Here’s a conversation I hear from friends all the time. “I feel like I make a lot of money, way more than my parents, but I still feel like I’m drowning.”
And whenever I try to write about this group, I hear something else — all the time: “They sound like spoiled brats.” And underneath that is some variation of, “They think THEY have it bad; well, they should see my bank account…”
We all have a “monthly nut.” That’s the number you need to hit every month. The mortgage, the gas, the school tuition, the student loan, the food. How your income relates to your monthly nut largely defines whether your life is comfortable or fragile.
Two years ago, when hundreds of you sent me your monthly budgets, roughly half had a big red number at the bottom. Money coming coming in was less than money going out.
This is a large and growing chunk of Americans. A Gallup poll conducted in 2015 found than 36% of Americans said they were afraid they couldn’t pay their bills every month. This year, that number climbed t0 41%. More than 4 in 10 Americans are afraid they can’t pay their bills.
By the numbers, median income nationally means your household income is around $55,000. But if you don’t make your nut every month, you are decidedly not middle class.
To be “doing well,” you’d have to earn much more than your nut. You’d have to be setting aside perhaps 10 percent for retirement, another 10 percent for emergencies or future capital costs, and 10 percent for — God help us — vacations and fun. If one-third of your earnings isn’t truly discretionary than you are not doing well.
“Doing well” is even more elusive than “middle class,” but here’s a stab at it. Only 27 percent of Americans say they are “living comfortably” in last year’s Federal Reserve “well-being” report.
Here’s some other data from that report.
- 31 percent, or approximately 76 million adults, are either “struggling to get by” or are “just getting by.”
- Twenty-two percent of employed adults indicate that they are either working multiple jobs, doing informal work for pay in addition to their main job, or both.
- Forty-six percent of adults say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money.
Are you among the roughly half of Americans who say they couldn’t cover an emergency expense? Share with me, below, or message me privately.