class might mean something like, you have enough to live the “American Dream” (means different things for different people) if you are careful with your money, work hard and make reasonable trade offs. It also means, in part, being able to provide your children with the same upbringing that you had (assuming you perceive that you had a middle class upbringing). If family bonding time, based on your lived experiences in your family of origin, included things like skiing together on the weekends (and maybe brown bagging your lunches because those resort food prices are just silly), and if part of childhood for you included an opportunity to be a competitive athlete (with no pressure to get a scholarship through your sport, because you knew your parents had you covered), and living in a good school district where you were exposed to new and good things and you and/or some of your peers got accepted to top colleges, then these things are part of what it means to be middle class in America to you and you want to provide them to your own family. Our acquaintances who regularly fly first class, send their kids to private k-12 school, drive range rovers, eat at expensive restaurants, and wear designer threads – they are the upper class. And our other acquaintances who fly private, live in mansions, have second (third, and fourth) homes – they are the wealthy. I suppose that’s all up for interpretation, and reasonable people differ on how they spend and save, but the income and budget in the post above for a family with kids in SF or another HCOL area looks middle class to me (though maybe “upper middle class” would be a more appropriate definition).

            2. Orthros, Well done, well done.
              Thank you for contributing a modest and meaningful suggestion at life choices to this conversation.

              I read Sam’s post more as “How to make 300K a year and *not* become financially independent” as a means to show opportunity for improvement and cost reductions. Whereas most readers read it and immediately used it as self justification as to why they can’t save.

              Raising kids is as (in)expensive as you want it to be. Private, public, home school. Private, public (in state), community college or gasp trade school.

              Be weird, be different, be modest and be financially independent.

              Sam, how about writing a follow up on how to reduce the budget in this article so more people can become financially independent like us?

              1. Love your attitude. That is exactly how folks can view this post to achieve financial independence sooner, rather than later.

                “Be weird, be different, be modest and be financially independent.” – Words to live by.

                I will write a follow up post about solutions to reduce the budget and increase the income for folks stuck in such a situation.

  104. I was originally thinking of moving to California but I looked at the cost of living and its just too much. You definitely a high earner dual income. That’s why I decided to stay in the mid-west, its pretty easy to live off a single parent income. Also why would I ever pay 20k for property taxes. They city better be offering free car maintenance, house maintenance, and free messages half the year for 20k a year.

    I really think you’re out of touch when you keep listing the people who make 300k or over.
    Here are some statistics from bls on wages
    – 2.4 Million Janitors, median salary $24k a year
    -1.3 million post secondary teachers (they have Ph.D.’s), median salary 75k
    – I’m an engineer with experience and I’ve applied to companies in silicone valley and none ever offered over $100k .

    I can write an entire essay on how hard it is now for people in STEM especially the ones who want a Ph.D.

    1. I definitely would love to read your essay and potentially host as a guest post on how you don’t think making $300,000 a year as a household as possible in a big city.

      It’s always good to get different perspectives. Thanks and I hope you write it.

    2. Those of us who travel in these circles know for a fact that you not correct.

      To point to some interesting data, I had occasion to review recent Statistics Canada data that made it clear that there are 200,000 households in Toronto that earn over $200,000 dollars. Readers, internalize that number. That is a vast concentration of earning power and, in some cases, actual wealth. That is a big reason why New York, SF, Boston, Toronto and other similar cities are priced the way they are. People want to live there and are willing, and in some cases, able to pay the freight, even if it sounds difficult.

  105. David @ Zero Day Finance

    These cost estimations seem pretty high for middle class, but it really depends on your definition of middle class. Nobody wants to admit that they *aren’t* middle class when they are easily upper class. In fact, a pre-tax income of $300,000 easily puts you in the top 5% of income earners for the entire U.S. population (as of 2016), so I’m very hesitant to say someone earning $300,000 is middle class. However, ignoring all of that, I think the home price is something that is throwing people off.

    I live on Long Island, a very expensive part of New York. I can pay $750,000 for a house that sits on 1/3 of an acre in a very good (top 10%) school district, with roughly $15,000 – $18,000 in school/local taxes per year. The home will have a brand new kitchen, roughly 2,000 – 3,000 square feet, probably a semi-finished basement with a 4-6 car driveway/garage.

    I can also pay $400,000 for a house that sits on 1/4 of an acre in a good (top 25%) school district and pay $7,000 – $11,000 in taxes. For a house that is 1,200 – 1,800 square feet, probably with a semi-finished basement and a 2 car driveway.

    I can also go ham and buy a $1.5 million home that sits on 1-2 acres in a very good/elite (top 5%) school district, and pay $25,000 – $32,000 in taxes. The home will be completely custom, finished, and in perfect shape. Usually 6 bedrooms, 4-5 bathrooms throughout 4,000 – 6,000 square feet, multiple garages, and a driveway that can fit 10 cars.

    Clearly, these homes are different. Where would you expect the “middle class” person to live? In this example, it’s obvious. The $400,000 person house.

    But another thing to consider is what sampling bias we are imposing. You talk about being middle class for coastal cities. Coastal cities are so much more expensive than everywhere else in the country. Maybe you are “middle class” if you only earn $300,000 and decide to live in Manhattan. But you made the decision to own property in Manhattan. The only people (okay, not only, but I’d say the majority, most likely 99%) who actually own property in Manhattan are already upper class people. The same thing goes for those people in San Francisco. Most people who own property there are already in the top 5% of income earners in the country. Again, if you only make $300,000 per year, maybe you’re only “middle” class when you compare yourself to the 1%’ers who actually live in Manhattan/San Fransico, but it’s a dangerous comparison to make.

  106. Lots of commenters are saying this budget isn’t middle class. Now, my husband and I make nowhere near this much, but I don’t find these numbers totally outrageous. First off, that $300k quickly becomes only $170k after taxes and retirement contributions. It’s nearly cut in half already! Assuming you don’t get a pension and big Social Security fund in retirement, it’s about right, unless you want to work in retirement.

    From there, expensive housing and higher SF prices are at play here. My parents made $170k ish while my sister and I grew up, but we were living in the Midwest and cheaper coastal cities with small populations. Trust me, we didn’t have luxuries. That budget was enough to send my sister and I to a public university and put a significant amount into retirement. My parents lived (and still do) in an older home currently worth about $200k. They bought it without a mortgage. Their income was enough to prevent taking on debt and to save for retirement, but our lives were absolutely ordinary. The biggest vacation we ever took was to Yellowstone. My parents drive Fords, Toyotas and Chrystlers. They never worried about money, but we had a pretty basic life. The only difference is my folks could save, invest and avoid debt. That’s why it’s worthwhile to try and build a decent income like that…if you use it on endless stuff and toys, your retirement is at risk (if you’re American, anyway).

