The Expert Podcast

So here's the question Does it really take $200,000 of income now to be considered middle-class or have a middle-class lifestyle? Let's take a look at the numbers. Because 200,000 sounds like a lot to some people but that might be what it needs. To have a middle-class kind of comfortable lifestyle. Let's look at the numbers. If you are purchasing a home. Right now. You're going to probably want to buy a house in most markets that's maybe around five 50 or 600,000. Most markets in order to get a decent house a nice house something that's a little bit above average, you're going to spend five or six sometimes close to $700,000 for a house in most markets two or 300. Doesn't get you much You can get okay House. Right You can get a decent house. Probably 10 to 15 years old. Maybe a little bit smaller. And maybe less land and some areas obviously you can still get a three or $400,000 house it's decent but in most areas 5 50, 600, 6 50 maybe four. on the above average house it's not a million dollar house It's not a millionaires type house not a mansion, but above average house. Put in the comments let us know what you think about that in your area, but here's the thing. If you buy a house let's say it's 600 or six 10. Put down let's say 10%. Most people put down 10%, you're going to be financing about five 40 or five 50. Well that's going to put you on a mortgage payment with the current rates of $4,000. Right. Hold that thought…a house like that will probably have taxes and insurance property tax and insurance of maybe another thousand bucks a month 12,000 a year, depending on the tax rate and insurance premiums in your state. So add another thousand Now you're at $5,000 just for your house. Now if you buy a relatively nice new car. Most new cars now that are halfway decent are about 40 grand 45. You could spend easily 50,000 to get a decent average car You're not going to get a luxury car in most cases for…but even, you know cars like, Jeep. Gladiators minivans. SUV's they're all going to be in the 40 to $50,000 range. So let's say buy one that's 45,000. Right. Can you find cars that are 30 or 40 Sure You can. Can you find some cars that are in the mid in the twenties and not so much anymore for a new car? Well if you take a $45,000 car, You're going to have a car payment of about a thousand dollars a month…at the current interest rates. So now at Ana thousand now you're at $6,000 for payments for one car and one house One nice car in one nice house. Let's assume you have a second car but maybe you own that cash Maybe that's a cheaper car We'll throw that away. So now you're at six grand. Well what is your insurance for your car is going to be. Right. So you might have. maybe if you're lucky. 300 $400 a month for insurance for your car…And you're going to spend probably three or $400 a month for gas for your car…You're also probably going to have on your house. Some utilities. Depending on where you live. You could have electric…water. You're going to have internet. You're going to have a probably sewer in most places. Yeah and all that up that could be a thousand bucks. So add that with your insurance That's 16 1700. Well now you're at $7,500 a month just for your base payments. Before anything discretionary. You got to buy food. What's your food budget. Food budget could be a couple hundred dollars a week two 50 a week That's another thousand now you're at $8,500 a month…For basic necessities. That's not any entertainment going out. Close other things So let's start adding that up. If you have a couple kids you're going to have fees for school activities. Sports activities, lessons, books. That could be two or 300 bucks a month You're going to have to buy at least somebody a birthday present every month you know 12 people. That you need to buy a birthday present for, and if it averages out one a month that could be a hundred a couple hundred dollars a month. All of a sudden now you have another five or 600 So let's take that 8,500 make it nine grand. You're keeping a running total. Now you have $9,000. And you're also going to find that you're going to want to buy stuff You're going to want to buy clothes maybe some, Things for the house, you know things in the house you want to get new furniture, look those kind of expenses. You don't necessarily see them on your monthly budget but they add up you. You're at the store You see. You know flower arrangement you want to buy or you see. lamp or you see something for your yard or whatever it is you're going to see that that's you know a couple of. dollars a month It adds up quick Also you're going to need to fix things that break…You're kind of maintenance on your house You're going to have to repair your lawnmower Get a new lawn mower. There's a few hundred dollars. You also can have a cell phone bill. If you've got three or four people on a cell phone bill. That could easily be three $400 a month…In addition to that you're probably going to have some entertainment. subscriptions, you might have a streaming. You might have, some. Like Disney or Hulu. Add those three things up now you've got another thousand now you're at ten five a month in expenses. You probably could get away without having domestic staff like somebody cut your grass. maybe somebody to do maintenance on your house A lot of that you can do yourself so we'll leave that off but some people want to pay for those things. So remember you haven't gone on any vacations. You haven't gone out to eat. Signific. you haven't purchased any luxury items. So whatever your budget you think for that's going to be…overall throughout the year it may not be the same every month. What do you think that's going to be. So if you say what's your eating out budget, what's your vacation budget What's your luxury item budget. So eating out. If a family of four goes out to eat it's probably gonna cost a couple hundred bucks…And you can do that once a week, or you can do that twice a month. You got to do that. Twice. Two or three times a week. Let's say if you do it once a week and that's pretty conservative most people go out to eat more than that. So…you're going to have an expense adding all that up. That's going to be a very extremely variable from one family to another. And then what about vacations? You may go on a vacation in the summer You may go for a three-day weekend You may go for holidays around Christmas or you may go for two or three. And if you average that out if it costs you a few thousand bucks, every time you go between gas and hotels or flights or whatever it is and you go two or three times, that could be another four or $500 a month On average it couldn't be five or 6,000 a year. So now you're adding you're taking that ten five and you're adding probably a couple grand. For discretionary. Type activities eating out and vacations, and then you have your luxury purchases but let's stop right there Let's not even add that on. Already we're at. 12 almost $13,000…For…A monthly budget. On average. Well what does that turn out to for an annual salary? Well $13,000 a month times 12 months. Put you…At $157,000 for expenses, but you gotta remember that's after taxes take home. What does it take? For a gross pay to take home 150. It takes about 208,000. So if you have that kind of a budget structure, For your household for your family, where you have a nice car a nice house. You got to eat once in awhile you buy a few things. You're going to need to have a $2,200,000 a year. Annual income household income. And as a household income you may have two people earning income You might have spouses each earning an income to add up to 200,000. But either way it's going to take $200,000 to fund that kind of lifestyle That's not even including, do you want to put money away for retirement? Do you have to pay for your own health insurance? Do you have health expenses outside of insurance? That's just for your daily, monthly yearly life It's not for your saving for the future It's not investments. So 200,000. At one point it seemed like a lot of money. In 2022 or 23. That's roughly middle-class or just kind of a maybe a slightly above middle-class tell us what your thoughts are in the comments And do you see the same kind of expenses in your house?