7 ms·

60% of Millennials Earning over $100k Live Paycheck to Paycheck

43 points by elorant 5y ago

wdb 5y ago
You would assume people earning these kind of wages are highly educated and would have learn financial literacy via their parents and/or school. We had whole classes about this at high/secondary school
- HarryHirsch 5y ago
  One would think that a goodly number of them live in coastal California, where the housing market is fully out of control. The article hints as much. Can we fix the housing market and then start blaming victims?
  - tluyben2 5y ago
    > Some of these millennials — known as HENRYs — prefer a comfortable, expensive lifestyle. That is what the article says so seems there is at least some issue with their spending habits.
    - HarryHirsch 5y ago
      I mean, what are you supposed to do when you work in Irvine and are starting a family? The rent starts at 3500 dollars, so you'd need a family income of at least 100 kUSD. This is madness.
      - tluyben2 5y ago
        Sure, if that is the case and you cannot work anywhere else where the ratio is somewhat different then yes, you have an issue. But it feels like, and I see this a lot more on HN than elsewhere, that people want to hold on to the location and lifestyle they dreamt of (for some reason) while they could have a far less stressed out and comfortable life somewhere else. Things in life are not always perfect and if you can make 100k in Irvine or 80k somewhere where this housing problem is not a thing, why not move? Somewhere there is a misplaced entitlement is there not? Why should you be able to live there if the situation at hand tells you you cannot afford it? The housing issue needs to be fixed, but until it is, maybe you cannot live there. That is not the end of the world. And the article (and reality around me) does give me the impression that not only live people in houses they cannot afford but also have a life style to match. We are in sort of a bubble for a long time now already, but what do you reckon happens when the next crisis hits and all these people lose their jobs basically over night?
        sparker72678 5y ago
        > why not move? Maybe you have kids, and don't want to take them away from their school. Maybe you have kids with an ex, and you're legally not allowed to move more than N miles from your ex without their agreement. Maybe you're heavily invested in your community with friends, family, church, sports, etc. Maybe you can move, and get a job somewhere else, but for some reason your partner is much less likely to be able to. It's not that moving is always impossible. Heck moving might truly be the better idea. But it can be extremely costly socially to move, and even then it isn't necessarily going to actually solve your problem.
      - dangus 5y ago
        It’s only madness if local wages don’t pay well enough to compensate. In reality, the sixth digit of a six figure salary is less meaningful than it used to be. That’s the reality of normal and expected currency inflation. I’d like to see less hysteria over home prices and “a bar of soap used to be five cents, everything is so expensive now!!” The average home is larger with more amenities than it was during the mid-century. You can get roommates, your kids can share bedrooms. You don’t need two bathrooms: my parents grew up with four kids sharing one bathroom. And, yes, parents always had to make lifestyle sacrifices to raise kids. My parents weren’t going out to eat and traveling to exotic locations when they were raising me. By the way, people don’t shop on home prices, they shop on monthly payment. That’s a large reason why home values increased during Covid: interest rates plummeted, so everyone can afford a higher priced home.
        wan23 5y ago
        Not everyone can afford a higher priced home, even with low interest rates, because funding a down payment can be a significant hurdle in places where modest homes are over a million dollars.
        deleted 5y ago
        [deleted]
  - octopoc 5y ago
    FTA: > HENRYs [High Earners, Not Rich Yet] typically fall victim to lifestyle creep, when one increases one's standard of living to match a rise in discretionary income. They prefer a comfortable and often expensive lifestyle that leaves them living paycheck to paycheck. That kind of problem can't be solved with more money. It has to be solved with a behavior change.
    - triceratops 5y ago
