Christina Moss and her husband had a combined yearly income of $125,000. They make 59 percent more money than the 2020 median household income in the United States–which was $67,521.
The reality of their day-to-day finances, however, places them in a much different light. The couple, who shared the details surrounding their finances in 2019, had to cancel a service call for their home’s furnace because they couldn’t afford the $200 fee. Christina said her family is lucky that her husband is handy and could fix the furnace himself, but she still expressed shame when discussing how financially strapped the couple is on a daily basis.
“It’s embarrassing to make this much money and still be financially broke,” Christina, a 42-year-old accounting manager in St. Louis, Missouri said. “After a while, you get used to it and just chalk it up.”
A higher income does not guarantee financial security
On paper, the Moss family’s income is strong and stable. However, their story illustrates the challenges of making ends meet even with a strong and steady income. It’s a challenge that is especially prevalent at a time when inflation is skyrocketing across America, and the cost of everything from gas to groceries to housing and healthcare has been climbing.
Household budgets are being squeezed as daily living expenses continue climbing and nearly all (93 percent) of consumers say they’ve noticed higher prices on the items that they buy, according to a Bankrate poll conducted in March 2022. What’s more, of the adults who say they’ve experienced price increases over the past year, nearly three quarters (74 percent) reported that the increases negatively impacted their financial situations.
Another Bankrate survey found that only about 4 in 10 Americans have enough savings on hand to cover an emergency expense of $1,000.
“Just 44 percent of Americans could cover an unplanned expense of $1,000 from savings, a troubling statistic at any time but particularly with monthly expenses marching higher due to inflation at a 40-year high,” said Greg McBride, CFA, chief financial analyst at Bankrate. “Being undersaved for emergencies or lacking savings altogether is not limited to certain income brackets and is a reality for Americans from varied walks of life.”
Financial challenges for American families
So how can earning even as much as $100,000 keep families from staying financially afloat?
There are so many factors at play — it’s almost impossible to pinpoint just one reason why so many Americans are teetering on the edge of being one surprise expense away from a major financial emergency.
One hitch in the system is that our perspective of “good money,” or what draws the lines between the middle class — rich and poor — hasn’t changed in over 50 years.
The official Federal poverty measure is a calculation used to determine who is poor in America. However, the measure was created in 1963 and is based on 1955 data. Economic analysts pointed out years ago that this measure of poverty is wildly outdated and needs improvement to better serve the public. The calculation is based solely on income and takes into consideration the cost of a minimum food diet in 1963–not 2022.
Cost of living
Meanwhile, the cost of living has been skyrocketing and the purchasing power of workers has been significantly diminished by record inflation. Consumer prices are up about 8.3 percent over one year ago, and inflation has been increasing at a rate not witnessed since the 1980s.
The cost of food alone increased 8.8 percent between March 2021 and March 2022. That figure is the largest 12-month increase since the end of May 1981.
While employers have increased wages in recent years to attract employees after waves of resignations amid the COVID-19 pandemic, those increases have not been distributed evenly–and some sectors fared far better than others.
“Americans and their personal finances have been through a lot over the past few years,” said Mark Hamrick, senior economic analyst and Washington bureau chief at Bankrate. “There’s been the pandemic, an economic recovery and then inflation began to soar, seeming to catch nearly everyone by surprise. Because wage growth has not been sufficient to keep pace with rising prices, many households have been scrambling to adjust, whether tapping funds from savings, cutting back or utilizing credit card debt.”
Healthcare costs are another substantial challenge for Americans when trying to make ends meet. The U.S. Bureau of Labor Statistics reports that in 2018 (the latest year with statistics), an average of 8.1 percent of the U.S. household budget went toward healthcare, which was up substantially from 5.9 percent in 2004.
Another major expense impacting household budgets is student loan debt, which has reached $1.76 trillion. Though federal student loan payments were temporarily on hold amid the pandemic, student debt will continue to be a significant financial challenge for many Americans once payments resume.
Childcare costs in America are also a significant issue that can hardly be overlooked. The costs associated with child care are among the highest expenses in a family’s monthly budget. In fact, in many parts of the country childcare costs are often more expensive than housing, college tuition, transportation or food.
Bad financial habits
All of these factors combine to paint a blurry picture of a struggling working class. At the same time, Hamrick says, some of the challenges may be self-inflicted.
“During good times and not-so-good times, one constant is the need for individuals and households to have a budget, attempt to live beneath their means and to continue to prioritize savings for both the short and long terms,” said Hamrick.
