How Does Any American Family Make It On Less Than $50,000 A Year?

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A rapidly increasing number of American families are finding it really, really hard to make ends meet each month.  The price of food, gas, health insurance and other basic necessities has continued to escalate, but wages have not followed suit.  So more Americans are finding themselves squeezed financially at the end of every month.  Instead of having extra money with which to enjoy the American Dream, millions of families are now experiencing the American Nightmare of working too hard but never having quite enough.  But what can be done?  Certainly we can all cut back on unnecessary expenditures, but there are some expenses that just cannot be eliminated entirely.  We all have to eat, we all have to drive to work and we all have to pay the rent.  In fact, it is very hard to imagine any American family making it on less than $50,000 a year.  Of course millions of American families are making it on far less than that,  but it isn’t easy.  The truth is that $50,000 doesn’t go nearly as far as it used to.


To demonstrate this, let’s do a little exercise.  Let’s set up a monthly budget for an average American family of four.  Both parents work either in or near a big U.S. city, so they both need cars.  In our scenario the children do not go to private school, they don’t have their own cars and they don’t have cell phones.  We will give them $4000 to make it through the month ($50,000 a year comes out to about $4000 a month) and we won’t factor in expenses that don’t happen every single month such as automobile repairs, appliance replacements, property taxes, registration and license renewals, etc.  We are also going to assume that our family does not have any credit cards.

So can our “average American family” make it on $4000 a month?

Let’s break it down….

Rent Or Mortgage: $1000

In rural areas this expense could be quite a bit less, but in our scenario the family lives in or near a big U.S. city (where most of the jobs are) and so $1000 a month is a very conservative number for rent or for a mortgage payment.  In fact, in most of the largest U.S. cities this number is completely unrealistic, but let us assume that they can find a little house to squeeze into for $1000 a month.

Power, Water And Garbage Collection: $300

Our family can certainly turn down the heat and not run the air conditioning, but utility expenses are still going to be there.  $300 a month is a fairly conservative number for a small house – especially if the house is located in a colder climate.

Phone, Internet And Television: $100

Some families have cell phone bills that run into the hundreds of dollars each month.  But not our family.  For our purposes, we will assume that our family has basic phone service, basic Internet service and basic television service totalling approximately $100 a month.

Student Loan Payments: $200

The vast majority of people graduating from college these days have student loan debt.  We’ll assume that our family only has to make a very modest student loan payment each month.

Car Payments: $400

Both parents work, so they both need a car to get to work.  We’ll assume that they both purchased used cars to save money and so the monthly payments on both vehicles are not too bad.

Auto Insurance: $100

They can’t drive the vehicles without auto insurance, and so we will assume that they both have good driving records and that the insurance premiums are fairly reasonable.  If either of their two children drive this expense will be much, much higher.

Health Insurance: $400

Let’s assume that our family of four is generally in good health and is living in a state where health insurance premiums are not wildly out of control.  $400 a month seems about right.

Food And Toiletries: $800

This breaks down to $50 for food and toiletries per person every week.  That is actually not a lot when you think about it.  But we’ll assume that our family is fairly economical and looks for ways to cut grocery costs.

Gas: $200

With gas hovering around $3.00 a gallon, assuming that our family will only spend about 50 bucks a week on gas may be a bit of a stretch.  But let’s give them the benefit of the doubt.

So, after adding up all of the expenses, our hypothetical family has spent $3500 of the $4000 they have earned for the month.  That is before they have spent anything on clothes, entertainment, charitable giving or anything else.

But wait, our family has not paid any taxes yet.

Federal and state taxes will take at least $1000 out of the $4000 that they earn each month.

So that would only leave them with $3000 to make it through the month.

Oops!  It looks like they didn’t make ends meet after all.

So what do you think of this budget?

Are the assumptions reasonable?

Is it possible for an average American family of four to make it on $50,000 a year?

Please feel free to leave a comment with your opinion….