      > They prefer a comfortable and often expensive lifestyle Is that so crazy if you're making 1.5x the national median income? > That kind of problem can't be solved with more money Who's talking about "more money"? > solved with a behavior change. Or a zoning change? Or changes to property taxes?
      - bhaak 5y ago
        >> They prefer a comfortable and often expensive lifestyle > Is that so crazy if you're making 1.5x the national median income? You left out the rest of the quote: "that leaves them living paycheck to paycheck." If you're living paycheck to paycheck, you are living above your means. You have no financial room to adjust if something unexpected happens. That's a problem. A completely unnecessary one as you would have enough leeway if you reduced your cost basis. People that earn much less usually don't have that possibility.
        triceratops 5y ago
        > If you're living paycheck to paycheck Sure. But if regulations force prices of essentials (like housing) up enough to take most of your paycheck, how much is it down to personal responsibility? And how much to regulations beating down regular workers?
        bhupy 5y ago
        Why can't it be both? Yes, housing regulations are pretty much the root cause of all of the Bay Area's problems (IMO). But at the same time, people making $100k+ aren't helpless, they have all the agency and means to live within their means. This includes making the decision to live with roommates, or perhaps even leaving the Bay Area for saner pasteurs like other commenters in this thread. Earlier, you said the following: "Is that so crazy if you're making 1.5x the national median income?", and I'd like to dig into that a little more. It's not really accurate to compare Bay Area's income with the national median without also considering how the cost of living compares with the national median also. Bay Area new grads are certainly high earners relative to people in Iowa, but they're decidedly middle class relative to their peers in the Bay Area. If you want a proper apples-to-apples comparison of how "HENRYs" ought to live their lives, you need to compare them with people in other parts of America that are also middle class relative to their local peers. Either that, or you have to compare their income to the median income in the Bay Area, which I believe is around $96k. So if you're earning $100k, you're not earning 1.5x the median, you're at the median, and should therefore spend like you're in the median.
- lm28469 5y ago
  It's a mindset, I have friends who earn X times as much as I do and spend it all on vacations and gadgets. If I had their salaries I would retire in 10 years, priorities I guess
- P_I_Staker 5y ago
  It's not a financial literacy problem. It's a quality of life thing. People want or have convinced themselves they need to live a certain way. Sometimes it's "keeping up with the johns'", but I think it's more that what people see as the base level of living at their level is too expensive, and people don't want to give anything up. A huge number of people operate at the verge of insolvency, because they refuse to compromise quality of living. It's not just about knowing, you have to be willing to give something up.
llimos 5y ago
House prices house prices house prices house prices house prices. When will the people who write these articles understand this? I am convinced that today's house prices are tearing apart the fabric of society, without exaggeration.
- lotsofpulp 5y ago
  The root cause is not house prices. The root cause is automation/technology/outsourcing causing income/wealth gaps to increase, and concentrating the geographic locales where the probability of one moving up on the socioeconomic ladder is sufficient, resulting in very high demand for land in fewer areas. This is then coupled with restrictions on land use for those limited areas that are in high demand (sometimes because of the quality of life enabled by the restrictions on land use). Otherwise, there are very large swaths of the US with reasonable land prices. But they come with tradeoffs, so addressing house prices itself is not good solution. Addressing the tradeoffs themselves is a long term solution.
- nodesocket 5y ago
  Unless every person in the poll lives in California or New York I don’t think that’s entirely accurate. I was born and raised in California and moved to Nashville TN three years ago. I bought a house last year at the height of covid (thanks fed) and my biggest debt is not the mortgage, car payment, health insurance, food and entertainment, streaming subscriptions it’s by far taxes. Want to close the wealth gap? Then politicians should lower and more importantly simplify taxes. Close the loop hole for crypto wash sales, back door conversions, real estate tricks and implement a basic flat tax. Wishful thinking, this ain’t gonna happen. It’s easier for people to blame housing costs or wealthy people instead.
