The American Dream Does Not Cost $130,000/year

american-dream-130k

This past weekend, USA Today published a report estimating the American Dream now costs $130,000/year to attain. You can find the entire article and figures here: Price tag for the American dream: $130K a year

Based on these figures, only 1 out of 8 American families are living the dream. Yours truly would be excluded.

To compute the numbers, the author determined first to define the American Dream. Based on surveys and interviews, the American Dream became defined as “economic security, finding and pursuing a rewarding career, leading a healthy and personally fulfilling life, being able to retire in comfort, and opportunity for their children to live a better life.” All good things.

With this as the goal, the actual cost of the American Dream was parsed into several broad categories:

  • The Essentials (housing, food, transportation, medical, utilities): $58,491
  • Extras (vacation, entertainment, eating out, communications): $17,009
  • Taxes/Savings (taxes, college savings, retirements): $54,857

Yearly income required for security, health, fulfillment, comfortable retirement, and opportunity for your offspring? $130,357

The article has continued to grow in popularity since its publication on Friday. It has been shared via social media thousands of times and has been reprinted in countless publications around the world: Detroit, Seattle, New OrleansGreat Britain, just to name a few.

This is unfortunate. Not only because the article is untrue, but because it is harmful.

For starters, consider the math. The notion that a family of four must own a $275K home, drive an SUV, spend $5K on summer vacation, and eat $315 worth of food every week is foolishness. The presumption that security and fulfillment and happiness can only be found in the ownership of these luxuries is a shameful misrepresentation of our heart’s greatest desires. I know countless people who live fulfilled and content lives on far less—all the while planning on a comfortable retirement and providing opportunity for their children.

Nevertheless, it is not the math that worries me so much and prompted this public response. Instead, it is the unintended (or maybe intended) consequence of this article. And my only hope is that these words will find their way into the minds of those who need to read them.

The bold proclamation that an annual income of $130K is required for the American Dream carries with it serious consequences:

It breeds discontent. 7 out of 8 American families are being told their lives would be more fulfilling if they had more money. As a result, our standards become redefined. While we may have been living a perfectly content life with far less annual income, we are forced to reconsider the possibility that we may be missing the really good life—and even worse, that we may never fully attain it.

It breeds jealousy and envy. 7 out of 8 American families are left out of the American Dream, left only to wish and dream it could be theirs. Soon, comparison begins to settle in our minds. The presence of bigger houses, faster cars, and corner offices become more apparent than ever before. And we begin to ask ourselves, “Why do they get to live the American Dream and not us?” Jealousy has taken root.

It breeds resentment. When jealousy and envy take hold of a heart, resentment is soon to follow. Not only do we wish we had what they had, but we soon become bitter towards those who have more. And whether we are in the 87.5% or the 99%, resentment will always steal more joy from us than it will from the other person.

The American Dream does not require $130K/year. To claim that it does, is to grow discontent, jealousy, and resentment in many American families. Indeed, this article harms us as individuals.

And it harms us as a nation because it is based on a faulty definition of the American Dream.

This past weekend, we celebrated Independence Day in America. Towns and Cities all across our great Republic were united in their celebration: 238 years ago, our forefathers stood up against what they believed to be unfair laws and unfair taxation without representation.

These are the words they chose to boldly declare their independence on July 4th, 1776:

We hold these truths to be self-evident: that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness—that to secure these rights, Governments are instituted among Men.

This, then, is the American Dream. It always has been and must continue to be so: that each of us would be allowed to experience life, liberty, and the pursuit of happiness. And government would not stand in the way of these pursuits.

As Americans, we are free to pursue our own happiness—however we decide to define it—in whatever lawful manner we desire. And those of us who have chosen to define happiness and security apart from $250K mortgages and SUVs in the garage are free to do so. Because there are greater and more important pursuits available to us than material possessions.

This is the American Dream. And it costs far less than $130K/year.

Joshua Becker

About Joshua Becker

Writer. Inspiring others to live more by owning less.
Bestselling author of Simplify & Clutterfree with Kids.