    We have a mortgage, but I’m trying to follow my parents’ example. Hopefully get out of debt and stay there. By the way, it’s a huge blessing from a child’s perspective to know my parents are prepared and spent their lives being wise with money.

  107. The reality is retirement, let alone early retirement is a pipe dream for the vast majority. You can’t really argue with your numbers presented as a whole, but at best 20%-30% of the population that is in this situation…everybody else is “effed” or working until they croak/living a very modest retirement. Good attention grabbing title though for click bait!

  108. This is a great post! I, for one, appreciate the… shall I call it validation?… on monthly household expenses in the Bay area. I have found myself staring at my budget every few months, wondering why I was spending so much money and was there anywhere I could cut back? After looking at your budget list, I found that our budget was quite in line with it.

    Here are just a couple of suggestions:

    – I would increase the Car line to include maintenance.
    – The Property Maintenance line needs to be higher. In these coastal cities, one is usually purchasing an older home that needs annual maintenance of some sort (house painting, roof repair, etc.), in addition to landscape maintenance and other such expenses.
    – Clothing should be increased, particularly if there is a woman involved. :-)

    Thanks for the well researched post.

  109. These numbers are, sadly, spot on when it comes to high COL areas such as NYC. Although I know many bankers & lawyers who can have the firm order their food and have it delivered to their office after they work X amount of hours (or stay past a certain time).

    I know quite a few people that have their dinners ordered to work, they bring them home and eat dinner with their significant others, and then continue working. It may not seem like a lot, but a $40 seamless order stretched out over a year really starts to adds up. There’s always a way to hustle…

  110. Spoiled Americans… Well, I don’t buy into these figures, but what do I know?
    I’m the ultimate stealth wealther cheapskate. Despite living just north of NYC in an upper middle class suburb (All Alone! In a creepy 60 year old house!) my biggest money-gobbler is house tax at close to $12,000 a year. No mortgage. No expenses on “entertainment” as the local library offers plenty for free. And above all no kids or wife to feed or beat. Despite this, I’m living strictly on passive income (I pulled in just under $20,000 in the last year sitting on my ass doing nothing but worry about my furnace, my health, and Trump). I’m going over these FS numbers and scratching my head… $6,000 on baby/toddler things (brats, spoiled little brats! You know what I had to play with when I was a little brat? Legos, Lincoln logs, jigsaw puzzles–all second-hand! I made my own games!)… $6,000 on entertainment (you pay celebs to perform For you at home? How much does Paul McCartney charge per hour?)… $7400 for car payment? Dunno about you but my two old cars are paid for in full (not counting insurance and oil changes), and what’s this about a Bigger one being Safer? Oh, right a SUV (Stupid Urban Vanity) status vehicle which gobbles gas, emits greenhouse gases, and flips over on the highway, gotcha… $25,200 for Food? I mean fuel for the body? I mean… Once a week I go to a cheapo diner for a lunch/dinner that costs around $15. The rest of the time I’m eating home. Then again, I don’t smoke, drink, take drugs, or even drink soda anymore. You guys apparently eat at fine ristorantes and sip wine with your Russian caviar. You need it as part of your image.
    Property maintenance and everything else I do myself which is what every able-bodied red-blooded American who doesn’t have ‘Entitled’ tattooed on is ass would do.

    But again what do I know? I don’t even go to Starbucks or buy bottled water.
    Or carry a phone with me.
    My recommendation is the Living Stingy site for a more Realistic approach to surviving and thriving (even if the guy who runs it is gay and has a queer fixation on BMWs and golf carts!).

    1. My Family of 3 lives in Sacramento, Ca and our total income per month after taxes is $2,200. My husband works and I am a stay at home mom. We pay $500 a month to my parents for rent and utilities. We live in a 2 bedroom house that is 1100 sq ft, 5 of us and rent is $1500. Now I know this is a privilage to be bale to live with my parents and spend only $500 for rent and utilities, but it was this or live on the street and be homeless. I am reading this blog post and I am just flabergasted at how eccessive this can be. I can only dream of my husband making more then 30k a year. I am not very educated (as in i never went to collage or worked for more then 11 months my whole 38 years) and I have many Mental heath issues and cannot work or get disability. Even If I did work, my measily income would pay for CHildcare and I would rather stay home with my son. We are both approaching middle age, we have never been on a vacation, we don’t eat out and we struggle living paycheck to paycheck. I think honestly it does all come down to priorities, and for us it is being able to spend time with eachother and our son because life is short and we have learned to live in poverty! I wish that we could afford to give like you do, but i just wanted to second what you have wrriten about. You can live off way less, although we are miserable and stressed about the future and financal freedom. The majority of people we know are in the same boat as we are or even worse off or maybe slightly a little better.

      1. Shane Turner

        I give kudos to people like you. If I had the say so you would be getting paid a lot more than what you get. I want to get a degree in Electrical Engineering and I will be 39 years old and going back to school. I will always have more respect for the people who make a lot less. I know there working hard and get so little. I want to live a comfortable life and live decently but simple.

  111. That home that sold for 1.56M is crazy. There isn’t any space between your house and your neighbors!

    1. This is very personal, but I would rather have a smaller lot and small older house in a fabulous area of the city near the beaches, parks, walkable to most places, great shopping, university, restaurants, clubs, entertainment, 15 minute drive maximum to anything, and 30 minutes to the airport and farms to buy produce in summer time, than have a large lot with sprawling house in the surburbs, but 60-90 minute drive into the city and have to do all my shopping by car at a mall. Other benefits of the city life, are much better property price appreciation, and good location for getting tenants to rent your rooms or basement suite. It’s often quieter too, as people do not have the barking dogs, the tractor lawn mowers, the building projects, the freeway noise from a mile away, chain saw, rifle ranges, gravel pits, and other industry contributing to the weekend “quiet”. You pay for location but you also have more property appreciation.

  112. Solo Prosperity

    Great Post. I keep an excel sheet based on Daniel Kahnemans happiness paper + COLA figures by state/city and for 2018, San Francisco, for a family of four, spit out an annual income of $301,593.00 (Nearly double the national figure for a family of four) to achieve day to day happiness. LA and NYC were lower though, $226k and $262k respectively.

    1. @Solo Prosperity – Do you have a link to this excel sheet or resources to run these calculations myself. I will be making quite a few life changes/moves in the next couple of months and am interested in this.

  113. Happy renting

    Another argument against buying property – $19,200 annual property taxes.