  - triceratops 5y ago
    > Close the loop hole for crypto wash sales, back door conversions, real estate tricks With you so far. > and implement a basic flat tax What's a "basic flat tax"? How does taxing every income at the same percentage simplify "loopholes"? Loopholes occur when deciding what counts as income.
ArkanExplorer 5y ago
Saving money doesn't make sense in an inflationary environment, where credit is easily available, and interest rates are 0%.
- lotsofpulp 5y ago
  Saving money in a savings account does not. Investing money does make sense.
- nealabq 5y ago
  I think what you mean is it's a good idea to borrow at the current low interest rates and put the money into an inflating asset. Aka leverage. A good idea if money is losing value (inflation) faster than the cost of money (interest rates). AND if you can find an asset that will gain value faster than (interest rate) - (inflation). After discounting for risk and volatility. But asset prices appear to running ahead of inflation right now, and thus risky. Still, the Federal Govt and Federal Reserve appear to be interfering in the price-setting mechanisms of the market in new ways lately. Really since 2008. Signaling that (upper)middle-class property speculators will have some protection from rising interest rates. And too-big-to-fail banks and perhaps large employers will also be protected. What's not clear is how much control the Feds really have. And how far they're willing to go.
deleted 5y ago
[deleted]
avgDev 5y ago
Rat race and keeping up with the Joneses. Many individuals like to show off when they have some money. Buying expensive cars, expensive clothes, expensive dinners, expensive outings, expensive gifts....and the list goes on and on. I am extremely comfortable around $100k. I do my own house maintenance, projects, I do my own car maintenance and repairs. We eat out here and there but nothing fancy. I am constantly doing small updates on the house and I have decent medical expenses. Every month we have money to spare, while constantly investing in 401k, S&P/Russel, bonds. People need to turn off social media and stop buying garbage. I have met a guy making $400k a year in the banking industry prior to 2008 crash. Wife stayed home, while kids went to daycare. They cleaning ladies, and sometimes cooks to make dinner for them. Few million dollar house. After he lost his job, they lost cars, house and then divorced. The moral of the story is it doesn't matter how much money you make but how financially savvy you are. There is a reason many professional sports players in the US "flex" during their prime years but then go broke when money dries up.
- andrewmcwatters 5y ago
  I don’t know if that’s always the case here. Look at the price of everything, and think about how people don’t just up and move when the cost of living is boiling them alive.
  - rayiner 5y ago
    Folks should just move. Iowa has a 3.7% unemployment rate and is desperate for workers. The people I went to law school with are now buying $1.5 million+ houses. Even on a $500k/year salary that's insane. My wife, who grew up in a modest household, simply couldn't pull the trigger on a mortgage like that. We moved an hour outside D.C. and bought a house for 1/3 that much. I understand close-in houses are more expensive than they used to be, but there's also been serious lifestyle inflation among middle class millenials. I grew up in a solidly middle class household; my dad had a graduate degree and a white collar job. We ate at Sizzler, sat through the timeshare pitch to get tickets at Disney, etc. We travelled internationally just three times growing up: twice to go back home to Bangladesh, and once to Paris. Today, it seems like millenials think that just because you have a white collar job you should be able to afford an international vacation every year.
rayiner 5y ago
I wonder if this is why so many millenial professionals clamor for "socialism." (Also, whether they realize that the thing the U.S. needs to do to make democratic socialism happen is heavily tax millenials making $100k/year...)
sparker72678 5y ago