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Comments

  1. Elizabeth says

    What really IS the “American dream”? Why is it so important for some families to “keep up with the Joneses”? I think the American dream is just like any other dream: it’s personal. What’s a dream for one family could be a nightmare for another family. I live in a very affluent So. Calif. beach city and we’ve lived here for over 20yrs. Seeing our city change over the years has been hard: the old surfers die-off or are bought out, the trust-fund kids move in and bulldoze any house that has under 3 bathrooms and 2 kitchens….I AM NOT KIDDING! Our family’s only extravagance is our children and their education. Our newest vehicle is 10yrs old. I am the help: the maid, the gardener, sometimes the plumber. If families STOPPED looking over their fence to compare what they think their neighbors have, we’d all be better off! Less consumer debt, less worry, less envy=more happiness! Look inside your family and figure out what YOUR American Dream is, don’t let someone else select it for you.

    • erika says

      So glad you wrote this. I live in Manhattan beach and it sounds like you are close. :-) I grew up in the Midwest and have had quite an adjustment since I moved to so cal 15 Years ago. Rejecting the status quo here is hard and comparison breeds contempt. I am happy and grateful…even if others would deem my house a tear down. Haha

  2. says

    Unbelievable. Just un-***ing-believable.

    This is the first I heard about the “American Dream costs $130K” article.

    Beyond speechless, I’m pissed off.

    Such BS knocks people down like they’re Nancy Kerrigan.

    Good on you, Joshua, for the follow-up.

    Note to self: write a comparative cost post for other countries. Knock a zero or two off that “American Dream” price. :)

  3. Confused says

    I’m very confused. The author of this article is basically saying that because people’s feelings would be hurt, the article detailing the American dream by USA today must be wrong.

    Guess what. It’s a dream. People dream of the lottery and it won’t happen for anyone but an extremely tiny percentage ( more like you will be stuck by lightning) but people still play. A dream by nature is somewhat unattainable or else we wouldn’t call it a dream.

  4. Gaylene says

    Totally agree with you, Josh. The article does nothing but promote discontentment to those of us that don’t begin to make that much $$ but have a wonderful fulfilled life! Again, our joy doesn’t come from things!

  5. says

    Extras (vacation, entertainment, eating out, communications): $17,009

    Holy … With that budget, I’m sure your living the dream! LOL

    Seriously, I went fishing with my GF in this unbelievably beautyfull river a few miles out of the city, cost me 7$ of fuel, 3$ of fish-hook, and I brought back for at least 25$ of fish.

    I had a great time and the fish was delicious.

    The mass media try so hard to brain wash everybody to believe that happiness is something that you have to buy.

    Great post!

  6. Mary says

    Many people are living well without having the purportedly required $130K in annual income but if they want more and their incomes will not permit them to afford more, what are they likely to do? I think some will buy those things anyway, and borrow the money to do so. I do not recall, but did that article mention $10K in credit card debt as part of the so-called American Dream??

  7. says

    I see lots of evidence of people striving for the American Dream laid out in the _USA Today_ article. So many families, who have plenty of money coming in, still have both parents working in order to buy all the stuff and/or to maintain some sort of image.

    I reckon a lot of those families are in debt as well… basically chasing their tails.

    Of course we all have free will. But social pressures can be tough to ignore. I believe it’s really important that we choose who we listen to and hang out with.

    Your article is spot-on. Thank you.

  8. says

    While I agree that most of this is ridiculous, the housing cost outlined in the article doesn’t seem far off to me. Utilities costs alone can often add up to over $400/month in some places. I live in an area where a winter heating bill can run $500-600 or more. That’s almost half of the $1400/month cost outlined. That’s not *just* a mortgage payment. It’s everything related to housing costs, including maintenance if you own the home.

    Around here, taxes and insurance could run you $200-500+/month in some towns, add in a mortgage payment that amounts to a few hundred a month and all your maintenance and utility costs, and you could pretty easily hit that $1400/month number without owning anything even close to resembling a $275k home.

    Even if you rent, it adds up quick. Rent for a 2 bedroom apartment in my area can run $700-$800/month without utilities. Add in the utilities and you’re looking at $1200/month.

    The grocery budget is the one that really strikes me as funny in the USA Today article. I eat mostly organic, high-quality foods and my grocery bill rarely exceeds $50/week (it’s usually closer to $35). Even if I quadrupled that to fit a family of 4, it’s still nowhere near what the “American dream” calls for.

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