    Financial Samurai: The return on rent is always -100%.

    Me: The return on taxes is always* -100%.

    *At least above $10,000 combined for state, local and property taxes.

  114. I’m with the other posters that find this post spot on. Virtually every number in it is very close for our household finances. A bunch of thoughts:

    – People seem hung up on the $1.5MM house, but the example family has a lot of equity, and a very low mortgage rate. $4k a month is about right for a family living in an $800k home with approximately a 20% down payment and a 4% interest rate.

    – Childcare is pretty spot on (for 1), but can quickly blow up the budget with 2. Even once children start elementary school, they will likely need some kind of before & after school care if both parents work.

    – Some of the naysayers are massively out of touch on food. Sure, in single earner households, families might rarely eat take-out or go out to eat. But with two working parents, it might be common for no one to be home before 6:30 or 7pm. Sure, you can microwave something, maybe grill, make mac & cheese, pasta with jarred sauce, etc. But forget anything that requires preheating an oven, 15 minutes of prep, and 35 minutes of baking (unless you want your kids eating dinner at 8pm on a school night). So, for many of these families, pizza, fast-casual, or ethnic takeout is going to be a necessity. For a family of 4, you’re looking at $30-$50 a dinner. Let’s say you do that 12x per month at an average of $40, that’s $480 per month. Add in groceries, maybe 2x work happy hours for each spouse per month, coffee and lunch dates with coworkers, maybe eating out as a family 2-3x per month, and date nights 2-3x per month, and $2100 is probably about what a lot of dual-career families spend on food.

    – I think $100 per month for property maintenance is low. In the suburbs, trees have to be trimmed, lawns cut and fertilized, landscaping mulched, exteriors power washed, gutters maintained and cleaned, driveways sealed, fascia painted, termite systems kept baited, irrigation systems maintained, and that’s just the exterior. I do a ton of this stuff myself but not everyone I know feels comfortable climbing up tall ladders.

    – Maybe I missed it, but where are utilities in this budget? If they are included in entertainment, $500 per month might be low.

    – People are jumping at a $700 per month car payment, but if you include maintenance and insurance for two cars, plus a car payment for one, that’s probably about right. Truthfully, it’s probably low.

    – For us, the areas we save are on any kind of maintenance (I do it myself, including automotive) and by using points for vacations. But all of this stuff is a tradeoff between time and money. Families with dual incomes who make a fair amount of money generally have far less time than many commenters likely have. If you factor in the commutes that often come with coastal suburbs (let’s say 90 minutes per day, total), plus 10 hour workdays, plus 30 minutes getting ready in the morning (for many, it’s likely much longer), you’re looking at 12 hours per day dedicated to work. Figure you’re in bed for another 8 hours, that leaves 4 hours for everything else, including time with your kids. Not surprisingly, many people don’t want to spend that time cooking, mowing their lawn, cleaning toilets, or grocery shopping, so they outsource those tasks so they can instead help with homework, read to their kids, talk with their spouses, or watch netflix.

    1. I agree. I found the budget to be more or less correct for a 2-parent, 1-child household. In our case, child-related expenses are a little higher (extra curricular activities, plus I would feel “underfunded” at only $400 per month in 529 contributions). Even where some details are a bit different, the outcome is about the same.

  115. Recovering Engineer

    I guess I’m one of the hated “coastal elites” these days and your numbers look roughly in-line with my experience. I assume that calling this “middle-class” is meant to be inflammatory (your post about the $500k family just scraping by I think is still one of the most viewed right?) but not too far off. I think your taxes are off, I didn’t run through the math but they seem at least $10k too low.

    I’m lucky that my wife was able to stop working to raise our child so we save out on the child care expense and we spend less on food since we cook most nights. I wish our property taxes were as low as yours though, we pay 50% more in taxes on a house that is 20% cheaper, which eats up a lot of money each month. My wife loves clothes so we spend more than your budget there.

    I also think your vacation budget is low and your 529 savings are low. 3 weeks of vacation means you’re spending only $2,600 per week/vacation. I suppose if you are driving rather than flying that might be possible, otherwise airfare and hotel will eat that entire amount and you still have actual activities and food to pay for. With the 529’s saving $5k/year isn’t bad but if you’re making $300k you’re probably looking to pay for your child’s education and not saddle them with the burden of student loan debts. I don’t think putting away $400/month will be sufficient to get you there.

  116. San Fran sounds like a real rip-off. I have been casing out the cost of living in the UAE (Abu Dhabi) and it’s a case of ‘mining the miners’ for professional employees living here. Rent for a 2-3BR apartment can easily go to $50K USD a year and other fees add up quickly, international school can easily run $20K per child. True there is no income tax as of yet, but the curse of being an American citizen means that you are taxed on worldwide income even as a non-resident (an honor that we only share with Eritrea) however in all fairness we do get the break of the foreign earned income exclusion at $103K of the lowest taxed income in 2018. So that means figure another 20% to be sent to Uncle Sam while all the other citizens are able to save that or use it for consumption. At some point one begins to question if it is even worth the effort…

    Since you have a location independent business, that scores another point for packing up and moving to HI sooner rather than later.



  117. I understand you’re trying to stretch numbers and create a bit of a debate here but these numbers definitely aren’t for a middle class family. They’re in the high end of all categories and would be nothing but very high upper middle class, borderline wealthy.

    I live in a 1 br apartment in a nice neighborhood in SF (wife, no kids), takes two annual overseas vacations, have expensive hobbies but try to be aware of costs in everyday life. Annual spending $70k. Add in your childcare expenses, another room in the apartment and scale up the rest of the costs for total annual costs of ~120k. This is what I would consider a very good middle-class life, although living in a smaller space than the average american (it’s a city after all….). This is about 50k cheaper than your family above and not even trying to live especially frugal.

    1. No problem. Enjoy your freedom now and get back to me when you have one or two kids and let me know how your costs change. I think you’ll enjoy another post about the cost of private school, if that is a consideration.

      If you’re happy with renting forever, that is cool as well. However, I would say over 80% of people who have children no longer want to rent because they want to have more control and stability.

      Who knows the future. But it’s worth planning for it.

  118. Utilities$ Our electric, gas, water, trash, phone/internet, cell phone is about $600 for a family of 4 in Hermosa Beach and that is without air conditioning!

  119. Doubt this will get approved, but whatever.

    $2000 a month on food? $500 a month for clothes? I live in the most expensive cities in the world (10 years each in New York, London, Hong Kong and Tokyo) and for our very typical family of four our figures are half that easily.

