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.
Merf56 says
Here in the Philadelphia suburbs ( not the fancy locales) you cannot find a home for 275,000 or if you do it is barely habitable and would cost 200,000k to bring it to habitability. How do I know this? My daughter and her husband are trying to buy their first house… The first one they looked at for 268,000 needed: a new roof( extensive water damage inside) ,new oil tank, new hot water tank, new heater, all new interior piping, asbestos removal, shoring up of the main beam, and the bathtub was cracked through and useable in the only bathroom. We thought it was a fluke! Boy were we and they wrong!! They have been out every Saturday since and all homes under K300,000 in modestly safe neighborhoods had various incarnations of many of the above flaws. They would need massive amounts of cash on hand to be able to prepare to make the needed essential repairs. They have even made low ball offers and were turned down…
I agree K130,000 sounds like a great deal of money but when you both have large student loans, a long drive to the only job you have been able to find that allows your spouse to get to his or her job with the same commuting distance so you both need a reliable car( not an SUV), are trying to put money immediately into your 401k so it builds up like responsible adults…. Well, it really isn’t the enormous sum it seems. (That said we don’t make that and we go abroad on vacation every year and have a large old home… But we went to college when it was cheap, started out with a pension though that is small and spent most of our married life before cell phones, iPads, kindles and huge cable bills!! ( DD and SIL do not have cable and use dumb phones that only text btw) …..
Smugly denigrating people struggling as if they were all crazed spendthrifts throwing their money in the street is not exactly constructive and in fact my daughter found this article rather insulting as do I.
Jim Green says
Bottom line is don’t buy what you cannot afford.
gloria mccord says
It sounds like they’re try to tackle EVERYTHING all at once? That surely is a lot of pressure. Maybe a small apartment till student loan is paid off? You know the upkeep on a home. Sometimes you have to wait till you get your ducks in a row.
Nekiya says
I agree that in certain locales say CA, 275k would find you in the ghetto. However, I’m from Philadelphia and moved in NJ. Keep in mind much of the US isn’t like that. I know I’m NJ the middle class lives terribly. Still you’d need 70k for a couple to live well…not 130k! Also, you can get a condo for much cheaper than that…and not a fixer upper either! Some are worried about status and “need” the single home they won’t even get to enjoy. Yes I’ve known my share of folks who whine about debt after making decisions that are outright insane. My husband and I lived with his family while he paid down education debt. I understand that isn’t always possible, but there are ways. At one point we even rented space in a house.Sure, the elitist types were probably scoffing at us while we lived that way, but we paid everything off, went on vacation and enjoyed life. Also, 17k on entertainment? Really? Come on! People half of the time dig their own graves then cry when they find themselves buried alive.
Ella Smith says
The American Dream is the freedom to do what you want and the initiative to do it! My family should not have to apologize for working hard and getting in a position that we can go on vacations, live in a nice home, drive a SUV, pay for our children’s college and save for our retirement. We shouldn’t be at risk of having it taken away because someone else choses to do it differently and now wants what we have. We went to Junior College while living at home so we could pay it off as we went. We went to a state college and worked 2 jobs over the summer before going away, lived with several people to keep rent down and worked while people taking out student loans went on spring break to fun places, we picked up their shifts! I’m not jealous now and I was too busy to be jealous then. Security was what we wanted and our choices have allowed our children to grow up knowing their in state college and 1st car (used of course) will be paid for so they can be set up for the future as a productive contributing adults. They are required to work while at school and taking on debt is not an option. If they want masters degrees they need to figure out a way to pay for it without taking on debt (ie scholarships, jobs that pay for it etc) We have done several job moves to get ahead financially. We didn’t divorce when we sometimes wanted to. We probably missed out on some potentially great opportunities but they were too risky for what we wanted for our families. Our methodical way is not for everyone, it was hard, but those were our choices and we made them work. We were happy while on the climb and we are happy enjoying the view. The American Dream is having the ability to dream and then taking the initiative to follow it and accepting the good and bad of having pursued it!
Merf56 says
I have a friendly bone to pick with the general opinion here on this post and its comments and at this (wonderful) site in general. And that is regarding “vacations”. Here everyone, including Joshua, poo poos the value of vacationing – the kind you take that is a substantial distance from home for a few weeks a year.
I think taking a vacation should be considered an essential item. People who never leave their little ‘zone’ or area end up, years later, with a very stunted and skewed view of both life and the world. And no – you simply cannot remedy that with the Internet and books – you need to get out and see other regions of the state the country and the world.
We budget our vacation monies just behind mortgage and food! We have taken our kids rafting on the Maoyan River in China, Barrow AK, Hawaii’s Volcanoes NP, swam with them in the Dead Sea on the Jordanian side and many more places abroad as well as to all fifty continential states. We live very simply so we can provide them with these life altering experiences and promote in them and us a greater understanding of why people think and act the way they do. Seeing, for example, the vast emptiness of N Dakota you begin to grasp why the people living there think and act the way they do. In seeing life in rural China you understand more why the Chinese behave and think as they do etc.
We live in a four bedroom colonial in suburban Philadephia and yes we have tidy mortgage on it. We insulated the house well and lowered our heating costs substantially and we believe in sweaters in the winter and using fans before air conditioning on all but the worst nights.
What we DON’T do and never have, is fill our home with stuff. Much of what we have is ‘old’ furniture we have refinished that has come from family or thrift stores. We eat well – we buy a lot from local farms in season but we do not go crazy buying expensive organics shipped across the country or high cost cuts of meat. I love champagne mangos and papayas for instance but I buy them maybe once or twice a year. Instead we eat apples and pears and other less expensive fruits in the winter. And in season berries and other fruits in the summer.