  • REM

    We are a family of 6 living in Southern California and have been living on a very small income for some time. We have never earned as much as $50,000 in our eleven years of marriage. My husband has a part-time job as a paralegal and he is a full-time post-graduate student as well. We don’t pay federal taxes, nor do we pay for health care. We are renting a friend’s extra house for $750/month. We spend close to $700 a month on food. We have one student loan payment for now. We have internet and cell phones, but no land line or cable. We are surviving and learning to be content at this stage of life, but we often have to use the credit card if something unexpected comes up. I would say that it is not possible to “make it,” but it has been possible for us to survive these last 11 years.

  • Gary

    This is a direct result of all the tax cuts for the rich and the whole trickle down BS that the right wing has preached. We need to heavily tax the rich and corporations and spread the wealth. We need to be much more like Europe and have a more robust safety net. We need employee free choice passed to put a check on business interests. The working poor needs to stop voting republican and start to vote their economic interests.

  • Greg

    It is not possible to live as we are accustomed to living, but those who have planned and are carrying out the demise of our nation don’t want us to live like we have been accustomed to living. In fact, many of the elites are disgusted that the low life commoners are able to enjoy life and have anything beyond subsistence. They also believe that there are far too many of us anyway and according to Jacques Cousteau, 350,000 per day should be executed. According to Ted Turner, 95% of us should be exterminated (yet he “saves lives” with vaccination programs in Africa!). According to Bill Gates, we should use vaccines to reduce the human population. According to the Georgia Guidestones (the American Stonehenge) there should be no more than 500 million people on the earth. According to many people now serving as (buh)Czars under Obama, people should be eliminated with birth control in our food and water and forced sterilization and abortions.

    If you are looking to our government to help us out of this mess you should seriously ask yourself how those who caused it are going to reverse it. Additionally, you must be reasonable and ask yourself “am I the only person that can see that stupid actions will lead to a painful existence?” Since the answer to that question is “no”, why did so many people apparently not see that this would happen? They did see it coming…they made it happen. We are now sheep that are living under the watchful care of the wolves. The wolves are certainly not driven by the desire to make our lives better.

  • Jimbo

    $400/month for health insurance for a family of 4!!! What planet does this author live on? Try $1200.

  • Bill

    Greg and Gary are both correct. Nor have we hit bottom. The idea is to eliminate the middle class by transferring all of the money to the top 1% or so by means of “bail-outs” and putting the other 99% of us into impossible debt for the rest of our lives. You know… Lords and serfs? Indentured servants? Read history and you will find both of these set-ups. Neither is pleasant for the ones at the bottom.

    On the lighter side. I see families of 4 or more living on a lot less than $50K per year. Even a lot less than $5K per year. But then, the Philippines is a 3rd world country. Is the US headed this way? Just asking….

  • Greg

    Come on Gary! If you are older than 20 you have seen the exact same policies carried on through those you despise and refer to as right wing conservatives and by your blessed liberals who apparently just aren’t quite liberal enough for you. Are you really so stupid as to think that you are going to elect somebody or some group that is going to be different? They are all controlled, they all answer to the same decsion makers (e.g. there was a video of Hillary interacting with Rockefeller with her clearly understanding that she was the subordinate). The voters are not in control, we are merely allowed to go through the gate on the left or the gate on the right that lead to the same place but make some sheep think they are OK because they got to choose, therefore they stay blind, dumb and submissive, just like we are supposed to be. Give me more governmental control, I want it baaaaaad!