There's a serious lack of awareness in some of these comments of just how dang expensive kids & a family can be. That's not to say that there isn't plenty of poor financial management going on, but if you have 3 kids you can't just start a 4th side hustle, live in a cardboard box, and put all your money in crypto and then retire in 4 years.
- deleted 5y ago
  [deleted]
- handrous 5y ago
  $1000/m day care per kid (+/- 50% depending on school quality and where you live, though I'm sure it's possible to spend even more than that). Or else whatever wages one parent is giving up to stay home, total, divided by # of kids needing daycare. $500/m, maybe, on healthcare, for kids who aren't particularly sickly and don't have chronic conditions. Family insurance coverage levels this cost out a bit, though each kid increases the likelihood of accidents or illness, which is expensive. Birth cost is likely to hit whatever your max-individual-out-of-pocket cost is, and potentially double that if you time it very poorly. Cost increases to housing and transportation vary a lot but I think $500/m is a fair low-side-of-average guess to put on that. You can technically avoid much of that, but usually only at costs most people won't accept if they can at all afford not to (e.g. sending your kids to bad/dangerous schools). This doesn't scale per-kid like day care does, though. Food and other consumables. Probably looking at $5,000-$15,000 for each birth, unless you spread too much of the pregnancy over two years (if you get all the pre-natal care in one deductible year, and the actual birth in another, that's very bad). This assumes none of the kids are actually sick. Three kids (minimum for statistical above-replacement rate) and we're talking $15,000-$45,000 paid for births, and probably $30,000-40,000/yr while they're young (daycare), dropping to maybe $15,000-$20,000/yr when they're a little older, total, for all three. Food, clothes, incidentals all (very roughly) included. Again, assuming your kids are basically healthy—any chronic illness can add hundreds to thousands per month, easily. Yeah, it's a fuckton of money, and a whole lot of risk on top of what you're nigh-guaranteed to spend. At least you get a tax credit to pay for a small fraction of it. That's nice. Mine are in early grade school or about to enter school. Did a mix of some stay-at-home-parent and some daycare. I reckon we're approaching half a million spent so far, which would have had us well on the way to early retirement. I'm not counting opportunity cost. Way the market's done, that'd be well on the way to a million now. We've taken, like, one of them on a non-long-weekend vacation ever (the others weren't born yet, it's not like we ditched them), and none of them have ever flown anywhere, so we're not spending lavishly on vacations. Public school (so far, anyway). Mostly cheap "activities" (swimming lessons at the community center, stuff like that). We're in a low-cost-of-living area. Having kids took us from guaranteed, comfortable early retirement to... well, frankly I don't expect to be able to stop working until I'm not physically able any more.
asdffdsa 5y ago
Rent, Traveling, and entertainment seems to replace the diligence of saving in my generation. Anecdotally, the sacrifice required -- living a draconian life of cheap groceries, awful living conditions and long commutes -- is simply not worth it to lots of millennials who instead choose to enjoy their 20s and the healthiest years of their life having a good time balancing a regular job with a relatively lavish lifestyle off of work. The tradeoff will probably mean much later home ownership (if at all), marrying someone who has money, or inheriting property from their parents.
t0mas88 5y ago
Could also have something to do with inflation. High house prices and high cost of living in the big cities in the US (where it's also more likely you can find 100k+ jobs) effectively make a dollar worth less there. What keeps the overall inflation lower is that this fast increase of housing prices doesn't apply to more of the non-big-city areas of the country. 1 USD is just under 0.85 EUR at the moment, but if you convert the price of a beer or hamburger in a place like New York or San Francisco to euro and compare to Paris or Berlin you get 1.2 or so beer/burger there for that same dollar. Suggesting that in US big city terms maybe a dollar is only worth maybe 0.70 euro in buying power. I'm not an economics expert, but I think this results in a built-in wealth transfer from "countryside" US to big city US. Because wages in San Francisco and New York increase with the high prices but the rest of the country doesn't do so as much.

