Recently, 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 Orleans, Great 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.
Every summer, we celebrate Independence Day in America. Towns and Cities all across our great Republic are united in their celebration: 250 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 a happy life contains more important pursuits than material possessions.
This is the American Dream. And it costs far less than $130K/year.
Jessica says
Actually, it could cost that much depending on where you live. If you have a studio or 1 bedroom place in the LA Fashion District where you’ve just finished going to fashion school and are trying to make a name for yourself, plan on paying an average $2500/month rent. Maybe your student loans are another $500 a month. Your taxes and health insurance run another $1000 a month. Your utilities cost $200 a month and transportation – your 7 year old car your parents sold you for $3k before you started college – costs another $400 a month for gas, insurance and fees. Perhaps you spend $100 a month for cleaning supplies, detergent, toiletries, medications like aspirin, light bulbs and other misc. Figure $400 monthly for food. $100 monthly for communications – phone & internet service. There’s $4300 monthly and you haven’t taken a vacation, gone out to eat, bought new underpants, sent your mom flowers for her birthday, flown home for your sister’s wedding, gone out on a date, saved for retirement, paid for that filling you need at the dentist or joined a gym. Cost of living in places like Seattle, NYC, LA, Chicago could easily be $130k for a much less luxurious lifestyle than you’d think. I lived in the Chicago area for 5 years as a poor college student 15 years ago and my rent was $1015 a month for a shared apartment in a crummy building that had mice and roaches. I had no car. I now live in a place with a much closer to average cost of living. My family of 5 gets by on half the number from the USA today article but we’re not taking vacations, we’re buying secondhand clothes, I’m clipping coupons and we don’t have cable, data plans, or get our hair/nails/eyebrows done.
Tasmanian Minimalist says
Oh my. Your article is amazing. For starters when I hear the letters SUV, straight away I think ordinary, soccer mum type lifestyle where one feels they have to keep up with the Joneses. I don’t mean to be SUV -ist, but it is just so ordinary, and so costly. I imagine people who are told who they should be, how they should be and what they should spend …which I guess is exactly what the article you speak of is pushing, Joshua as always you provoke my thinking.
April says
It’s very sad that people often only value the things they can put a price on. I don’t have quite the same ‘American Dream’ pressure here in the UK, but my husband’s work may take us to the US in the next couple of years and one of the things that worries me is that I’ll be sucked into the dreadful game of keeping up with the neighbours just to fit in. (If it starts to happen I’ll seek out the local Becoming Minimalist support group and try to stay strong!)
Sebastian Aiden Daniels says
My first thought was that this was a post about how college education is absurdly overpriced and not needed now, but I was a mistaken. That is an interesting article. I think you are right that it breeds discontent and jealousy. Western society, based on my observations, seems to be a society that is all about me, the individual. We are pitted against each other to achieve and to have better and be better. Competition is everything. It creates this system of inequality.
I think you are right that you can live the American Dream can be lived under the 130k a year. All it requires is a change in thinking and lifestyle. : D Minimalist lifestyle ftw.
Jeff Goins says
Whoa. Craziness.
It’s interesting: the avg. person in America makes something like $55,000/year. And the “dream” is nearly three times that.
No wonder people are overmedicated and unhappy.
“Here’s a goal that 90% of you will never reach. Have fun!”
Yet another reason why our satisfaction cannot be based on what we have or lack.
Kristen says
Don’t know where you all live but where I live, homes start at 300,000 – and that is 1200 square feet from 1950 – not comsumeristic for a family of five. USA Today has a good point.
tashanicole says
I cannot imagine living somewhere like that. I am currently buying an older, but still good, house (1500 sq ft) on 2.5 acres for less than $90K. I really don’t see how people afford these $300K+ houses.
Pastor Jamie says
Bravo, Josh!
Beth DeRoos says
::::::::::::::::THUD::::::::::::::::(sound of me passing out)
Extras (vacation, entertainment, eating out, communications): $17,009??????? Where are these people going on vacation? Why are they eating out so much? And why are they not shopping for better cell phone service and cutting back on cable etc?
$315 worth of food every week????? Someone doesn’t know how to shop for whole healthy foods and/or doesn’t know how to cook.
‘Thomas Hirschl, a professor at Cornell University It’s about security,” he said.’ Then the article notes ‘Home ownership is central to the American dream. So, we took the median price of a new home ($275,000), subtracted a 10% down payment, then projected the annual cost of a 30-year mortgage at 4% interest. We also added annual maintenance costs of 1% of the purchase price. Total: $17,062 a year.
•We used the U.S. Department of Agriculture’s April 2014 figure of $12,659 for a moderate-cost grocery plan for a family of four.
•In May, AAA estimated it would cost $11,039 a year to own one four-wheel-drive sport-utility vehicle.’
Each is based IMO on what marketers push NOT what is reality. NO one needs a 2k sq ft home. I am in an area with smart tiny house folks and the homes cost on average $15-30 to build.
No one in my area owns an SUV. Small energy efficient vehicles are the norm and cost $15-20 cash and cost less than 1k a year to own (gas insurance maintenance.
People need to STOP being brainwashed into thinking its HAS to be expensive to live well on less!!! Many of us do it. And this whole ‘American Dream’ nonsense is something created by those who insist we have too buy what they are selling. Wrong, the American Dream is individual and need NOT be what someone out to take my money from me, says it is!!
tashanicole says
….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.”………
It’s sad that the American Dream doesn’t include any form of spirituality.
JLG says
The economic downturn was financially devastating to my self-employment income. However, it was a blessing to my personal life. At age 52, I have never had less discretionary income – nor have I ever been happier!
Recent economic improvements mean I could work more again & increase my income, but I do not want to return to what I now realize was a stressful nightmare. “Time is Money”, instead of hiring help because work took all my time, I now cherish the days I spend mowing, trimming, weeding,… Instead of dining out, I enjoy the time experimenting with new recipes. Instead of buying new clothes, home decor,… I am proud of my DIY repairs, alterations,… Instead of flying to a vacation resort, I enjoy hours on backroads to nowhere and discovering glow worms instead of glowing business signs.
I am living MY dream!
However, I am very fortunate to have already owned my (modest) house prior to the crash, my children were attending college on academic scholarships and my retirement account is recovering nicely. Someone just starting out wouldn’t have the same ability to so easily decide that enough is enough.