    If you take out a $1 million mortgage, yes, you probably need to make $300,000 unless you want to be up to your eyeballs in debt. Maybe don’t take out a $1 million loan? Believe it or not it’s possible to live a comfortably middle-class life in a house that costs a fourth or a fifth of that.

    I can’t decide if you’re that cluelessly out of touch, simply posting click bait articles for the click$, or both.

    1. He is out of touch with what a middle class is. Middle class is supposed to be the bulk of the people, not the special kids working in Facebook. It may be surprising to him that lots of American are living with no investment and savings and middle class is really just anyone who can own a house at this point and have savings.

      1. Call me selfish as well as out of touch, it doesn’t matter. I really don’t want my readers to lead the typical middle-class lifestyle where people have no retirement savings, can barely afford a home, and have to work until they can receive Social Security. I’ve seen the benefits of financial freedom, and it is worth fighting for.

        There are few personal finance education requirements in school, pensions are going away, and the United States government wasn’t as focused as Australia or Singapore or Canada to take care of its people. Therefore, people in America must focus on taking care of themselves.


        1. I agree, the articles have helped me a lot. But I think the main problem is as someone else said later. The middle class didn’t disappear. The definition of middle class, if maintained as it used to be (as yours) have disappeared.

          A more fair title would have been. Minimum household salary to live a comfortable, financially stable life in the coast. The new requirement to be the old middle class.

          Though if we think about it, why? Why is it that magically, there is a critical number that once hit, financial stress goes away? Until one goes past a certain number and different strss takes its place. That may be a fun article to write. It would probably have something to do with earning ability vs spending “requirement”.

    2. Recovering Engineer

      If you have any listings for houses that are $200,000-$250,000 that can comfortable fit a family of 4 in NYC, London, or Hong Kong can you please send them to me? I would love to invest in a property in any of those cities where I could rent out the house for 50% of the purchase price annually.

      1. Man, I’d love to know too! That would be sweet to buy properties for $200K-$250K here in SF and flip them for instant gains.

        I would be kinda upset too if I bought NYC and London property and sold a long time ago to only be able to afford to buy a $300K house in the suburbs of Tokyo. But man, the food in Tokyo/Japan in general is so good, it might help him ease the pain.

        1. LOL. Clearly DragonAsh is a jealous guy who feels bad that he lives in a mediocre house in the boondocks of Tokyo. If he was happy with himself, he wouldn’t be so angry per his original comment.

          Ah, the banter is so fun! “I’m financially free but still work” is the biggest lie people who are not financially free tell themselves.

    3. Care to share when you reached financial independence and how much your budget is with how many kids? Where do you live?

      You sound pretty bitter for some reason. Plenty of commenters have said the expenses are spot on, if not low.

      1. Financial independence at age 40, although I still work because I love what I do, two kids, spent the last 10 years in London, 10 years before that in NYC (UWS) and currently live in Tokyo and I paid cash for my house.

        1. Recovering Engineer

          I wonder if maybe you’re thinking of housing prices from 20+ years ago when you bought in NYC. A 3 bedroom apartment on the UWS today rents for $8,000-$22,000/month and would be a minimum $2M and more likely $3M+ to purchase. Prices in the last decade have gone crazy in these cities.

    4. DragonAsh- since you had live in all these expensive cities, would you mind sharing your expenses in these categories? Would love to compare line items by items.

      1. Sure – here’s a snapshot of our monthly budget that has stayed fairly consistent over time. I track everything in Excel – I’m a total Excel nerd – but I don’t think the formatting will come through. Still, this should give you a reasonable snapshot. As noted, family of four (with a golden retriever that eats enough to be considered a third child….)

        Salary (Gross) 13,000
        Salary (Net) 9,000
        Food 800
        Dining out 250
        Daily sundries 100
        Newspaper/books 100
        Clothing 100
        Pet 100
        Hair cuts etc. 100
        Other 100
        Electricity 125
        Gas 125
        Water 100
        Internet 100
        TV 100
        Landline 10
        Mobile (1) 100
        Mobile (2) 100
        Car-related 80
        Car insurance 20
        Gas (car) 30
        Train/subway 50
        Home insurance 20
        Property tax 70
        Furniture/appliances 100
        Reform/renovation 500
        Life insurance 200
        Health insurance 25
        Clinic visits etc. 25
        Allowance (1) 350
        Allowance (2) 350
        Family travel etc 600
        Hobbies/lessons 500
        PC-related 100
        Total expense 5,130
        Monthly Savings 3,570

        1. Thanks for sharing. Can you expand upon the property tax being so low and there being no mortgage or rent? Housing costs are generally a huge portion of one’s expenses, if ot the largest in expensive metropolitan areas.

          I’d love to learn from you how to live so cheaply in an expensive city. Your property tax would indicate a house that cost about $66,000 in SF compared to the $1.5M median cost.

          That said, many residents I know here in SFdon’t pay much for housing at all because their parents hooked them up. https://www.financialsamurai.com/a-massive-generational-wealth-transfer-is-why-everything-will-be-ok/

          1. There’s no mortgage or rent because I pay cash for my houses. My current home (two-story, four-bedroom house in Tokyo) is worth around $300K. Property taxes are cheaper in Tokyo than they were in NYC or London, but our overall budget has not changed all that much no matter where we live, with the obvious exception that we now have kids-related expenses that we didn’t have previously. But overall, the monthly budget hasn’t changed. London was more expensive for utilities, cheaper for food, Japan was cheaper for health care, more expensive for food, NY was more expensive for food, cheaper for transportation etc etc.

            My salary has remained fairly constant at around half of your ‘$300,000’ example, yet I save just as much as your example – in part because I’m not spending $60K a year on a mortgage and car payment.

            (I’m also well aware that I would at the very least be at the high end of what could be considered ‘middle class’).

        2. I too can live cheaply and call people who spend a lot foolish if I don’t have to pay rent or a mortgage.

          What am I missing here?

          What are you missing to be so out of touch with working families living in coastal cities?

          1. What are you missing to be so out of touch as to think that people simply must take out $1 million mortgages to buy a $1.5mn home, then cry and moan that they have to make $300,000 to be ‘middle class’?

            I paid cash for my house and car by *not* doing those. It’s amazing how much money you have left over if you’re not handing over a chunk of your salary to the bank each month.

            1. You still haven’t revealed what city you paid cash. Obviously not in a big city bc you don’t make enough and your property taxes indicate the value of your house is low.

              You telling people they are out of touch while claiming to pay $1M cash for a house is hilarious.

              You can’t have it both ways as you try. Either say how much you bought the house for and where or stop being so clueless and enjoy your Midwestern winter.

