15 February 2008 3 Comments Print This Post  Email This Post

Yesterday, I read a blog post that I can’t get off of my mind. Catherine Shaw, at Wise Bread, wrote “Is Six Figures Really That Much?,” questioning why the $96,000 she and her husband made last year didn’t go further. They aren’t out buying new cars, shopping for clothes or living above their means, yet they’re barely able to put anything into savings.  She references an extensive comment thread on Free Money Finance about a family with a six figure income that really is getting by.

What really stuck with Catherine (and flabbergasts me) from the FMF thread is the fact that a lot of commenters seem to think that this family must be living way above their means. While a few seem to agree that it can be hard to get by on $100,000 if you live in some parts of the country, plenty make suggestions along the lines of “Why don’t you just get a cheaper car?” Depressing as it is, though, a six figure salary isn’t that much anymore. While a person can get by on quite a bit less, if she wants to live the good life — premium cable, new clothes and the like — she’s gonna need more, especially if she has a family.

But what about those of us who just aren’t going to make that much money? Are we doomed before we even start? For us — and I’m a member of a two-income household that definitely does not break the $100K mark —  we have to make choices. We can live in a less expensive part of the country in order to make our dollars stretch further. We can exhibit a higher level of frugality than some of the other folks out there. I’m willing to agree that it’s feasible to live comfortably on a lot less: there are folks out there that do just fine on under $50K. There are extenuating circumstances for every family, of course. The real problem isn’t so much the amount of money that we live on, but what we think we should be getting for it. Just as inflation has steadily been rising, the expectation of what a middle class family should be able to afford has also been rising. Two car families, labor-saving devices, material goods — even the quantity of entertainment we expect to be able to consume — has skyrocketed over the course of the last century. Think about the sort of expenses your grandparents had to budget for when they were young, and you can get a glimpse of the level of the changes.

We can, and should, redefine our expectations of just what we should expect for six figures and for a middle-class income. Is it reasonable to expect a brand new car to be within the financial grasp of someone supporting a family of four on $150,000? I’m starting to think it isn’t — at least, it isn’t if you don’t want to save for retirement and college. Expectations aren’t the only thing that needs to change, either. I don’t know how to go about glamorizing saving for retirement, but a healthy 401(k) really ought to be more of a status symbol than a brand new BMW.