How debt adds up
When the Moss family adds up their monthly costs, there just isn’t enough cash to cover everything. Their situation is a fairly typical financial scenario: They have student loan debt, credit card debt, a mortgage, kids to care for and monthly bills to pay.
Before Christina and her husband met, they were both single parents. Her husband, who makes less than her, was “struggling” to survive, as Christina puts it. After they married, she started helping him manage his debt.
Combined, Christina and her husband say they have $200,000 in student loan debt and about $15,000 in credit card debt. Being saddled with debt is a common experience in America — another recent Bankrate survey found that 3 in 10 Americans have more credit card debt than emergency savings.
Their mortgage, which eats up 15 percent of the family’s monthly income, is upside down. They say that they cannot afford the $30,000 it would cost them to sell the home.
The couple reported spending 33 percent of their monthly income on education-related expenses for their four children. Their oldest daughter only received partial tuition scholarships for college because their “income is considered too high to get the entire tuition covered,” according to Christina. She and her husband cover the remaining $6,000 of their daughter’s tuition and provide her with a stipend for living expenses.
Their other three daughters attend private school, something Christina says is unavoidable.
“I wish this wasn’t the case, but with the failing school system in St. Louis, this was our only option,” she said. The scholarships each of the three daughters receive doesn’t cover all of their tuition, leaving the family to foot the rest of the bill.
On top of that, there are the regular living expenses — groceries, utilities, car payments and vehicle maintenance — that often take the backseat. Christina, who hasn’t paid her vehicle loan since December, recently negotiated a new payment arrangement with her bank.
“The irony is that the car has been down for about three months, but we don’t have the money to fix it,” she said. “So, I’m basically paying for a vehicle I can’t drive.”
Bit by bit, the Moss family is trying to pay off their debt. But Christina knows financial security won’t happen overnight.
“We are slowly working our way up,” Christina says.
4 ways to manage your finances when facing insecurity
Preparing for a financial emergency is one thing. But managing your finances while you’re already facing insecurity is another.
Those seeking to break the paycheck-to-paycheck cycle have options, regardless of their income range.
Assess your current employment
Hamrick says consumers should take a hard look at their current employment and determine if it’s making ends meet. If it isn’t, he suggests taking a new approach.
“Assess whether you need to look for another job (or additional work such as a part-time gig), move to a more robust job market or seek additional training,” Hamrick said. “Most of us aren’t trust fund babies or wealthy because of inheritance. We’re reliant on our work, or a wage earner, for meeting our regular expenses and possibly raise our standard of living.”
Live beneath your means
The Federal Reserve has been steadily raising interest rates to help fight inflation. But that means the cost of debt, including credit card balances, is going up and getting more expensive.
“With interest rates on the rise, there’s increased urgency to manage debt effectively,” said Hamrick.
Instead of charging expenses you can’t immediately cover to a credit card, adjust your budget accordingly.
Determine what you’re willing to sacrifice
If you’re already feeling strained for cash, consider small changes that can have a large impact on your budget; this can include packing a lunch or skipping a daily coffee run.
On a larger scale, Hamrick recommends considering a used auto purchase over buying new. Consumers can also think about cutting down on college costs by encouraging their children to attend a community college for the first two years before diving into a four-year university, he says.
Automate your savings
Having as little as $250 in savings can help consumers be better prepared for a financial emergency, like missing a bill or being evicted.
Overall, ending a paycheck-to-paycheck cycle requires constant communication, planning and strategizing. And while initial conversations about struggling may be intimidating, Hamrick says they are of big value in the long run.
“For couples and families, having constructive conversations about money, while sometimes challenging, can be very useful,” Hamrick says. “And it shouldn’t be a one-time-only event. What are the goals and what do we have to work with?”
The cost of living in this country has been increasing steadily for years. Food prices, housing, gas, the cost of college tuition, health care and child care are all eating away an ever greater share of the household budget. Even Americans who have a strong, stable income find themselves struggling to make ends meet
With record inflation sweeping much of the nation, household budget challenges are becoming even more significant. Some of the steps to help manage finances amid such insecurity include living beneath your means, identifying areas to sacrifice and automating your savings to better prepare for emergencies.
Is making $80,000 a year good? ›
No matter where you live, 80K is considered to be a pretty good salary for most people. This puts you in the higher middle-class range of people who are earning no matter where you live in the US.Is 80K enough to support a family? ›
Depending on the size of your family, $80,000 can comfortably cover living expenses and beyond.How much should you save if you make $80000 a year? ›
According to The Balance, “The short answer is that you should save a minimum of 20 percent of your income. At least 10 percent to 15 percent of that should go toward your retirement accounts.Is 80K a year middle class? ›
Anyone who makes 80 K a year is considered to be in the middle class no matter where they live in the US. This is because you only go above the middle class if you are making $175,000 a year on average.How much is 80k a year hourly? ›
$80,000 is $40.00 an hour.