Our cabinets and surfaces are not filled with sit around stuff from Home Goods or TJ Maxx yet we have some lovely classic pieces that will stand the test of time and improve with age .
We are a one income family who makes very very very far from $130,000 a year. We hire almost no one to do anything because my husband and tackle most things ourselves. And have honed our skills so we do a safe and professional looking job on nearly everything. As of now we have one child in grad school ( we assist but mostly she pays her own way and also lives very simply) and one who is an undergrad – state school (we pay and he helps with part time work) and lives in a dorm- no loans.
You can live a simple life and still take some pretty awesome ( as my son puts it) vacations. In fact we believe it is an absolutely essential part of educating your children and yourselves to be informed caring people…..
SCP says
Merf56, I am in total agreement. For me and my husband, travel is an ‘essential’ budget item. It has made me who I am, and allowed me to learn from how others live.
My idea of minimalism has always been to buy very carefully, and then take good care to keep those items for as long as possible. For example, my car is 18 years old, we just repaired our refrigerator ourselves (20 years old), etc.
As for daily purchases, we don’t go out much, instead buy organic food and savor it. Not a lot of anything, but mindful enjoyment is the key!
Arthur Rashap says
I recently delivered a sermon called:’Waking Up From the American Dream.” Jefferson wrote: “the pursuit of happiness,: And that is the carrot that those ‘in charge’ (who are often billionaires – and as an aside, if one earns $100K a year and saves it all it would take 10,000 years to amass that sum (interest left out) – that those in charge wave in front of the rest of “We the People.”
Our Founders – so wise beyond their elevated stations in life and greatly prescient – wrote as the introduction and instruction for this new nation:
“We the People of the United States, in order to form a more perfect Union, establish Justice, insure domestic Tranquilty; provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
In a couple of days, a new book will be published (see Amazon) titled: “The Indomitable Freedom Quest: Honoring America’s Sacred Trust.” It provides a base, a target, and how to realize the dream of our Founders.
Ted says
Well, Without dreams, people perish, a lot of people are perishing right now even at the young age of 20 because of article like this. This country has blessing no other countries enjoy, I always encourage people to be the best they can be, to be successful. God said, I wish above all you prosper….If I’ve to attempt something, might as well attempt something great. The goal is to get to a point that time and money cannot control you, if somebody don’t like it, the goal hasn’t change, they are not paying your kids’ education or when you get lay off, they’ll help pay your rent or mortgage. You cannot give up your dreams because your friends don’t like it, what kind of a friend is that ??
Mona L says
I was wondering about the reference to 250k mortgages in the article. I lived in the NE most of my life and for 250k you can get a fixer upper, meaning more money down the drain in repairs. I recently moved to FL and try as we might we couldn’t find something in below that range and I don’t have a big house. I rented for a while but was paying about the same a month minus the taxes. It’s pretty discouraging how unsustainably expensive basic things are getting from food to education to a decent roof over your head. Smh.
Dave says
I am glad that you have the courage to write these articles. We are all being sold a “bill of goods” for the enrichment of others, which is leading to the discontentment in our own lives.
Axeman says
I live in England (not London) very happily on the equivalent of $22,000 net. Debt free, dont drive, embarking on a more minimalist lifestyle, I eat well, sleep soundly at night and worked all my life. Life is experience not schedules, bank loans, 4x4s and the accumulation of material possessions. “Keeping up with the Jones” and The “American Dream” is a dream people need to wake up from. Life is what happens when you are not fighting in the queues on black Friday for a cheap tv that more than likely involved some form of child labour in China during it’s production.
Tom says
Great article. Why? It seemed to get a lot of people thinking about life, values and money and how to manage the three. Great to hear from those who are doing well, regardless of income. For those who are hung up on the $130k, get over it and learn from the others.
Tom
Forest says
Although I understand where you are coming from based upon your website I think the USA today article and the numbers represented are fairly accurate as to what most married people dream as a good life – to be able to dine out 1-2 per week, take a couple vacations(or own boat,etc), and save as much as they can to try to have a nice lifestyle in retirement. The vehicle and education expenses are probably a little high but otherwise seem like the overall numbers are in the ball park.
Lorna says
So true!
Barbara Kois says
Thank you for this excellent, thoughtful and absolutely true post and for clarifying what the American Dream actually is. All of your points about the results of this crazy thinking that the American Dream simply equals materialism are on target. Great post and great perspective.
Kelley says
I’m a little surprised at the author’s condescending attitude towards $250k mortgages. Here in California, most house prices start at $400k, even for a modest home. A $250k house would be a steal.
joshua becker says
Thanks for the comment. I did certainly not intend to sound condescending. And I don’t think I ever singled out mortgages in the article above.
Melissa says
On the Facebook preview for this post, it specifically says, “Those of us who have chosen to define happiness and security apart from $250k mortgages…” I came here with the same complaint of condescension. I am in Washington, DC where a studio condo goes for $250k and my $350k VERY fixer-upper small rowhouse in a less-desirable neighborhood was a steal. My family prioritized being in the city to continue our car free lifestyle and reduce out overall environmental footprint over moving an hour away from our workplaces to spend on transportation any small amount we would save on housing (not to mention commuting time). I come here for tips on decluttering and getting a new mindset regarding my possessions, not to be preached at about my mortgage.
“And I don’t think I ever singled out mortgages in the article above,” yet
“[t]he notion that a family of four must own a $275K home…” is the beginning of one of your sentences in the post. I don’t think you are being purposely disingenuous but try to listen and see where someone might be coming from instead of immediately getting defensive and saying something that isn’t correct.
Jan says
That’s precisely why we left California, where I was born and raised. We now live in North Carolina with a much lower cost of living and where natural beauty abounds and is free for everyone to enjoy.