  • Dale

    Reading the comments to this point – I find some of the remarks interesting. Gary, who posed that the problem is a result on “tax cuts for the rich?” Might the problem be more a question of “TAXES” – period. Most all taxes are presently paid by the rich and NOT to the same extent by the, fast disappearing middle class, and certainly not by the working poor or poor. Therefore should they (the classes other than the rich) be paying more or the rich even more than they pay now? NO – Federal Taxes were an illegal (as in unconstitutional) construct to begin with. Can anyone say with certainty that ANY TAX goes to fund what the tax was proposed to pay for to begin with? One needs only to look to the greatest ponzi scheme ever for proof of that – Social Security (not the medicare entitlement that was added later as a “vote getter”) – it was to be pain into a TRUST FUND – NOT to be touched for any other purpose. It is broke – why? Because of too many retirees? NO, because those funds were used by the Central government to pay for all the other “spend like there is no tomorrow” programs that you were taxed for – that paid for by you, that went somewhere else. Prior to 1913 there was NO FEDERAL income tax – are you to have us believe that we, as a country were some second rate nation prior to that date? Quite the contrary – we were experiencing our pinnacle in growth and influence.
    The news of late has been that our debt will soon match that of our GDP – well, I have some even more shocking news for you – RIGHT NOW, our total debt – Government (both funded – the 13 trillion plus) and unfunded (Medicare, Medicaid, etc) Corporate, AND PERSONAL – that’s right, you and I – and those SUV’s, Wide Screen TV’s, and all the other TOYS we needed NOW, and homes we felt ENTITLED too, even though we couldn’t afford – OUR TOTAL debt, as a nation – presently is 360% of GDP!!!
    In less than 100 years – WE, not some political party, or philosophy – Liberal or Conservative – have gone from Manufacturing Giant – Marketplace to the WORLD – to nothing more that a giant sea to shinning sea “Shopping Mall” – a consumer nation that produces virtually NOTHING – a nation of entitlement, rather than enterprise.
    To quote Shakespeare’s Julius Caesar and that to the point line delivered by Cassius; “The fault, dear Brutus, is not in our stars,
    But in ourselves … “

  • Jennifer


    They make 50K/year but there is no provision for childcare. This assumes that there is only one working parent. Childcare is by far one of the biggest expenses. I think 8-5 care/5days a month in my town runs about 1K/mo.

    The other thing to note is that there is no provision here for retirement savings…but let’s call this an extra.

  • Kristi

    I feel that these numbers are VERY conservative, and probably not achievable in all areas of the United States. There’s also the “learning curve” to take into account…we are suffering from that right now — having purchased a vehicle that had payments we could afford before my husband lost 25% of his income due to paycuts. We’re just grateful he still has a job, but a nearly $400/mo car payment is something I will NEVER do again. We’re suffering for our ignorance now, but it has been a valuable lesson that we will never forget. This financially conservative lifestyle is something I did not grow up knowing…and that is no fault of my parents, all they wanted was what they felt was best for us…but my children will certainly know how to make every dollar go as far as it can.

  • Sharonsj

    In the past, the rich paid extremely high taxes and the country was just fine. Somehow, the less the rich pay, the worse our standard of living.

    Social Security would be just fine if Congress stopped “borrowing” the money for other things and also raised the ceiling; right now you pay a social security tax on about the first $95,000 earned for the year. That means the rich certainly are not paying a fair share.

    I’d also like to know why Republicans scream about the debt and propose cutting social programs–but never mention the defense budget? And I’ll answer my own question: both parties get kickbacks to make their friends rich. They can’t steal as much from the social programs. Why aren’t you complaining about the $2 billion the Pentagon says it “misplaced”?

    We used to manufacture everything but big business decided it could make more money by abandoning America–and Congress gave them tax breaks to outsource and to move outside the country. Again, it’s because Congress is beholden to corporations for campaign money and for bribes. What I’m entitled to is a government that works for the people, not for the CEOs.

  • Gary

    Sharonsj-you are exactly right. I totally agree with you. My hours just got cut at work and others laid off because even though the company is making money it will not meet wall streets expectations so they need to cut and cut. I see none of the executives took a pay cut, only us workers who only make between 10-15 dollars per hour. All we pretty much have left for job growth is crappy low pay service jobs. When the fastest growing fields are retail, custodial, and food service you know we are in trouble big time.

    Regarding SSI tax being capped on the first $95,000 in income I do not know of a better example of the rich not paying their fair share.

    Good Post Sharonsj!!!

  • Mark

    Gary, you socialist- why should the rich pay more on social security when they’ll never receive the benefits of it? Are you perhaps a closet communist? Is your resentment of the rich and your self-loathing at your pathetic failure of existence clouding your rational thinking, or did you just attend a public school?