$40.00 is the hourly wage a person who earns a $80,000 salary will make if they work 2,000 hours in a year for an average of 40 hours per week, with two weeks of total holidays. We take the annual salary of $80,000 and divide it by 2,000 to get to a $40.00 hourly rate.
|Income range||Number of people||Proportion (%)|
|$77,500 to $79,999||1,307,000||Less than $100k 90.85%|
|$80,000 to $82,499||2,725,000|
|$82,500 to $84,999||1,021,000|
Pew defines “middle class” as those earning between two-thirds and twice the median American household income, which in 2021 was $70,784, according to the United States Census Bureau. That means American households earning as little as $47,189 and up to $141,568 are technically in the middle class.What is a livable wage in the US? ›
The national average living wage is $24.16 per hour – or $50,249 annually – for one worker in a family of two full-time working adults and two children. For one full-time working adult with no children in 2022, the national average living wage is $17.46 per hour – or $36,311 annually.How much salary is a good salary? ›
Ans. A decent earning and average salary in India is around INR 3 LPA. If you earn up to INR 25K in a month, you earn a decent salary. Your salary also depends on various factors.How much home can you buy with 80k salary? ›
So, if you make $80,000 a year, you should be looking at homes priced between $240,000 to $320,000. You can further limit this range by figuring out a comfortable monthly mortgage payment. To do this, take your monthly after-tax income, subtract all current debt payments and then multiply that number by 25%.
Is 80k a year good for a family of 4? ›
Is 80k a year middle class? With the median U.S. income being about $80,000 a year, a household of four earning between roughly $52,000 and $175,000 a year is considered middle class.What is considered high income? ›
Based on Pew's analysis, a household of three needs an income of $156,600 to meet the definition of upper class, which amounts to more than double the national median.What income is considered lower class? ›
“Lower-income” adults have household incomes less than $52,000 and “upper-income” adults have household incomes greater than $156,000. The income it takes to be middle income varies by household size, with smaller households requiring less to support the same lifestyle as larger households.What salary is considered lower middle class? ›
"Middle class" is defined by the PRC as those earning between two-thirds and twice the median American household income, which in 2021 was $70,784, according to the United States Census Bureau. That means American households earning between $47,189 to $141,568 are in the "middle class" as defined by the PRC.How much is $30 an hour annually? ›
If you make $30 per hour, your Yearly salary would be $62,400.How much does 80k make a month? ›
$80,000 yearly is how much per month? If you make $80,000 per year, your Monthly salary would be $6,667.How much is 80k after taxes? ›
For the 2022 / 2023 tax year £80,000 after tax is £54,250 annually and it makes £4,521 net monthly salary. This net wage is calculated with the assumption that you are younger than 65, not married and with no pension deductions, no childcare vouchers, no student loan payment.What income is upper middle class? ›
Many have graduate degrees with educational attainment serving as the main distinguishing feature of this class. Household incomes commonly exceed $100,000, with some smaller one-income earners household having incomes in the high 5-figure range.How much does the average American make a week? ›
According to the U.S. Bureau of Labor Statistics (BLS), the median weekly income (including overtime, commission and tips) for full-time workers (excluding those who are self-employed) in America was $1,041 as of the second quarter of 2022. If that rate persists for the entire year, that would equal $54,132 a year.What is the average salary in the U.S. per month? ›
United States Monthly Earnings stood at 4,585 USD in Jan 2023, compared with the previous figure of 4,531 USD in Dec 2022 See the table below for more data.
What is a good salary to support a family? ›
As of Feb 24, 2023, the average annual pay for a Family Support in California is $52,105 a year. Just in case you need a simple salary calculator, that works out to be approximately $25.05 an hour. This is the equivalent of $1,002/week or $4,342/month.What percent of households make over 80k? ›
|Annual Household Income||% of Americans Earning More|
|$65,000 to $69,999||35.03%|
|$70,000 to $74,999||31.85%|
|$75,000 to $79,999||29.22%|
|$80,000 to $84,999||26.57%|
How much money does a family of 4 need? A family of 4 needs a minimum of $50,000/year to live modestly but comfortably. However, location and lifestyle choices will impact that significantly. In expensive states like California or New York, expect that number to be 2-3 times higher.How much income is enough for a family? ›
“We found that the ideal income point is $95,000 for life evaluation and $60,000 to $75,000 for emotional well-being” for an individual, Jebb told Purdue, and more for a family.