Average Family Income Required (Minneapolis, St. Paul: middle-class, apartment, renting)

[northsub]

Some thoughts:

It appears the $74k figure is pre-tax.

The methodology seems to be more in line with "what does an average family of 4 pay?" than "what does a family of 4 need to live a secure life?".

Healthcare cost is including the part the employer pays. That seems a bit strange. I guess that $74k would need to be gross salary plus whatever money your employer puts toward healthcare.

The daycare costs are at centers, not family child care places. It breaks down to about $200 a week for a 4 year old and $6700 throughout the year for an 8 year old (the family they are using is 2 parents, a 4 year old, and an 8 year old).

Food costs seem really high to me. Supposedly the numbers are for preparing all of the food at home. Do people really spend $750 per month on groceries? We're a bit smaller, but I don't think we ever get over $200. The methodology also uses the same food cost for everywhere in the country.

Transportation costs are using the 55 cent per mile figure. The IRS number has always seemed high to me. I'm guessing this is really some kind of average across all car types.

There appears to be no savings component.

I'd be a lot more impressed with a study that took some sample families and actually tried to determine how much they needed to spend in a month. This just seems to be some kind of averaging.

[gtc08]

its not 74k net, its 74 gross, which is what net?

[TimtheGuy]

The #'s from the study are based on the "average amount spent" by a family of X size. So this would be take home not gross and it is not saying it is what is required to get by, but rather what 'spent'. The Headline of the article is misleading.

The numbers look pretty accurate to me. I can see where the average family of 4 in the metro spends $74k/yr or $6,166/mo.. Obviously there are many that spend less than that and many that spend more.

[northsub]

Originally Posted by TimtheGuy

The #'s from the study are based on the "average amount spent" by a family of X size. So this would be take home not gross and it is not saying it is what is required to get by, but rather what 'spent'. The Headline of the article is misleading.

The numbers look pretty accurate to me. I can see where the average family of 4 in the metro spends $74k/yr or $6,166/mo.. Obviously there are many that spend less than that and many that spend more.

The numbers are gross. One of the categories is amount spent on taxes. You could subtract that off and get a take home figure. That would come to just under $68k. Note that the $68k also includes money that an employer puts into health care.

I don't think it's just the headline of the article that's misleading. It's the premise of the whole thing. They are calculating an average spent and passing that off as the amount needed to get by.

[golfgal]

Originally Posted by northsub

The numbers are gross. One of the categories is amount spent on taxes. You could subtract that off and get a take home figure. That would come to just under $68k. Note that the $68k also includes money that an employer puts into health care.

I don't think it's just the headline of the article that's misleading. It's the premise of the whole thing. They are calculating an average spent and passing that off as the amount needed to get by.

I still don't think that 74K, gross, is a huge salary in the twin cities for a family of 4. It's about $5000/month and while it's not poverty level it's not living the high life either. Figure rent/house payment plus utitlities is going to be about $2000/month, health insurance is going to be about $650 on the low end, say one car payment of $300, groceries in the $500 range, retirement savings, car insurance, etc is going to eat up another $500+. They have $1000 of "disposable" income but still haven't factored in money into savings, clothing, medical bills, etc.

[Globe199]

Some of the calculations are a bit weird. They're saying $982/mo childcare for one child, but $1432/mo for two. I'm not sure why it wouldn't be $982 x 2, but isn't. Maybe they're assuming things about the age of the children. Nevermind, found it: "Child care expenses are based on costs of center-based child care for four-year-olds and school-age children."

For two parents/two children:

Monthly Housing: $920 - that seems about right to me. Maybe even a little low.
Monthly Food: $754 - that seems high. "assumes almost all food is bought at the grocer and then prepared at home"
Monthly Transportation: $607 - that's probably about right. This is an expensive place to own a car.
Monthly Health Care: $1524 - no idea where they're getting this. Unless you don't have insurance, or you have a chronic illness, I don't see how you come anywhere near this amount in a normal month.

I think they took a few liberties with the numbers, but all in all it seems like it's pretty close. Perhaps they're being a bit conservative with the estimates and estimating high in that case. Not surprisingly, they don't mention anything about iPhones or Nike; I think we need to get over complaints about cell phones. It's 2013. Every family will have a monthly phone/data/internet expense. That is not a luxury.

If you want something to complain about, complain about families having to spend upwards of $1000/mo for childcare. The cost of an iPhone is nothing compared to that.

[Beenhere4ever]

Median family income is $63,000. So I'm guessing maybe $40,000 is enough. And a family can live on less than that (my father found so many ways), but it becomes harder and harder. There are things no one needs to own. I think with a major sickness, it is easy to get submerged. The health industry is so voracious. We didn't really get much medical care when I was a kid. I went from 1948 to 1985 without being hospitalized. We just didn't have the money.

[golfgal]

Originally Posted by Beenhere4ever

Median family income is $63,000. So I'm guessing maybe $40,000 is enough. And a family can live on less than that (my father found so many ways), but it becomes harder and harder. There are things no one needs to own. I think with a major sickness, it is easy to get submerged. The health industry is so voracious. We didn't really get much medical care when I was a kid. I went from 1948 to 1985 without being hospitalized. We just didn't have the money.

A family of 4 on $40,000 in the metro would qualify for food stamps now. Sure, 40 years ago living off that was EASY in the Twin Cities, when nice houses could be had for under $100,000, in desirable areas even. Heck, when we did our first tour in the TC Metro, houses in NICE neighborhoods in Edina were $140,000....20 years ago....same house now is well over $300,000...not happening on 40K.

[TimtheGuy]

Originally Posted by northsub

The numbers are gross. One of the categories is amount spent on taxes. You could subtract that off and get a take home figure. That would come to just under $68k. Note that the $68k also includes money that an employer puts into health care.

I don't think it's just the headline of the article that's misleading. It's the premise of the whole thing. They are calculating an average spent and passing that off as the amount needed to get by.

They show taxes of "Monthly Taxes $462". That is not nearly enough to cover FICA, State and Fed income taxes so I am not sure what taxes they are referencing. I was thinking maybe it is sales and real estate taxes. Or is that paltry $920 supposed to be PITI (principal, interest, taxes & insurance)?

It is true, obviously people could "get by" on less, but it attempts to show what the typical family actually spends.

[Beenhere4ever]

Originally Posted by golfgal

A family of 4 on $40,000 in the metro would qualify for food stamps now. Sure, 40 years ago living off that was EASY in the Twin Cities, when nice houses could be had for under $100,000, in desirable areas even. Heck, when we did our first tour in the TC Metro, houses in NICE neighborhoods in Edina were $140,000....20 years ago....same house now is well over $300,000...not happening on 40K.

No one had $40,000 40 years ago. We probably had $6,000 for a family of 8 kids. The house probably cost less than $10,000. So let's clarify that I'm not applying any numbers between the two things. But if you're citing a HOME price in EDINA, you aren't talking about "getting by" any more. It takes a pretty good income to afford a house anymore. So we're talking renting a house OR renting an apartment which can be done if the family is that small. My father rented houses and apartments. And he was someone who actually saved money to be able to buy things that required some savings. At the present time, the average person saves nothing. They have a credit card balance which my father never had.