            2. *Shrug* believe what you want, I’m just a random guy on the internet. Like you.

              But FWIW – I paid cash for my first house (condo) in NYC (UWS). I paid cash for my second house in London. I paid cash for my current house in downtown Tokyo. My current house is worth $300K give or take. I had to pay more for my NYC and London properties, and property taxes are cheaper in Tokyo, but that’s neither here nor there.

        3. Well done! I’m aiming towards buying a home with cash (though much smaller) a few years from now as well. Your budget is a good reference for my future cash flow.

          Glad to see you’re able to squeeze travel and dining out in there too. Those tend to get brushed aside in my budget.

  120. From Census Bureau data San Francisco and Washington, DC are indeed at the top of the median household income distribution among the 25 most-populous metro areas (see Fig 2):
    But median household income in these two relatively well-off large cities is still a bit below six figures (as of 2016).

    As for the upper tail we can get an estimate from
    where #3 San Francisco has a 95th percentile of $397,594 (your target of 300K should be near the 90th percentile here). It’s close to the 95th percentile in New York City.

    Therefore I think your expenses table is out of reach for the vast majority of households in SF & NYC, so it might actually be possible to get by on less.

    Why do they stay? My guess is that they earn enough to get anything they want– but not everything they want. So they would rather give up or trim some of the lines in your ideal budget than relocate. IMHO part of being ‘middle class’ is having to make some trade-off decisions.

  121. Since when is living in a $1.5M house, driving a $60k luxury SUV (also that’s twice your 1/10 car rule), and eating out constantly or having food delivered middle-class? $2100 to feed a family of 3, you can’t be serious.

    When I see posts like this I wonder if you’re starting to lose the plot on what middle class actually is. $300k is the top few percent of income earners, so by its very definition is not middle class. I also think you need to understand that most of the country (you said the coast, but outside of living literally on the coast of california or manhattan your numbers are very inflated) doesn’t nor needs to live like this.

    In most of the country $200k lets you live very comfortably if you’re diligent with your money. Nice house, reliable cars, vacations (reasonable ones; e.g. drive to disney, not fly the whole family to Paris), retirement, cover college.

    1. I think this is mostly a perspective from SF and NYC because that’s where Sam lived. Makes me happy that I don’t live in those cities.

      Also, this website is geared to “the average above-average”. Two college grads in their 30s can easily make $150k a piece total comp. My point is, I don’t think Sam is out of touch with the middle class. I think he is mainly referring to the middle class as his defined average above-average.

      1. “Two college grads in their 30s can easily make $150k a piece total comp.”

        Data does not support this. Most college grads in their 30’s do not make this much, which means it can’t be done “easily”, and to have a total household income at $300k or more when you’re 39 or younger puts you in the upper echelons of income earners across the country.

        I agree Sam’s target audience is on average better heeled than average.

        1. Yeah 150k is not at all easy to make. I am in the beginning of my career as an accountant and to make 150k you need to become a partner in a firm which takes 10-15 years and not many people make it that long. I think 80k a year is pretty easy to get to with 5-10 years experience in my field. Maybe up to 120k if you are a top performer. I could make more in New York or San Francisco, but not that much more.

    2. We live in a NYC suburb. Our food costs comes out to around 2K a month for a family of 4 so 2100 a month for a family of 3 is slightly high but not absurd. Understand that part of the 2K per month has our child paying $2.5 a day for lunch a school which clearly is under-priced (not that the food is that awesome.)

  122. Really enjoyed the article Sam! The post is very relevant for my wife and me. We live in NYC and our income is marginally higher than the income figure outlined. While we do not have kids yet, we are able to save considerably more than the example provides. We save a meaningful portion of our net income or just over 30%ish of gross income. Regrettably, we never bought in NYC, but only have about $3Kish of monthly living expenses by living in a so so apt (2 bedroom walk up in BK/Queens) that will be large enough even when we have a young kid. We also do not have a car so our transportation costs are very manageable…pre tax unlimited subway is tough to beat. Outside of the SALT tax, I am really not sure if my COLA would go down much by moving to the Midwest/FL. Granted my lifestyle would likely be much better at the same expense figures etc.

  123. I live in Princeton, NJ, formerly of NYC. So, a coastal-ish place in a high income/cost area.

    I think most of your chart is correct but I would add another 24k/year for expenses (childcare) for a 2nd child, if you do want to say this is for a family of 4. I know your chart says the childcare is for just 1 child but in your intro you said for a family of 4. I have 2 kids and each one costs about 2k/month in childcare for high quality care. Luckily the older one will be starting public kindergarten in fall of 2019 so that will be a nice savings!!

    1. Is it really double the cost for two kids? Surely there are workarounds to saving money for childcare. Some hire an au pair, the babysitters I speak to don’t charge double for two kids, and the daycare providers provide some discount. 50%-65% more, but not 100% more.

      I feel that every parent figures out a way not to pay double the cost once the second child is born.

      1. Every daycare provider I know (maybe 12 locations?) charges per child. You might get a 5-10% discount on the second child, or perhaps both. But it’s pretty close to double for two kids. In our case, our non-profit daycare gave us 5% off the total bill for having two kids enrolled at once.

        1. This is why when our second child was ready for daycare we switched to a nanny. It was 2 kids for 1.5x cost of 1 and no more commuting to/from daycare… kids stayed in our house. Way better deal

          1. I’m with you, but my wife was pretty adamant that our daughter had a good experience in daycare, and when our son was born, she was getting a lot out of it educationally. So she didn’t want to send her home with the nanny and a new baby.

            It wound up the right move for our daughter (she was a full year ahead of other kindergarteners academically, even in a top school system full of yuppies), but the wrong move for our son. I’ve already said if we have a third we’re getting an au-pair. I refuse to pay all that money to haul a 6 month old back and forth to a daycare nursery, and have them get sick 60% of the time and have to stay home anyway….

  124. Is it a little sad that my first thought on a $48k mortgage only annual payment was “ohh that’s pretty affordable for San Fran! Nice find!” >_<

    Childcare is ridiculous as always. & I mean their food costs is half of their housing…to me* it seems HIGH for 3 people (one being a kid too) but everything else on the budget looks to be about right (middle class) after you adjust for the cost of living.

    *I've lived in SF half of my life and food isn't that much more expensive compare to Seattle. SF is foodie paradise.

    And $53k net worth gains being built in isn't bad at all! It's really good actually! That gain is probably the biggest non middle class-y part about this.

  125. Everything seems so inflated, but that’s the price you pay to live in an expensive city. There isn’t much room to cut back with a kid. I guess they’ll just have to make more money to save extra.