  • Steve

    It was never the governments job to have a forced retirement plan for people. I hope the rich dont pay anything and the whole stupid ponzi scheme collapses. If some of you could wrap your puny heads around real freedom, you would realize that for the vast majority of us, we would be better off keeping the fruits of our labor.
    Go ahead, keep taxing and regulating the rich and corporations. They will finally say fuuuugit and you’ll be left with nothing. At that point, I’ll bet you will wish you could go out there and start your own company if it wasnt for the mountain of taxes, regulations and forced insurance that you’ll need to wade through. At that point, you will say fuuuugit, and we’ll all just sit there starving while being sorrounded by arable land and plenty of renewable recources. Hey that sounds like Mexico!!! which is the much more likely result of your liberalism than you’re completly clueless European Utopia which is also rotting from within.

  • Anonymouse

    @Gary and the others

    The only people making jobs are in the higher tax brackets.

    What I can’t believe is that families can make less than $50k! Just my extra job as a part-time waiter nets me $15,000/year and I work 15-20 hours/week. How can two able-bodied adults working full time not pull down more than $50k/year?

    The problem is that our government has set it up so that people lose their benefits the more they work. For the people that earn less, why don’t we not only refund all of their tax money, but give them extra cash back! Would you work more hours to make the same amount of money at the end of the year? The system is broken…

    I can’t wait for all of these middle income families to learn that they will now be forced to purchase health care at a large cost each month. Thanks Obama!

  • Duane

    Way to many numbers to swap to make things right for everyone.
    No one class of people or any corporations should be liable for the faults of the system or dinero deprived people just for being successful. Money does create jobs, not enough perhaps for all of us, but those pulling in the dough do create jobs. Don’t punish them.

    Maybe we should try utilitarianism for a while, go back to basics, stop buying pointless gadgets, let the Jones’ get ahead of you, wear socks with holes, re-new what you have only when you have to. Prepare a budget and watch every bit of your money that is used at home. Home is your business, so run it like one. That work pays.

    50k can go far if your happy with dreams remaining dreams.

  • My family is going through this currently. One possible solution that I don’t expect to ever see happen is to eliminate income tax. It could be replaced by high sales tax on luxury items ONLY and high import tariffs. This would also stimulate the economy by creating a need for more local and national manufacturing. Hang in there everyone. It’s only getting worse.

  • Scott

    Sharonsj… all good points. Only thing is that the Pentagon lost $2.3 TRILLION, not billion.

  • Rex Remes

    So, this hypothetical family has students loans from going to college, YET they only earn 25K per adult? What college educated person, living and working in/near a big city only makes 25K per year? Isn’t the average salary of a new college graduate something like 40K per year? What did they get their degrees in – underwater basket weaving?

  • the stranger

    I realize you are using a simplified example (and a good one at that!), but in addition to Fed and State taxes, there are other taxes, like local 7-8%, and real estate taxes which can be enormous! And I believe someone on this board already mentioned FICA. And if you own your own business, You pay all of FICA, over 15%!!!

  • the stranger

    And don’t get me started on the AMT!

  • Gary

    Yes I am a socialist and proud! ALL of our money problems can be solved by simply taxing the rich and the corporations. Where are they going to run to? Europe? Their they make the rich and corporations pay more of their fair share? Lets end all corporate welfare.

  • Rex Remes

    Proud to be a socialist…. hmmmm…. What amount is fair share? and who determines what is fair? Sounds like you want to replace corporate welfare (which may not even exist) with expanded welfare for the masses.

    When will it be enough?

    When will people learn to be responsible and self-reliant?

  • Steve

    Its useless talking to socialists. They dont even have the same fundamental values we have. Since Europe is a utopia for them, I say dont let the door hit ya on the way out. Of course they think this is their country too, and that we are a democracy. We are not. We are a constitutional republic where the rule of law is supposed to protect us from thieves like the socialists.

    Yes, if you are a socialist, you are a thief. If I went to your house and forced you to give me some of your money at the barrel of a gun and then turned around and distributed to the “needy”, you would rightly call me a thief. This is excactly what socialists do when they vote. But because they are spineless cowards, they will only steal through the vote. They let the cops do the actual gun pointing since they are a bunch of pillow biters who are afraid of guns.