43 points by elorant 5y ago

wdb 5y ago

You would assume people earning these kind of wages are highly educated and would have learn financial literacy via their parents and/or school. We had whole classes about this at high/secondary school

HarryHirsch 5y ago
One would think that a goodly number of them live in coastal California, where the housing market is fully out of control. The article hints as much. Can we fix the housing market and then start blaming victims?
- tluyben2 5y ago
  > Some of these millennials — known as HENRYs — prefer a comfortable, expensive lifestyle. That is what the article says so seems there is at least some issue with their spending habits.
  - HarryHirsch 5y ago
    I mean, what are you supposed to do when you work in Irvine and are starting a family? The rent starts at 3500 dollars, so you'd need a family income of at least 100 kUSD. This is madness.
    - tluyben2 5y ago
      Sure, if that is the case and you cannot work anywhere else where the ratio is somewhat different then yes, you have an issue. But it feels like, and I see this a lot more on HN than elsewhere, that people want to hold on to the location and lifestyle they dreamt of (for some reason) while they could have a far less stressed out and comfortable life somewhere else. Things in life are not always perfect and if you can make 100k in Irvine or 80k somewhere where this housing problem is not a thing, why not move? Somewhere there is a misplaced entitlement is there not? Why should you be able to live there if the situation at hand tells you you cannot afford it? The housing issue needs to be fixed, but until it is, maybe you cannot live there. That is not the end of the world. And the article (and reality around me) does give me the impression that not only live people in houses they cannot afford but also have a life style to match. We are in sort of a bubble for a long time now already, but what do you reckon happens when the next crisis hits and all these people lose their jobs basically over night?
      - sparker72678 5y ago
        > why not move? Maybe you have kids, and don't want to take them away from their school. Maybe you have kids with an ex, and you're legally not allowed to move more than N miles from your ex without their agreement. Maybe you're heavily invested in your community with friends, family, church, sports, etc. Maybe you can move, and get a job somewhere else, but for some reason your partner is much less likely to be able to. It's not that moving is always impossible. Heck moving might truly be the better idea. But it can be extremely costly socially to move, and even then it isn't necessarily going to actually solve your problem.
    - dangus 5y ago
      It’s only madness if local wages don’t pay well enough to compensate. In reality, the sixth digit of a six figure salary is less meaningful than it used to be. That’s the reality of normal and expected currency inflation. I’d like to see less hysteria over home prices and “a bar of soap used to be five cents, everything is so expensive now!!” The average home is larger with more amenities than it was during the mid-century. You can get roommates, your kids can share bedrooms. You don’t need two bathrooms: my parents grew up with four kids sharing one bathroom. And, yes, parents always had to make lifestyle sacrifices to raise kids. My parents weren’t going out to eat and traveling to exotic locations when they were raising me. By the way, people don’t shop on home prices, they shop on monthly payment. That’s a large reason why home values increased during Covid: interest rates plummeted, so everyone can afford a higher priced home.
      - wan23 5y ago
        Not everyone can afford a higher priced home, even with low interest rates, because funding a down payment can be a significant hurdle in places where modest homes are over a million dollars.
        deleted 5y ago
        [deleted]
- octopoc 5y ago
  FTA: > HENRYs [High Earners, Not Rich Yet] typically fall victim to lifestyle creep, when one increases one's standard of living to match a rise in discretionary income. They prefer a comfortable and often expensive lifestyle that leaves them living paycheck to paycheck. That kind of problem can't be solved with more money. It has to be solved with a behavior change.
  - triceratops 5y ago
    > They prefer a comfortable and often expensive lifestyle Is that so crazy if you're making 1.5x the national median income? > That kind of problem can't be solved with more money Who's talking about "more money"? > solved with a behavior change. Or a zoning change? Or changes to property taxes?
    - bhaak 5y ago
      >> They prefer a comfortable and often expensive lifestyle > Is that so crazy if you're making 1.5x the national median income? You left out the rest of the quote: "that leaves them living paycheck to paycheck." If you're living paycheck to paycheck, you are living above your means. You have no financial room to adjust if something unexpected happens. That's a problem. A completely unnecessary one as you would have enough leeway if you reduced your cost basis. People that earn much less usually don't have that possibility.
      - triceratops 5y ago
        > If you're living paycheck to paycheck Sure. But if regulations force prices of essentials (like housing) up enough to take most of your paycheck, how much is it down to personal responsibility? And how much to regulations beating down regular workers?
        bhupy 5y ago
        Why can't it be both? Yes, housing regulations are pretty much the root cause of all of the Bay Area's problems (IMO). But at the same time, people making $100k+ aren't helpless, they have all the agency and means to live within their means. This includes making the decision to live with roommates, or perhaps even leaving the Bay Area for saner pasteurs like other commenters in this thread. Earlier, you said the following: "Is that so crazy if you're making 1.5x the national median income?", and I'd like to dig into that a little more. It's not really accurate to compare Bay Area's income with the national median without also considering how the cost of living compares with the national median also. Bay Area new grads are certainly high earners relative to people in Iowa, but they're decidedly middle class relative to their peers in the Bay Area. If you want a proper apples-to-apples comparison of how "HENRYs" ought to live their lives, you need to compare them with people in other parts of America that are also middle class relative to their local peers. Either that, or you have to compare their income to the median income in the Bay Area, which I believe is around $96k. So if you're earning $100k, you're not earning 1.5x the median, you're at the median, and should therefore spend like you're in the median.
lm28469 5y ago
It's a mindset, I have friends who earn X times as much as I do and spend it all on vacations and gadgets. If I had their salaries I would retire in 10 years, priorities I guess
P_I_Staker 5y ago
It's not a financial literacy problem. It's a quality of life thing. People want or have convinced themselves they need to live a certain way. Sometimes it's "keeping up with the johns'", but I think it's more that what people see as the base level of living at their level is too expensive, and people don't want to give anything up. A huge number of people operate at the verge of insolvency, because they refuse to compromise quality of living. It's not just about knowing, you have to be willing to give something up.

llimos 5y ago

House prices house prices house prices house prices house prices. When will the people who write these articles understand this? I am convinced that today's house prices are tearing apart the fabric of society, without exaggeration.