    I wonder how poor people get by in SF and NY. Rent control and rental assistance? It seems crazy to just get by with $300,000 income.

    Portland is a bit cheaper. I think you’re right about the equivalent. $120,000 is pretty good. A friend is making $40,000 and she’s just getting by with barely any savings. She’d need to increase her income to at least $65,000/year to get ahead.

    1. I can answer that Joe! It’s easy to squeeze people in. If you’re a family of 3 the most you need is 2 rooms. And not bedrooms per se. Just rooms. So you can pack everyone in as dense and affordable as you can and do no maintenance afterwards because the low rent gives landlords no incentive to keep you. (That’s how my kidhood went) and we kept our rent under $1000 average every single year. Last year my mom pay $800 per month for a basement in San Francisco.

      (Our family of 3 made $20k to $40k in the best year.)

  126. Damn Millennial

    There is something to be said for relocation once FI is reached. The pros out weigh the cons of living in a major metro area while young. Building some experience and increasing income is way easier in expensive cities.

    I live in a middle ground location Denver and feel like it was a good call. Career wise household income could be larger but as you stated I have found my happiness not really increasing with income. Shoveling more money away is great but there is a cost to everything.

    I feel like I have “hacked” a HCOL area with our only reoccurring expense being a $1,580 mortgage. At this point I am at the earn and accumulate stage. I see Colorado being a place I will stay. My longer term goal is to transition from the 9-5 corp life to something that I will make less in but enjoy more.

    Have to earn and save to reach those kind of long term goals but we are on track. Visited SF once and it was a great vibrant city. If you are a tech guru I don’t think there is ever a reason to leave. For those chasing the money in that industry though I am sure many will reach a breaking point and reshape their situation.

    Great reads lately!

  127. Brian McMan

    Saving for retirement, saving for children and their education, owning your own home: these things sound upper class to me. Maybe the person earning $300,000 a year needs to reevaluate what a middle class life style is and review their goals.

  128. Thank you Sam, I love the site, active reader for the last 6 years (and now a podcast listener). I am in NYC (Brooklyn) and you are spot on. My household income hovers around the range in your article. I have two kids, an SUV, and go on 2-3 vacations a year. I was fortunate enough to be able to buy a 2 family brick town house in 2009 for around $650k, and refinanced to a 30 year mortgage at 3.75%. My mortgage is around $2,400/month, Real Estate tax around $580/month, maintenance/insurance around $1000. However after factoring in 1,300 of rental income, my total living cost is around ~$2,700. That extra savings via rental income goes a long way.

    One item that I think is missing (couldn’t reconcile to your federal effective tax rate, if it is in there ignore my comment) is Social Security and Medicare tax. For a household making $300,000 (assume income is split 50%/50%) that’s an extra ~$20k (that’s without even factoring in the extra 0.9% which kicks in after $250k). As you pointed out in many of your other posts, having passive income and business income where you have opportunities to lower your taxable income base goes a long way.

    Appreciate your site and keep doing what your doing. Your articles motivate, educate, and make all of us more financially well off.

  129. Interesting that the term “coastal” almost never includes Florida, the state with most coastline in the continental US.

    Cost of living in Florida is notoriously low compared to the rest of the US.

    I make about $150,000, and spend about $17,000, and people tell me how rich I must be, based on their perception of my wealth based on the spending they see.

    On the Florida coast, $17,000 can buy a lot, and with no state income tax, I would suggest it is the best coast for maximizing the amount you can put into investments, and still afford a comfortable life.

    1. I don’t disagree. In fact, I would move to Florida after making and saving as much money as possible in a big city, especially if it was one on the East Coast eg NYC. Who wants to pay state income taxes?

    2. It’s not in the coastal or not, or even on the DEMAND. Millions of people have moved to Florida creating huge demand but, unlike California, supply restrictions have been light.

      It’s all in the SUPPLY — and of course in the supply restrictions.

      Demand for electronics has increased one hundred fold in the past four decades, yet they are getting more and more affordable. Why? Unrestricted supply.

      It’s not in the demand, but in the supply, and the pitchforker anti-growth attitude that makes your next upgrade house more expensive even faster than your current one, and prices your children out of your area, or makes them lifetime renters.

  130. I would move. I make 100,000 plus as a nurse practitioner. Other health professionals, excluding physicians, make good money too. But I would have to bust my ass to make an income of 300. I’m frugal and managed to invest to over 1 mill with the help of my wife but I’ll stay away from the coast. I hope all the rich folk stay away from my small towns. Peaceful, simple and cheap.

    1. Where is your small town so the rich people consider buying? You might have to bust your ass making $300,000 a year, but if you find a partner who makes $200,000 a year, then you won’t have to do anything more except for to start saving on expenses.

      1. “…but if you find a partner who makes $200,000 a year, then you won’t have to do anything more except for to start saving on expenses.” Well, that solves ALL my problems! Why didn’t I think of that?

  131. Thanks, this is great! Quick question, is this for a family or 3 or 4? Your table cites 3 but your article cites 3.

    Just to compare, we live in NYC and the numbers are similar if not higher than this as NYS + NYC income tax ~11% (not 9% in CA), child care is ~$2,500/m (not $2,000), public transportation ~$700/m and I wish I was only paying 3.25% rate on my mortgage!

    1. aimlesstraveler

      Sorry, how does public transportation cost $700/month? An unlimited ride metro card is $121/month times two adults…kids under a certain height ride free. School age kids get 3 free swipes per school day. I guess if both adults are buying the weekly express bus unlimited cards that would bring it up to just under $500. Still don’t know where the extra $200 comes from.

      1. LIRR train tickets for two would easily add up to 600+, and if someone is working anywhere away from the PENN Station is going to add another 117 to each person. That is way pass 700 bucks already,

        And BTW, LI property taxes are notoriously high, I pay 18K a year for a postage stamp size lot house.

        Any Decent car will cost about 500 a month of payment.

        The Mortgage is 2700 a month.

        Yeah, 300K doesn’t go far in NY or CA.

  132. It’s so interesting how these numbers hold even at a different life stage.

    We are a family of 4 with school age kids in the nyc metro area. So expenses which would go towards day care and baby supplies now go towards sports and other activities for example. And since we are in the burbs, we have more cars and a bigger house with higher insurance and maintenance bills across the board.

    We have one income via my various consulting work.

    And my expenses are pretty much exactly what you outlined here.

