The Average American Family

[creditcardfree]

Statistics can always be skewed to make any point you want! Politicians and media do it all the time. And it is not necessarily false information, but maybe not the full story either.

[disneysteve]

I believe it was Mark Twain who said, "There are lies, damn lies and statistics."

[GREENBACK]

be careful with averages...
who is included?

all citizens- well of course the X million high school kids make under 43k per year
all tax payers? the difference between AVERAGE and median incomes is staggering (the really high earners tip the scale)

A survey like this would make more sense if it were categorized by age groups. I wondered the same thing when first reading the numbers.

[b4freedom]

Safety nets take the motivation out of personal responsibility.

How does having unemployment insurance motivate a person to be less responsible? You have it to protect you if you lose your job. The payout is capped and for a limited period of time.

Using the same argument, you could say that having homeowners insurance means that your house is more likely to burn down.

[disneysteve]

How does having unemployment insurance motivate a person to be less responsible? You have it to protect you if you lose your job. The payout is capped and for a limited period of time.

I've known plenty of people who went on unemployment and made little to no effort to find a job until just before the end of the benefits period. Only when they knew the money was about to run out did they go out and get a new job. That's why extending the length of benefits really doesn't accomplish anything.

If, instead, people who were out of work were living off of their own savings (as I did when I was out of work), they'd be much more motivated to find a new job and preserve their savings.

[PrincessPerky]

I've known plenty of people who went on unemployment and made little to no effort to find a job until just before the end of the benefits period. Only when they knew the money was about to run out did they go out and get a new job. That's why extending the length of benefits really doesn't accomplish anything.

If, instead, people who were out of work were living off of their own savings (as I did when I was out of work), they'd be much more motivated to find a new job and preserve their savings.

Ditto that.

Also the assumption that one needs to earn a ton of loot to manage savings makes no sense. Folk are not required to have huge houses, gadgets, and eat out. Those are all optional, and those are often used as the reason not to have one parent stay home, or save at all.

I can cut my own budget by about 500 a month if I felt like it, bills, food and entertainment are all a smidgen higher than needed. I can see from the outside many families that could do the same. Frapachino a day, what is that $3 = $90 a month, and if one parent is buying one, you can usually bet the other is too. How about your lunch, was it cheap and packed or a 10 meal out? or were you frugally eating out for only 5 a day? either way you can't say 'I can't save' if you wont look at what you are actually spending your money on and realize any time you choose to buy a granola bar, coffee, cola, eat out, or whatever, you are choosing that over savings.

I know I could save more, spend less. I wont blame economy or govt officials on the fact that I choose to spend $10 on pure convenience foods today so that I can pack easier for the next few days. (I might feel guilty when reading Jefferies dollar a day blog though...)

[bjl584]

Jim,
If these stats are from a reputable source, then the outlyers would have been excluded in the results. I had a lot of lessons on this in a statistics class. In your example of the 9 people saving nothing and the 10th person saving 43,000, that 10th person would have been dropped before any calculations were done. I'm not sure if this study is reputable or if the outlyers were removed, but this study is worth anything, and if it wasn't done by someone with an agenda, then the numbers should be legit.

At the very least, most of us here can take pride in the fact that we throw off the statistics in studies like these on a daily basis.

[maat55]

How does having unemployment insurance motivate a person to be less responsible? You have it to protect you if you lose your job. The payout is capped and for a limited period of time.

Using the same argument, you could say that having homeowners insurance means that your house is more likely to burn down.

It seems most people will do the least they have to. Having safety nets gives them excuse to not build EF's or retirement funds. As an small business owner, I am not qualified for unemployment. This is why I take my EF seriously. I also don't have the president watching my back for a pension or any faith in SS, so I save and invest a much larger portion of my income then most people(outside this forum).

Take away all the safety nets, ss/medicare, unemployment and welfare, would you conduct your finances differently? I act as if they do not exist, but very few people do.

I'm proud of one of my new son-in-laws, he was let go about a year ago. Going to the unemployment office was not an option in his mind. He has two partial jobs and is making it. Most people would have just rushed to the line.

[b4freedom]

I've known plenty of people who went on unemployment and made little to no effort to find a job until just before the end of the benefits period. Only when they knew the money was about to run out did they go out and get a new job. That's why extending the length of benefits really doesn't accomplish anything.

If, instead, people who were out of work were living off of their own savings (as I did when I was out of work), they'd be much more motivated to find a new job and preserve their savings.

Why shouldn’t a person on unemployment insurance benefit to its maximum potential? They paid for it. It’s like my auto insurance. If I lose my car to a flash flood, why would I take $1000 from the insurance company when the car is worth $10,000? Sure, a $1000 car could get me from point A to point B just as easily as a $10,000 car, but I paid for a $10,000 policy, not a $1000 policy and therefore I’m entitled to it. Unemployment insurance is just that, insurance. There are caps on unemployment insurance to limit the length and amount you can stay and be paid. So, I disagree that our social ills and lack of financial responsibility are responsible for the sad statistics stated in this post.

I do agree with you that extending the unemployment insurance benefits (for free) don’t actually solve any problems. However, I’m inclined to not care because it’s a small % compared to the handouts given to banks and corporations (which I also think didn’t solve any problems). And, as our government is willing to dance a lovely waltz towards bankruptcy*, I’d rather the money be tossed towards the people who’ll actually spend it on goods and services and not the banks who are actually loaning it back to the government to make a profit.

Note: *If you want to know what to do when we eventually go bankrupt, I’d suggest you read “Reinventing Collapse”.

[b4freedom]

As an small business owner, I am not qualified for unemployment.