lotsofpulp 5y ago
The root cause is not house prices. The root cause is automation/technology/outsourcing causing income/wealth gaps to increase, and concentrating the geographic locales where the probability of one moving up on the socioeconomic ladder is sufficient, resulting in very high demand for land in fewer areas. This is then coupled with restrictions on land use for those limited areas that are in high demand (sometimes because of the quality of life enabled by the restrictions on land use). Otherwise, there are very large swaths of the US with reasonable land prices. But they come with tradeoffs, so addressing house prices itself is not good solution. Addressing the tradeoffs themselves is a long term solution.
nodesocket 5y ago
Unless every person in the poll lives in California or New York I don’t think that’s entirely accurate. I was born and raised in California and moved to Nashville TN three years ago. I bought a house last year at the height of covid (thanks fed) and my biggest debt is not the mortgage, car payment, health insurance, food and entertainment, streaming subscriptions it’s by far taxes. Want to close the wealth gap? Then politicians should lower and more importantly simplify taxes. Close the loop hole for crypto wash sales, back door conversions, real estate tricks and implement a basic flat tax. Wishful thinking, this ain’t gonna happen. It’s easier for people to blame housing costs or wealthy people instead.
- triceratops 5y ago
  > Close the loop hole for crypto wash sales, back door conversions, real estate tricks With you so far. > and implement a basic flat tax What's a "basic flat tax"? How does taxing every income at the same percentage simplify "loopholes"? Loopholes occur when deciding what counts as income.

ArkanExplorer 5y ago

Saving money doesn't make sense in an inflationary environment, where credit is easily available, and interest rates are 0%.

lotsofpulp 5y ago
Saving money in a savings account does not. Investing money does make sense.
nealabq 5y ago
I think what you mean is it's a good idea to borrow at the current low interest rates and put the money into an inflating asset. Aka leverage. A good idea if money is losing value (inflation) faster than the cost of money (interest rates). AND if you can find an asset that will gain value faster than (interest rate) - (inflation). After discounting for risk and volatility. But asset prices appear to running ahead of inflation right now, and thus risky. Still, the Federal Govt and Federal Reserve appear to be interfering in the price-setting mechanisms of the market in new ways lately. Really since 2008. Signaling that (upper)middle-class property speculators will have some protection from rising interest rates. And too-big-to-fail banks and perhaps large employers will also be protected. What's not clear is how much control the Feds really have. And how far they're willing to go.

deleted 5y ago

[deleted]

avgDev 5y ago

Rat race and keeping up with the Joneses. Many individuals like to show off when they have some money. Buying expensive cars, expensive clothes, expensive dinners, expensive outings, expensive gifts....and the list goes on and on. I am extremely comfortable around $100k. I do my own house maintenance, projects, I do my own car maintenance and repairs. We eat out here and there but nothing fancy. I am constantly doing small updates on the house and I have decent medical expenses. Every month we have money to spare, while constantly investing in 401k, S&P/Russel, bonds. People need to turn off social media and stop buying garbage. I have met a guy making $400k a year in the banking industry prior to 2008 crash. Wife stayed home, while kids went to daycare. They cleaning ladies, and sometimes cooks to make dinner for them. Few million dollar house. After he lost his job, they lost cars, house and then divorced. The moral of the story is it doesn't matter how much money you make but how financially savvy you are. There is a reason many professional sports players in the US "flex" during their prime years but then go broke when money dries up.

andrewmcwatters 5y ago
I don’t know if that’s always the case here. Look at the price of everything, and think about how people don’t just up and move when the cost of living is boiling them alive.
- rayiner 5y ago
  Folks should just move. Iowa has a 3.7% unemployment rate and is desperate for workers. The people I went to law school with are now buying $1.5 million+ houses. Even on a $500k/year salary that's insane. My wife, who grew up in a modest household, simply couldn't pull the trigger on a mortgage like that. We moved an hour outside D.C. and bought a house for 1/3 that much. I understand close-in houses are more expensive than they used to be, but there's also been serious lifestyle inflation among middle class millenials. I grew up in a solidly middle class household; my dad had a graduate degree and a white collar job. We ate at Sizzler, sat through the timeshare pitch to get tickets at Disney, etc. We travelled internationally just three times growing up: twice to go back home to Bangladesh, and once to Paris. Today, it seems like millenials think that just because you have a white collar job you should be able to afford an international vacation every year.