  • We live on less than 50,000 a year and always have. We are a family of four. I spend less than $300 a month on groceries and toiletries by using coupons and getting items free. I also stock up on meat when It is marked down for a 40-50% savings and I grow my own vegetables. I cook most of our meals at home and rarely eat out. We don’t use credit cards and don’t have student loans or any loans except our mortgage. We also don’t have health ins. I get most of our clothes from yard sales, a lot of times they still have the tags on them for .50 . We don’t go out to movies or other entertainment venues. We do go visit family twice a year for vacation. I rarely use AC and I use a clothesline. We do have a 401k but no savings due to past debt repayment. But we have learned to stay away from debt in the future.

  • Why do the rich and republicans bitch about people making 50,000 or less .They hate unions with a passion ( only 7% of workers are unionized ) with 60% of those making 50,000 or less in the unions What is their problem except greed .They want teachers who went to colledge with master degress to earn less than $50,000.Service people to earn Mimimum wages while they themselves want an uncontrolled ceiling on how much they should make .I see a class war coming and I don`t blame anyone that wants socialism .It sure beats poverty and greed .The rich are heartless bastards that only want more and more .Politicians included .

  • Rex Remes

    @eddie … No, you are wrong. It’s the recipients of socialism that want more more more.

    oh … and get your facts straight.

    FYI – 12.6 percent of all U.S. civilian workers were in a union in 2008. (7.2 percent of private-sector workers were union members. Among government workers, union membership is 37.4 percent)

    What areas of the economy do most people complain about as wasteful, ineffective and inefficient? Education, Public Administration and Government — all areas with HIGH unionization.

  • Duke

    Gary is completely ignorant. You tax the wealth and more jobs will be lost, they will close their businesses or fire employees to stay afloat. Why do you think Singapore has 11% millionaires. Could it be because they have a flat tax of 16% no matter your income. What do you think would happen if they imposed a progressive tax like we have. The rich will flee with their wealth and everyone else would be poorer. Wealth is needed for capital to be use in business growth and jobs. Learn some austrian economics instead of saying foolish reactionary things socialist politicians say. Educate yourself or continue to be poor

  • BF

    We pay $429/mo. for health insurance for three of us….but we have a $10,000 deductible. That money is socked away just in case. We’re self employed, no health problems yet, just over age 50.

  • Just Saying

    First, let me say that we live on 50,000 per year. First consider, how many of you have college degrees in a technical subject…engineering, computer science, medicine? I find quite a number of jobs, but most are of a technical nature. Need a degree, need skills. We keep hearing about all the high pay jobs in the Bakken Shale area (North Dakota). Oh yeah, farming is becoming a technical occupation just to operate the new equipment. Consider that the real issue is that we have an ever increasing population with little or no qualifications for the increasingly technical jobs. Oh yeah, wait till McDonalds becomes fully automated and requires 1 technician to monitor the mechanism. Where will those workers go, many of them that I have seen have limited math skills. Guys, this is likely a reality. Oh yes, you can start a business, but be careful about hiring staff…then you will be in real trouble. The opportunities do still exist, there are just fewer of them and they generally require at least some skill or at least a genuine hard core entrupenural spirit to keep plugging away in the face of those “anti-corporation” groups.

    By the way, if a business is not profitable it will surely fail and then those jobs will be gone. You know, the people with money could just pull out of the USA. If everyone pulled out of the stock market, most of those companys would likely go under…then where would you be.

    Just Saying

    • Ann

      Exactly. My husband and I gross 50k combined. He has a BA, I have AA. Both of us work for a not for profit f/t. Health insurance combined is $170/mo with a $600/ye deductible. At 50+ yrs, recovering from divorces and medical issues we are starting over. we can live comfortably, it is saving for retirement that is near impossible. We are hard workers but sadly this is reality for many.

  • K

    Don’t even complain to me!!! Believe it or not we are a family of 5, I have three kids, 14, 7, and 3 years old and we’re living on 18,500 a year and both my wife and I are working!

