$350,000 a Year, and Just Getting By

Financial confessionals reveal that income inequality and geographic inequality have normalized absurd spending patterns.

A cracked piggy bank
Paul Taylor / Getty

About the author: Annie Lowrey is a staff writer at The Atlantic.

The hypothetical couple were making $350,000 a year and just getting by, their income “barely” qualifying them as middle-class. Their budget, posted in September, showed how they “survived” in a city like San Francisco, spending more than $50,000 a year on child care and preschool, nearly $50,000 a year on their mortgage, and hefty amounts on vacations, entertainment, and a weekly date night—even as they saved for retirement and college in tax-advantaged accounts.

The internet, being the internet, responded with some combination of howling, baying, pitchfork-jostling, and scoffing. Representative Alexandria Ocasio-Cortez of New York quipped that the thing the family was struggling with was math. Gabriel Zucman, a leading scholar of wealth and inequality, described the budget as laughable, while noting that it showed how much money consumption taxes could raise.

It was just the latest in a long line of budgets to go viral. Perhaps you recall the law professor making $250,000 a year who accused Barack Obama of squeezing him dry back in 2010. Or the marketing intern making it in New York on $25 an hour with hefty subsidies from her parents and grandparents (she was, as she put it, #blessed). Or the two lawyers earning $500,000 a year and “scraping by,” unable to save.

Such financial confessionals are the radioactive material formed when social media and inequality collide—latter-day late-capitalist hate-reads consumed by an always online generation saddled with debt, and produced by or for members of an upper crust insistent that they are in fact middle-class. That insistence contains an object lesson about the way inequality has shaped spending and society: The country’s 10 percent really do feel strapped, and really don’t understand how much better they have it than the 90 percent below them.

Confessional budgets emerged in the blog era and took off in the social-media era. In the 1990s, inequality, the internet, and the personal-finance industry grew in tandem. As demonstrated in Helaine Olen’s book Pound Foolish, ordinary, middle-class Americans became stock pickers as advisers such as Suze Orman and Dave Ramsey developed mass followings. By the early aughts, Americans were crowdsourcing their investment strategies and sharing their penny-pinching habits on blogs. And in the late aughts, sites such as Refinery29 started publishing and promoting these strategies.

“We worked really hard to make sure we had diaries from all 50 states and from a huge range of income levels,” says Lindsey Stanberry, who launched Refinery29’s “Money Diaries” and is now an editor at CNBC’s Make It. “But our most popular ones were definitely men and women making six figures,” putting them in the top 10 percent and sometimes the top 1 percent of the income distribution.

In these viral budgets and diaries, urban professionals—they are almost always urban professionals—describe spending on $7 lattes and $70 bikini waxes and $70,000 private-school tuition. Some describe themselves as middle-class. Many describe themselves as unable to save. Self-evidently, this is nonsense: Spending tens of thousands of dollars a year on vacations and babysitters and housekeepers and fancy salads means you are choosing not to save, not that you are unable to save.

But the diaries and budgets demonstrate some of the real pressures such families face. For one, the cost-of-living crisis forcing middle-class families out of big cities also taxes the rich families within them. Making one-percenter money often means living in a place such as New York; Washington, D.C.; Seattle; Boston; or the Bay Area, and thus often means shelling out tens of thousands of dollars a year on a mortgage, rent, child care, and other necessities.

“Our ideal of a middle-class lifestyle is the same as it has always been,” says Sam Dogen, the founder of Financial Samurai, the site that published that $350,000-a-year budget. “Own a house, have a car, have a couple children, and retire by 65. These ideals haven’t changed. But it seems like it’s taking greater income to get there or to maintain that type of lifestyle.” Dogen—who semiretired at 34 with $3 million in the bank, something he credits to frugal living—noted that families earning six figures are considered middle-class in San Francisco because the cost of living is so high.

Moreover, many 10-percenter families have two earners with high-intensity jobs. “Highly educated women are now likely to be married to highly educated men, with both pursuing relatively high-paying careers,” says Richard Reeves of the Brookings Institution. “That makes it much more economically efficient to subcontract out the work of having a household, like mowing the lawn or doing child care.” The sense of being financially stretched might come with a sense of being psychologically stretched. “It isn’t just money; it’s time,” he adds. “These are intensive jobs, often done out of the bounds of a normal workday. I think the rise of the high-octane couple has increased this sense of generalized household stress, which no amount of money can buy you out of.”

The seeming cluelessness of the viral budget-makers also reveals the way that income inequality and geographic inequality have physically isolated the rich: Today people are more likely to know and live around people who earn what they earn, and less likely to know and live around anyone else. That normalizes spending patterns within a given community, while also stratifying spending patterns among different communities. Spending $50 a week on lunch might seem outrageous to, say, a parent with a part-time job in suburban Nebraska, but totally normal to, say, an account executive in Boston. That social myopia also means that people’s perceptions of what it means to be “rich” have stratified. In surveys, individuals making less than $25,000 say that making $293,000 a year makes you rich. People with incomes over $120,000 say something more like half a million dollars.

More money means more choice means more flexibility means a far easier time getting by. But it is remarkable how often in these diaries luxuries become necessities—things families have to spend on, rather than things they choose to spend on. Take that first diary, of the family earning $350,000 a year in a place like San Francisco. The parents could choose not to live in a high-cost city, or to move to a smaller place in a less expensive neighborhood. They could send their kids to public schools and cut their yearly vacation count from three—three!—to zero.

Dogen, for his part, believes that saving needs to hurt to work. “Anybody who has gotten braces or who has lifted weights understands this concept,” he says. “If the amount of money you’re saving each month doesn’t hurt a little, you’re not saving enough.” Of course, a family aware of its privilege, spending and saving conscientiously, if not painfully, is not a family whose budget is likely to go viral.

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