What is a good income for a family

The question of can a family survive on 50,000 dollars a year is something I hear only in the USA. I can answer with a strong yes. Fifty thousand is a lot of money, people need to put things into perspective. What is a good income for a family in the USA less than you think.

I not only studied Economics but has lived in Eastern Europe a good part of my life and people with almost the same price structure as the USA, people survive with their families on 800 dollars a month.

poor in the USA - American expectations about wealth
Me – walking (no car) to the library to get some books with my daughter an her cousin – in basic clothes (my wife cuts our hair), no cell phone etc, in Eastern Europe. I am a stock trading entrepreneurial capitalist, but does not mean I have to buy and consume the whole world.

I am not saying this to be uppity or for any other reason than to convey what I see. 800 dollars a month is actually not bad money. I am writing this only to say if you are an American and worried about money, do not. I want to give you confidence that you will survive. Forget the huge stigma in the USA about being poor. Who cares what other people think of you. I have been rich and poor and each has its pluses and minuses.

A prime example why Americans parents need not worry about money

For example my friend grew up with nothing, in a 160 square foot apartment with her parents and no running water and she is today a famous research PhD and MD and helps people with cancer in Poland. She is a happy lady with a family and her lack of material goods did not affect her in any adverse way. In contrast a friend of mind in the USA grew up in rich Connecticut gold coast and his father was Wall street guy. The kid is on drugs today. Money does not means anything for raising a happy family, in fact there might be a slight negative correlation. I am not a tree hugging hippie at all, I believe the best things in life are free and people who have an inordinate focus on hyper consumption will not be happy.

Example 2 why money does not matter for a family

Another friend of mine grew up with 10 people (two families in 2 small rooms. She is just as happy as kids in the USA. She started her own travel company and always talks fondly of her childhood. My point is you do not have to do that but put money and income in perspective.

My wife’s family and money

My wife grew up on a farm and when communism fell she remembers going to the store and looking at a candy bar (Mars) and she had no idea what it was. She tried to figure it out, but could not, because had never seen anything like that before. No one had anything.

She has a Masters and a few years of medical school, speaks a handful of languages (self-taught) and a grew up happier than a lot of the kids in the USA. She says her life is a fairy-tale.

If the doors of perception were cleansed everything would appear to man as it is, infinite. – William Blake

Fear of lack of money hurts people more than the actual lack.

American girl attitude about money – I never want to be poor

In contrast some American girl told me the other day she wants to marry a man with a good job so her kids can get language tutors and go to a good school. What a lame reason to fall in love. You want your kids to be fluent in French, go camping for the summer in Quebec and encourage them to study or like my wife did to learn French translate songs. I studied French for seven years to a University level and I think my wife speaks it better than I because she love translating French music lyrics. That lame American girl would be better off taking a trip to Italy and falling in love with some poor Italian guy, there and then her future children would be 100% bilingual and two passports and learn more about the world than any meal ticket in the USA she wants to spin her web around.

You want your kids to be smart? Do not spend all your time at the office to save for their education. Rather, spend time with them, teaching them when they are between 0 and 15 and the rest will take care of itself.

Gheez Louise, I will not give up love or family for money. I understand paying the bill but put expectations in perspective, and drop irrational exuberance like a bad habit. Being poor is no shame. Jesus said “blessed are the poor”. How is that unclear?

Poor Europeans are educated and happy

My point is very nice kids here growing up in poor countries with much less than a poor or impoverished family in the USA and making a lot with their lives.

My point is you can raise a family on less than you think and have a wonderful life. Since I have lived in Eastern Europe for so long, I can not imagine anyone having a hard time with a family on 20k a year in the USA. For Twenty thousand dollars you a year in the USA you and your family can have a nice life.

Looking at a frugal American Budget

Lets say you spend:

  • 500 on rent (could be less)
  • 300 utilities
  • 300 medical (Blue cross premium plus plan)
  • 400 on home cooked chicken soup type meals everyday etc.
  • Ah Mark what about entertainment? – It is called a book. But even books cost money have you seen the price of an e-reader these days? |They are called the library books. Did you know at your local library they will order you any book you want from the whole state?
  • Reading is what people do in other countries that do not have the latest iPod. In Russia on park benches everywhere you see someone reading some 30-year-old library book with aged pages. Its fun, I do it myself. I also spend the weekend on picnics in the forest with my family. Is that bad? Is that wrong? No shopping malls or gassing up the car and spinning wheels. Want another example, look at the Amish. Again I am an unrepentant capitalist, but I am just saying money is just energy and can be use for good and bad or conserved and you do not need that much to live a good life.
  • At 20,000 dollars a year you are cutting it close but even the above budget could be modified. However, at 25,000 dollars a year you are in a positive cash flow and 30,000 dollars a year you are saving.
If anyone does not see it this way leave a comment and challenge my number.