  • Trench

    Im sading by all of this. Sometimes the best thing to do is to give up when your losing a battle that is destine drop deeper. This isn’t how life suppose to be. They say if you don’t like your circumstances….then change them. See, i was that guy living underwater but now I keep my head above it so far. I was a hustler. Making good money, but changed. I know I have done things wrong and was willing to change for the sake of my life and any other chances going back to jail or death. I ventured off, leaving what I know behind just to get involve with a struggle more than I imagine. See a lot of y’all talking about 50k’s and 25k and what Obama’s doing and what socialist and unions are doing, but what about folks like me huh. I make 21k a year. I got married to a beautiful women that had a 1 year old child. I was married to her for 16 years now and I have 5 children by her also. Yeah I know what your saying. Hell nah, they on welfare. Well the hell with all that because I’m not. Why, because I takes care of my family. Im trying to do all I can to make ends meet. And its hard. I don’t have insurance because they would take too much out of my check. The stupid house that I stay in has 3 bed rooms and the rent is 750. Water comes in through the walls when it rains, mold smells are in the house and the truck that I have is a gas guzzler. There is a known water leak in the house that boost the water bill to about 400 a month. Car insurance and buying groceries by the meal at the grocery store is challenging. I never been the one to ask for hand outs because that not how I was raised. My life is turning me into a mean person. I fuss at my wife and kids daily for no reason. I try going to college but I just cannot maintain my focus because of the obstacles at hand. So at this point, its me with my back turn. 6 kids a wife and 1 car. My wife cannot work because of having 1 car and 3 of the kids are 10, 9, and 6. I am struggling, but I’m not robbing, stealing nor am I selling dope. i put GOD’s name in my prayers along with my mind and my family. My student loans are haunting me and I haven’t even finish. See I’m not a quitter and I’m definitely not lazy. I just want more for me and my family. Sometimes I sit and wonder……….Will I die like this? But as I read you all comments…. I know that the people in this life has nothing to do but spread drama. Don’t care about nothing else but themselves and money. If I was still on that page of life, I would be ganging up with folks that are thinking just like I was thinking….and my family will be eating good……with no exceptions. But that’s not me any more. I just want my visions and dreams to prevail. That way my family can eat healthier, live better, and I can love better instead of staying angry. But what am I mad about. I don’t regret having children. I just regret the day I stop making money before having them in this situation. So… what do you do? 50k is not looking promising to me. So I imagine my self making 500k. And by that note…..I struggle on. And pray to GOD to keep me on the right path. Because I’m struggling, and I have my family with me……which makes it more disturbing. My father killed himself when I was 13. he was 40. I’m 38. But I would never do such thing to leave my family like he did. Im going to make it. what ever ‘make it’ means.

    • Midnight

      God bless you and your family. The struggle is worldwide. This is how they want it but things willl change. We will have to close this growing gap between lower and upper class. It’s just disgusting.

  • Rob B

    The article that Gary wrote posses some things that are way to conservative such as health care but makes for a good opportunity to explore how many Americans must be living.
    First in my situation at being 54 suffering throu three corp down sizes- we ultimately had to give up on retirement savings because of loss of income and will end up losing value on our home. Now that being said 50K with two kids in public school where supposedly free is all about fees what you end up with including monthly bills is cash poor. Gasoline, food, car repair ( not a new car note) on top of a mortage of 2200 per month makes 50k before taxes barely doable.
    There simply is no cash. 50K per year $1041 per week – two weeks eat up housing cost- the other two weeks get beat down with gas,electric, fuel,food, emergency fund, fuel and tv and internet and cell phones – so a little over 2k kills it. So for me Social Security is going to incredibly important- though I know I will have to work for the rest of my life until I am unable.
    Finally as for the 1% and taxes – America used to be all in – but the 1% and Corps want us to fight for the economic might in over seas wars – Iraq or policies that are tenuous – Iran – at best.
    Tax the rich and consider all income regardless of source at one rate and raise the ssi/fica limit to 1 million dollars and we are again all in.
    Why should poor people fight so the rich can enjoy??
    One more point American businesses never quit business because of tax policy or what the fed will do – we used to go to market period with great products. The investment class is running the corp and that means chase dollars. With that we lose all in and become split- the investors should invest in the employees and think long term. Just my opinion