  133. Tuckerman Jones

    We could all cash out and move to Mexico, Costa Rica, or a similar country to enjoy the lower standard of living and great weather, but few do that. The price of admission to a city’s opportunities, convenience and other selling points is higher expenses – which are driven by the demand to live there. I don’t think of this couple as the struggling middle class as much as a couple who has decided that the price of the city is worth it. Could they move and get paid less, and enjoy more material things – possibly. I lived in NYC for a couple of years after graduating from college. Great time, but a black hole of funds and I estimated then (decades ago) that to live in a good neighborhood and send my yet to be born kids to a decent school would require a $500k annual salary – and the attendant tread mill. The reality is that we ALL face the challenge of living within our means, and the temptation not to so as to keep up with the Joneses. The key is to choose a lifestyle that you can sustain without working yourself into an early grave, and stop comparing that lifestyle to what others choose or can afford. Your observation that making over $200k didn’t impact your happiness indicates that cost today of your chosen lifestyle (and location) is about 200k. I have a number for myself and family as well, but I suspect that this is more than we really need to be happy. You can choose happiness at any income level.

    1. I tend to agree with your general assessment, but I disagree with income not providing additional comforts and happiness.

      The Best thing higher income can provide is less worry about money. But there is a huge psychological component to financial independence where it’s very hard to let go due to fear and the one more year syndrome.

      1. The more you have, the more you worry, if you have a personality that tends to worry about money. Trust me… ;-)

        1. Me too, but for me the worries are more trivial, and more about not losing money, changes in rules and taxes that will affect me, adding more “safety” by increasing net worth, setting higher goals to see what happens, spending to optimize happiness, whether some small luxury is worth the cost.

    2. I think you underestimate how many people do not geo-arbitrage simply because of inertia or because they just don’t know any better, people who used to carry soap on their first trips to Costa Rica a couple of decades ago because they thought they don’t have it down there. While that is an extreme most people are afraid to venture too far out.

  134. Charleston.C

    Long time reader, so my comments and questions are consider other articles you have written.

    If someone is working in SF and cannot take full advantage of geoarbitrage, wouldn’t a reasonable alternative be either living in a smaller apartment/condo in SF or live just outside of SF for a reduced expense? 2,000 sq.ft. of living space is typical for an American family, but if you compare to cities like Hong Kong, 600 sq.ft. is considered adequate for a family of 4-6. Not saying 600 sq.ft. is what people should strive for, but while a 1.5M house is the going price for SF, I’m not convinced it is the best path for financial freedom even if real estate is as much personal use as it is investment. I recognize there are no “correct” ways to manage a budget, but I personally would rather cut housing cost (savings in mortgage interest and property tax) before cutting food expenses.

    Also $200/month, representing greater than 50% of what the family is generating for cash flow, sounds like a lot for charity. Can’t fault anyone for being generous, but I know I am not willing to part with that much money if I only save $341 a month.

    With all that said, I will 100% agree that $300k = middle class in a city like SF. Because whatever savings one can generate by reduction in housing costs (or any other areas), the savings really need to go into post-tax savings. So it’s not exactly living large no matter how you slice it.

    1. Funny enough, I live just outside SF in the peninsula and it’s actually more expensive than SF proper. The only real option would be easy bay and having an hour+ commute each way.

    2. $200 a month in charity only sounds like a lot in the context of their “free cash flow” in this budget. If you consider what they’re spending on themselves or what they earn overall, it’s paltry. It’s all about priorities, and this hypothetical family clearly does not place much value on giving.

  135. I think your income totals might have an error. You use the $24K standard deduction to calculate the tax liability but it looks like you actually deduct that from their spendable income. Although they wouldn’t have to pay taxes on that $24K, they would still be able to spend it. If I am correct (and maybe I’m missing something) this couple would have an additional $2K per month to spend.

  136. not rich but money wise

    300k is a lot for most people, even for coastal cities like NYC or San Fran. I know people that have a family of four in these areas and they live quite comfortably on 150-200k a yr. A lot of the expenses in your chart like 2,000 a year for one person’s clothes, >8,000 a yr for food for each person, and 2,400 a yr for charity are luxuries that most people in those areas don’t partake in.

    Also, while it is not uncommon for people to make 300k in San Fran for a household it’s not the norm. In 2016 the median household income in the Bay area was only 96k.


    300k is definitely at the very high end of middle class.

    Finally, the average primary care doc finishes residency at age 29 and makes 205-240k a year depending on the survey. I’m a doc so I know a bit about the income we make.

    Specialists that finish at age 32 (6 yrs of residency/fellowship training) are typically making 300-550k a yr, although less when starting. 6 yrs of PGY training yields subspecialists who tend to make a fair amount more than the average doc who makes 205-300k. Everybody specializes in something, by the way. Geographic arbitrage is actually a big factor in medicine; a doctor in a low-paid specialty can make 160k in a saturated area or 350k in the boondocks.

    1. I am a doctor residing in Manhattan. 300k for a family in Queens or the Bronx is a lot. In prime Bk or Manhattan (which is almost certainly what he means by “NYC”), 300k doesn’t get you very far. In fact, my expenses are more than listed and we don’t even have a child yet. Admittedly, we don’t live an austere life but no one visiting us from outside the city would be able to imagine we spend that much in a month by our lifestyle. Everything is just really expensive here. Many of my friends are paying $50k per child for private school. Two kids means $200k annual gross income just for their elementary school education.

      1. "poor" primary care doctor

        Yeah well most “middle class” people don’t send their kids to 50k a year boarding schools. It’s called public school.

        1. It’s not boarding school. I just looked up my elementary school for a friend interested and it’s now 42k a year. And it wasn’t fancy. SF area. We didn’t have tennis courts and an Olympic pool. Now I realize that’s crazy, stupid expensive but just so you realize it’s not like these are schools where people are eating caviar for snack time.

          1. Are there no public schools in SF? Or are they really that bad? I couldn’t imagine having to pay that much for elementary school or even college!

          2. "poor" primary care doctor

            Boarding school or private school–the point is that middle class people don’t spend 100k a year for something that is “free” with taxes. The vast majority of normal people send their kids to public schools. Ideally you have somewhat decent options locally but if you don’t you persevere.

            A lot of the people I know that went to boarding schools are abject failures in life that can’t support themselves at age 30 and live at home. I went to a public school, for what it’s worth.

            I don’t recall if sam is from a rich family but his perspective is highly skewed. 300k in san fran is 3x the median household income there. It’s definitely at the high end of middle class. And if a 300k family wanted to they could move to Ohio and become “upper class.”

            1. I went to public high school and a public college, The College of William and Mary. It cost $2800/year in intuition back in 1995.


              There are good schools in the San Francisco public school system. But the system is a lottery system for social engineering. If you buy a house and pay $20,000/year in property taxes, you have no guarantee you get to go to your neighborhood school. If you can’t get into a good school, many parents feel that it is worth the sacrifice to also apply to private school.