What has changed in the USA – the economy or expectations in terms of supporting a family and earning a good income?

I think the main thing that has changed since I left the USA is people’s expectations about life. Even in the 1990s people had different expectations. When I left the USA at the start of the 2000s the world looked different. Now when I return the middle class all has nice clothes from shopping malls and nice cars and high expectations. Really, being abroad has allowed me to see the change other people living in it everyday do not.

The wonder years – look at old photos and see how the economy has changed but smiles have not

Taking it a step further, look at old movies and photos of your childhood. I remember growing up in the 1960s in the USA and I think we were not that bad off economically as my father was not only a hard-working man but a clever investor. With five kids and living in Connecticut we did well. Yet time were different, we had no PlayStation or Plasma TV and I read used books and used my imagination.

Einstein was right, this universe is relative and we can not go back in time. But that does not mean we can not remember where we as Americans came from.

What if you can not support your family?

  • Move to West Virgina or Kentucky to a mobile home or Palatka, Florida or where it is cheaper. Or a place where there is great job growth like North Dakota. The USA has infinite possibilities.
  • Upgrade your skills, go to massage school or learn on your own a skill like IT that is universal and can be done anywhere.
  • Make a budget like people living in the 1930s depression did, very basic.
  • But I have been to many countries around the world and you would have a hard time convincing me that in crisis America things are that bad economically for you and your family. Try me.

I do not want to criticizes, rather give you confidence that you can do it and do not worry. If the job opportunity if good and you want to move do not worry about money. Money goes and comes but time, well it only flies. Most families if you look at the “statistical mode” (highest frequency of occurrence) not some average that skews results for the super rich live on 30 something thousand dollars a year. For 50,000 dollars a year you are rich.

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6 responses to “What is a good income for a family”

  1. Adam

    For 50,000 dollars a year you are rich.

    As you mentioned it’s all relative.
    If in difficult times one stop trying to maintain an image and has the audacity to make the move toward a new and available dimension.

    Lowering our standard of living in a recession is not a disgrace it’s a smart and rational decision.

    would it really be so bad on vacation to sit around a fire camp with our families instead of staying at the Hilton on some popular destination? Other than not running more debt on a credit card we may end up experiencing a fantastic and unique experience.

    I have very often purchased used cars and never made a purchase that that I regretted. You do need to understand a few very basic thing about cars but its not rocket science. This will save you a pile of money if you do your homework. The first owner always takes the immediate depreciation so there is very little valuation left to lose if you keep your car clean. Other than oil changes and very basic tune ups I avoid garages as much as possible and my cars run for ever.

    Good quality food product are available and on sale in most large US Food store if one only take a few minutes to look for them.

    Unbelievably 50% to 70% low cost quality clothings (all the best names) are on sale at special discount stores in the US. Some colors or size may be missing but there is so much merchandise that its virtually impossible not to find all that one needs.

    I find that in some areas of the the US the market place offers the possibility to stretch a persons income tremendously. I had a delicious home made Mexican meal last week in some Florida road side mini diners for about $3.00 including a soda. It was fun, the lady owner and cook was nice and I enjoyed every minutes of it.

    I could have gone to a nice place by the beach but my point is that there is a low cost dimension out there that is not difficult to access and will make $50,000 almost fell like $100,000 and that will often bring a surprising and very enjoyable experience.

    1. Mark Biernat

      The one thing I love about the USA is that it has relatively efficient markets and it is a buyers market. That means if you want, you can find some deals on everything. Like your example of low cost high quality clothes. No where but America has such good prices. In Europe it is not just the VAT that jacks up the prices but excess laws and regulations and markets that are not as well developed from a supply chain point of view.

      I noticed the times I was pulling a pretty high income I was wasting a lot of money just because I had not time to do all the normal things, like have home cooked meals or take the time to even go to a mini roadside dinner.

      You also have a point about cars and depreciation.