The rules vary from state to state. However, as a general rule, self employed individuals who have setup their business as a corporation - and have paid into the unemployment system on a quarterly basis - are eligible to receive unemployment benefits. Many states also allow for private unemployment insurance that can be purchased from private companies.

Take away all the safety nets, ss/medicare, unemployment and welfare, would you conduct your finances differently?

Nope! I couldn't maintain my lifestyle on any government sponsored safety net. However, it's nice to know that there is some level of a safety net outside of my own.

[Snodog]

Also the assumption that one needs to earn a ton of loot to manage savings makes no sense.

Granted there are areas of the country that a frugal family of 4 could live comfortably and save on less than $43k. But meanwhile there are alot of families in other areas that are just getting by on that salary.

They're not starving, but there's little left over to save for the future, and they habitually blow their money on luxuries like dental bills, replacement water heater, or a new transmission.

Folk are not required to have huge houses, gadgets, and eat out. Those are all optional, and those are often used as the reason not to have one parent stay home, or save at all.

I can cut my own budget by about 500 a month if I felt like it, bills, food and entertainment are all a smidgen higher than needed. I can see from the outside many families that could do the same. Frapachino a day, what is that $3 = $90 a month, and if one parent is buying one, you can usually bet the other is too. How about your lunch, was it cheap and packed or a 10 meal out? or were you frugally eating out for only 5 a day? either way you can't say 'I can't save' if you wont look at what you are actually spending your money on and realize any time you choose to buy a granola bar, coffee, cola, eat out, or whatever, you are choosing that over savings.

But you are confusing things.

The average value of their home is $160k which is a pretty modest house in most areas. More often than not, it's Americans in the upper half who are buying huge houses, NOT in the lower half.

And I doubt many of these families eat out that often or buy $3 frapachino's, they tend to use the coffeemaker at work or buy at McDonald's.

They may have a cable and internet and most likely have a cell phone and a computer. These splurges are common among the working class families that I observe.

But beyond this I see little sign of the flagrant consumerism and unwise spending habits that everyone is harping about. That's a problem of the privileged class.

[jIM_Ohio]

Granted there are areas of the country that a frugal family of 4 could live comfortably and save on less than $43k. But meanwhile there are alot of families in other areas that are just getting by on that salary.

They're not starving, but there's little left over to save for the future, and they habitually blow their money on luxuries like dental bills, replacement water heater, or a new transmission.



But you are confusing things.

The average value of their home is $160k which is a pretty modest house in most areas. More often than not, it's Americans in the upper half who are buying huge houses, NOT in the lower half.

And I doubt many of these families eat out that often or buy $3 frapachino's, they tend to use the coffeemaker at work or buy at McDonald's.

They may have a cable and internet and most likely have a cell phone and a computer. These splurges are common among the working class families that I observe.

But beyond this I see little sign of the flagrant consumerism and unwise spending habits that everyone is harping about. That's a problem of the privileged class.

average
LOL

If 10 people have houses
and one of them has a house costing 500k
and a second has a house at 375k
and a third has a house at 200k
and a 4th has a house at 105k
the other 6 can have a house worth no more than 60k each (that is 60% of people have a house valued at 60k)

and their average house price is 160k

its not even the upper half buying good houses. Because 60k gets you a good house in Flint MI, but it gets you barely a 2BR ranch where I live in a crappy rural area if it even gets you that.

Making any generalizations based on the information in original post is silly, because I know I can throw out samples which distort that

what needs to be discussed is the difference between the average and median, how wide that is, and how the upper class really tilts the averages. That might have been your point, not sure.

[disneysteve]

I see little sign of the flagrant consumerism and unwise spending habits that everyone is harping about. That's a problem of the privileged class.

I work in a poor area and I can assure you I see consumerism and unwise spending habits every single day among my patients, many of whom are unemployed and living on welfare.

[Snodog]

I work in a poor area and I can assure you I see consumerism and unwise spending habits every single day among my patients, many of whom are unemployed and living on welfare.

I guess we each have had different experiences. Honestly I have not had much experience with people on welfare. All of the people I'm talking about work hard at their jobs but just don't make a lot of coin. Like a friend I have that makes $40k and his wife stays home with the kids.

Not to put words in your mouth (but I will anyway ) maybe you are considering smoking unwise and you may be right but it could be argued that many of these people "need" their nicotine fix to cope with monotonous or stressful jobs.

I will say that any family of 4 getting by (but not saving much) on less than $43k in an average cost of living area can't be a victim of flagrant consumerism as some seem to be suggesting. There just isn't enough money.

[disneysteve]

I guess we each have had different experiences. Honestly I have not had much experience with people on welfare. All of the people I'm talking about work hard at their jobs but just don't make a lot of coin. Like a friend I have that makes $40k and his wife stays home with the kids.

Not to put words in your mouth (but I will anyway ) maybe you are considering smoking unwise and you may be right but it could be argued that many of these people "need" their nicotine fix to cope with monotonous or stressful jobs.

I will say that any family of 4 getting by (but not saving much) on less than $43k in an average cost of living area can't be a victim of flagrant consumerism as some seem to be suggesting. There just isn't enough money.

"Flagrant consumerism" takes on different meanings at different income levels. When someone earning 100K wants to live like someone earning 250K, that may look one way. When someone earning 50K wants to live like the guy making 100K, that looks another way. And when someone earning 25K wants want the 50K person has, that looks yet another way. The things the 25K person has may not seem all that over the top, but relatively to his income, it might be just as "flagrant" as what the 100K guy overspends on. Hope that makes sense.

While I certainly consider buying cigarettes unwise, that wasn't what I had in mind here. I was thinking more of fancy cell phones, high end sneakers, leased cars, video game systems and frequent trips to visit family in Puerto Rico just to name a few.