rayiner 5y ago

I wonder if this is why so many millenial professionals clamor for "socialism." (Also, whether they realize that the thing the U.S. needs to do to make democratic socialism happen is heavily tax millenials making $100k/year...)

sparker72678 5y ago

There's a serious lack of awareness in some of these comments of just how dang expensive kids & a family can be. That's not to say that there isn't plenty of poor financial management going on, but if you have 3 kids you can't just start a 4th side hustle, live in a cardboard box, and put all your money in crypto and then retire in 4 years.

deleted 5y ago
[deleted]
handrous 5y ago
$1000/m day care per kid (+/- 50% depending on school quality and where you live, though I'm sure it's possible to spend even more than that). Or else whatever wages one parent is giving up to stay home, total, divided by # of kids needing daycare. $500/m, maybe, on healthcare, for kids who aren't particularly sickly and don't have chronic conditions. Family insurance coverage levels this cost out a bit, though each kid increases the likelihood of accidents or illness, which is expensive. Birth cost is likely to hit whatever your max-individual-out-of-pocket cost is, and potentially double that if you time it very poorly. Cost increases to housing and transportation vary a lot but I think $500/m is a fair low-side-of-average guess to put on that. You can technically avoid much of that, but usually only at costs most people won't accept if they can at all afford not to (e.g. sending your kids to bad/dangerous schools). This doesn't scale per-kid like day care does, though. Food and other consumables. Probably looking at $5,000-$15,000 for each birth, unless you spread too much of the pregnancy over two years (if you get all the pre-natal care in one deductible year, and the actual birth in another, that's very bad). This assumes none of the kids are actually sick. Three kids (minimum for statistical above-replacement rate) and we're talking $15,000-$45,000 paid for births, and probably $30,000-40,000/yr while they're young (daycare), dropping to maybe $15,000-$20,000/yr when they're a little older, total, for all three. Food, clothes, incidentals all (very roughly) included. Again, assuming your kids are basically healthy—any chronic illness can add hundreds to thousands per month, easily. Yeah, it's a fuckton of money, and a whole lot of risk on top of what you're nigh-guaranteed to spend. At least you get a tax credit to pay for a small fraction of it. That's nice. Mine are in early grade school or about to enter school. Did a mix of some stay-at-home-parent and some daycare. I reckon we're approaching half a million spent so far, which would have had us well on the way to early retirement. I'm not counting opportunity cost. Way the market's done, that'd be well on the way to a million now. We've taken, like, one of them on a non-long-weekend vacation ever (the others weren't born yet, it's not like we ditched them), and none of them have ever flown anywhere, so we're not spending lavishly on vacations. Public school (so far, anyway). Mostly cheap "activities" (swimming lessons at the community center, stuff like that). We're in a low-cost-of-living area. Having kids took us from guaranteed, comfortable early retirement to... well, frankly I don't expect to be able to stop working until I'm not physically able any more.

asdffdsa 5y ago

Rent, Traveling, and entertainment seems to replace the diligence of saving in my generation. Anecdotally, the sacrifice required -- living a draconian life of cheap groceries, awful living conditions and long commutes -- is simply not worth it to lots of millennials who instead choose to enjoy their 20s and the healthiest years of their life having a good time balancing a regular job with a relatively lavish lifestyle off of work. The tradeoff will probably mean much later home ownership (if at all), marrying someone who has money, or inheriting property from their parents.

t0mas88 5y ago

Could also have something to do with inflation. High house prices and high cost of living in the big cities in the US (where it's also more likely you can find 100k+ jobs) effectively make a dollar worth less there. What keeps the overall inflation lower is that this fast increase of housing prices doesn't apply to more of the non-big-city areas of the country. 1 USD is just under 0.85 EUR at the moment, but if you convert the price of a beer or hamburger in a place like New York or San Francisco to euro and compare to Paris or Berlin you get 1.2 or so beer/burger there for that same dollar. Suggesting that in US big city terms maybe a dollar is only worth maybe 0.70 euro in buying power. I'm not an economics expert, but I think this results in a built-in wealth transfer from "countryside" US to big city US. Because wages in San Francisco and New York increase with the high prices but the rest of the country doesn't do so as much.