            2. I might add that it is not just the well-off who send their kids to private schools in San Francisco. I worked in a poor neighborhood for years (another “poor” primary care doctor) and was struck by how many working-class families would do anything they had to to send their kids to private schools. These folks weren’t stupid; they knew the value of a high quality education.

          3. If one of the spouses in these expensive coastal areas has an earning capacity of only around $100k per year then it makes much more sense for that parent to not work and homeschool (hear that Sam?). Especially if you have more than one child.

            If you take into account that the second income would get all taxed at the marginal tax rates and you may even lose some deductions, the additional social security payback for a second earner is much diluted, a second health insurance is worthless since one spouse already insures the entire family, Medicare is already guaranteed once you’ve worked 10 years, add babysitting and commuting costs… then you actually come out ahead even financially by staying home and educating the kids — and your children don’t get indoctrinated with the group thing of schooling — which also gives them a leg up on their future financial independence.

            Well, in any case, that’s what we do.

            By the way, the marginal tax rates for most people in CA are much higher than the rate tables imply because of loss of deductions with rising income (e.g. Passive activity loss etc).

            If you use tax preparation software software then its easy to do the “what if” analysis. Just increase/decrease your income entry by a couple thousand dollars and see how your tax bill changes. That reveals your true combined marginal tax rate.

            Three years ago (pre tax reform) I filed an amended return because I had forgotten to subtract some income. By reducing my income by $2200 I got back a total of about $1050 federal and state combined, virtually a 50% effective combined tax rate. Combine that with the fact that if you eventually become “too” financially independent you may face an additional inheritance tax of 45% (much less of an issue now post tax reform) and you easily say thanks but no thanks to additional work and career ambitions. For us it would be preposterous for both spouses to work, and even I have significantly curtailed my work hours and career ambitions, as well as my ability to create more high paying jobs in the tech sector and contribute to further prosperity for this country (for you class warriors out there).

            1. Very few people are able to homeschool their children properly. For ex, I have an MD and my wife has a BA. How exactly would I teach my children nanotechnology, biomechanics, genetics, AI/neural nets, or anything else needed for the future? It would take me years to learn all of that stuff, let alone teach it. That’s what kids at top institutions are learning now. If you are making $300k+ in a large city, you are hoping your kids will stay in the top 5% or 1% in their lives & it’s tough to do that via homeschooling except for the rare programmer that creates a multimillion dollar business in their teenage years.

        2. Understood, I grew up in a family where my parents wages were in the $30-60k range most of my life and I went to a public school. But my education there was significantly better than what you obtain in the vast majority of Manhattan public schools.

          Also, in regards to wage averages, you have to realize in NYC and SF, the “real” middle class doesn’t exist. I have employees that make $40-100k annually, for example, and they survive, but they don’t have savings, they have to refi their houses regularly, borrow money, kids go to schools in dangerous areas, both parents work, they commute over an hour sometimes to get to work, etc.

  137. Other than food, two other categories stand out to me as outrageous.

    First, property insurance of only $1560 annually? How can that be for a $1.5M home? My midwest valued at aroudn $300k has insurance over $2k. How can so little coverage be acceptable for a $1.5M home?

    The other is the money for clothes. We clothe our family of 4 easily on what this budget spends on a month or two. It just doesn’t seem right to me.

    1. That’s interesting. My property insurance is only about $1k per year for a $650k home. I can’t imagine why yours is double what mine is. Maybe your home is in a higher-risk area for natural disasters? Earthquake coverage isn’t included in our insurance policies (California), and apart from that I’m not really at major risk of floods, tornadoes, hurricanes, etc.

      We should also consider the actual cost of rebuilding. The land doesn’t go anywhere, so it would just be rebuilding costs that would affect the premium. Most of my $650k house value in the land, so if the rebuild cost is around $250k, that’s the real “value” number from an insurance perspective.

      Also, a huge portion of homeowner’s insurance is third-party (liability) coverage, so it wouldn’t be a linear increase in premium based merely on the value of the home.

      1. The difference is hail. New roofs every few years in the Midwest make the insurance a lot more expensive. Especially since earthquakes aren’t covered here in CA.

      2. My 2.5m peninsula home’s insurance is 1200/yr (no earthquake coverage tho!). Umbrella adds another 400/yr.

      3. Sam, right on. Even in Canada, we do have to make an effort to have that middle class life and retirement life and plenty of people who had two professional incomes did not save nearly enough and/or make the right financial moves, and struggle in retirement even with pensions. Pensions don’t cover the rising rents if you don’t own, replacing cars, vacations, “luxuries” like dental, vision, and hearing aids, never mind a new laptop or phone. We do have free medical (pretty much), good public schools, and much cheaper higher education, but prices are much higher and income taxes are much higher. Also, COL in the middle of the country is not so low due to long distances to drive to everything in all weather and much higher heating, food, and property taxes. I think wages/salaries are probably lower too in some occupations.

    2. The sum of car and home insurance (~2.8K) does strike me as a bit low. In my household is bundled since that way I get a discount. For a ~1 million home and a 2017 Honda accord our home plus car insurance comes out to around ~3.5K. We are in a NYC suburb. Of course I do no know what the car and home insurance market is like out in SF.

    3. Indeed the insurance premium difference is somewhat puzzling.

      Perhaps one of the differences is that a $300k house in the Midwest is a much bigger structure than a $1.5M house in San Francisco. Of course that does not explain the entire difference because rebuilding costs are also quite a bit higher in San Francisco. All those low-wage construction workers are not so low-wage in San Francisco because they too have to live in ultra expensive real estate, so exorbitant housing costs quickly become pervasive and inflate all costs and expenses — as you can see from the babysitting budget on Sam’s list.

      Indeed the cost of anti-growth policies is staggering, but it’s the very grass roots suckers that support them who expedite our financial independence through real estate investments. The children of the pitchforkers who headed to City Hall to save the earth every time something new where to be built are now renting from uncle HB. So, in a way, I hope not too many people take my comment seriously and thus continue the good anti-growth work, and least until the distortion gets into bubble territory — and we may already be there, but that’s another story.

  138. Thanks Sam. I’m a SF resident living in the Sunset District and an avid reader of your blog. Your analysis mirrors what me and many of my ‘young professional’ neighbors experience today. SF is a special place, but the challenges to make a living here and raise a family are well represented in this article.

  139. If the couple is healthy (a substantial “if”), you may be overestimating their terminal annual expenses by about $70k: their mortgage payment and their child care cost should be completely gone by the time they retire.