      I wrote the article to make the point that it is relative, and expectations plays a big role in economics and determining one’s relative happiness with what you have.

      Not to get off the subject but one of my big issues with government interventionist policies to ‘save the US economy’ is it does not allow prices and markets to adjust. There is not reason the US government, the Federal reserve bank or anyone else needs to blow all our savings propping up prices of real assets or saving dying industries. If markets were allowed to work, it would be a lot easier for people to live in the USA as prices would come to a more competitive equilibrium, and competitive prices are always better than non competitiveness prices or non price rationing. The poor would be better off.

  2. Adam

    Corection: “we may end up having a fantastic and unique experience.”

  3. Adam

    “One of my big issues with government interventionist policies to save the US economy is it does not allow prices and markets to adjust.”

    That is correct Mark and it’s because they can’t.
    There intervention created the disaster in the first place and we have the same people pretending they have the ability to fix it.
    The economy is not the problem, “They are”.
    We have pyromaniacs acting as firemen.

    I think that we all realize that until the Real Estate sector comes back to normal the economy will remain mostly stagnant.

    The so called Government affordable but mostly irresponsible housing programs, the ridiculous and artificially low rates not reflecting risk, the insane lending practices with Fannie Mae and Freddie Mac leading the parades all backed by Government guaranties created a the Monster “The never before experience housing bubble.”

    You are correct when you say that “Government does not allow prices and markets to adjust.” That is because modern Government defends” Crony Capitalism.” or as some call it Soft Fascism,
    Lets face it there is still a monster hiding in the books of most Investment Bank’s.

    In the real world If I had lost a large portion of my personal portfolio that lets assume was used as a pledge against loans for my business operation. If somehow I was able to pretend that the valuation had not change and hope that lenders would not notice and that eventually either my business or my securities will make it back with time and cover this shortfall I suspect that it would not last very long before such a bluff would be called and I would have to face the music.

    However in the illusion Investment Banks world they are allowed to do this all day long and be loaded with non- performing loans.
    It is not even rare to find people living in homes and not making a single payment for several months, often much longer than one year.

    Banks are in no rush to challenge them since they would have to re-price downward those over-valuation on their fudged books. The Fed has been purchasing Hundreds from them Billions of dollars worth of garbage from Investment Banks “Toxic Assets” (The Fed’s balance sheet probably looks more like a bankrupt junk bond Fund now)

    There where thousands of good banks that could have absorbed the bad banks clients but instead at the end of all this there will be even less competition and the largest bank will not only have been saved from there mismanagement but will be rewarded with a much larger share of the overall banking system.

    The free market does not work this way. Was the Constitution about protecting freedom against tyranny of any kind or have we reached the point where Government and its agencies are now about creating modern tyranny and financial monsters.

    This is all wrong,unethical,phony and artificial economics. Its nothing other then bailing out and subsidizing losers at the expense of producers. It is also postponing any real recovery.

    The President will surely announce more spending this week and trying at any cost to create more artificial jobs before the next election. Buying votes.(Nothing personal against Obama they all do it.)

    For politicians adding water to the economic lemonade creates more lemonade. At first the illusion works since no one can argue against the fact that “nominally” we end up with more liquid officially called “the GDP” the diluted lemonade.

    It’s as if Central Governments are immune from the laws of economics. All other entities, households, individuals and businesses are subject to more “normal” economic rules.
    Yet somehow governments have this magical power to spend future growth in the form of debts or inflation postponing and jeopardizing “a real recovery and prosperity” for Political Expediency.

    Before its to late and in order to stop this monstrous conflict of public interest, isn’t time to evaluate a concept of separation of economic activity and intervention and the Government like we have with religion?

    1. Mark Biernat

      It is so clear to me as it should be to everyone, the crisis was caused by government. It was caused by an over expansion of credit by the central bank.
      Further it should be clear to any thinking person, with all the New Deal II (and New deal I for that matter). Government makes economics worse if it tried fiscal stimulation.
      It is beyond me why people still have faith in government providing an economic solution for their lives?

      Remember if you go back to the the original tale of Robin Hood was not based on taking from the rich and giving to the poor, but taking from the government and giving the wealth back to the people so they could make their own way in life.

  4. Adam

    Yes, it’s a very expensive illusion and an amazing hold ruse to have people think that Government somehow has money to spend.
    Government can not spend money in an economy with out eventually taking right back from that same economy = 0

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