Recently, I shared a sample budget of a family of four earning $408,000 a year on Twitter, the amount third-party data deems necessary to feel comfortable in San Francisco. To be clear, this wasn't my budget and it wasn't a recommendation. It was an illustration of how fast a six-figure household income disappears once taxes, shelter, and optional choices like private school get involved.
I also wanted people to question whether earning this kind of money is even worth it, given the 50+ hour weeks, the stress, and the time away from your kids. Big income does not mean big freedom.
The tweet received over 3.7 million views and more than 1,400 responses.
But the views aren't the story. The story is what I learned from the replies. And folks, I have tremendous news.
America is doing fantastic! We are far wealthier, happier, and healthier than the negatively-predisposed media would have us believe. Forget the retirement crisis, where the typical American supposedly can't come up with $400 for an emergency. Forget the health crisis too.
Healthy, Wealthy, And Happy Americans Are We
When you have over three million views and a thousand-plus responses, you have a sample set no well-funded university research lab could ever assemble so comprehensively and quickly. This is Financial Tips, after all.
Based on these responses from complete strangers, I can now confirm the following. Nobody in America is struggling with credit card debt. Everybody maxes out their 401(k). Every household keeps a detailed budget, updated weekly, reviewed calmly with a spouse who agrees on everything. And we all have a shot at modeling for next year's swimsuit calendar.
Grocery bills are especially encouraging. Thousands of families are apparently feeding four people on less than what we spend at Whole Foods before lunch. More on this miracle below.
Work-life balance has also been solved. Everyone who responded works a reasonable 40 hours or less, is home for dinner every night, has plenty of time with their kids, and still accumulates more wealth than the $408,000 household.
Their children are thriving at excellent public schools, on track for top universities, well-adjusted, and grateful. No supplemental tutoring required. The teenagers reportedly eat very little.
Marriages are strong. Nobody argues about money, which makes sense, because money fights are a leading cause of divorce and, according to my replies, nobody has money problems.
Everybody also bought their home at an affordable price and refinanced at 2.5% or lower. Renters, meanwhile, are all investing the difference with machine-like consistency.
My Job Here Is Done
As someone who has been on a mission to help people achieve financial freedom sooner, rather than later since 2009, all this feedback is bittersweet. For over 17 years, I believed America needed help with money. That belief gave me purpose, especially after leaving work in 2012.
But after reading the responses, clearly my work here is done. Financial Tips can wind down. You don't have to sign up for my free weekly newsletter to help you build more wealth. No more self-imposed publishing schedule of three posts a week. It feels wonderful to let go.
OK, obviously I'm being a little facetious. Not everybody has six-pack abs, a meaningful job with minimal stress, and a multi-million dollar investment portfolio. But the responses were genuinely illuminating about how Americans think about money.
Let's review the five main themes and what we can learn from them.
1) America Is Against Private Grade School
By far the biggest recommendation was to cut private grade school tuition and go the public school route. Invest the difference and give your child over a million dollars after they graduate college. Below is a typical response from about 80% of commenters.
And you know what? I have to agree.
In my WSJ bestseller, Buy This Not That, I recommend parents earn at least 5X the net annual tuition per child before paying for private grade school. At $90,000 for two kids, the household should make at least $450,000. At $408,000, they're close, but not quite there, so they will feel extremely strained.
The 5X minimum exists to protect families from FOMO. It's easy to work in a big city and feel you must keep up with the Joneses by sending the kiddos to private school too. But if you're stretched and can't get financial aid, you're putting your own retirement at risk. That's no good, because your kids may then have to support you one day, which drags down their financial security in turn.
Public Grade School Is Fine
Just as drinking tap water over bottled water is fine, attending public grade school over private is fine too. How well our children do will mostly depend on their own initiative and parental involvement.
As a public high school and college graduate, I'm a fan of saving money on grade school. I learned how to defend myself against bullies. Getting suspended for fighting and interacting with kids from every type of background was great training for the real world.
If your children go to private school, the experience will likely be different. Roughly 60% of families will earn multiple six figures and afford the tuition while still feeling its sting. About 15% will be on generous financial aid. The remaining 25% will be so extraordinarily rich that $70,000+ per kid for kindergarten does nothing to their finances.
Your kid will probably feel safe, and you'll meet some highly involved parents. But you might inadvertently foster an unrealistic sense of the world that leaves them lost after graduation. Or your children may realize how privileged they are and feel such pressure to perform that they feel like failures if they don't get into a top university or land a top job in finance, tech, law, or medicine.
Can you imagine killing yourself to get into Harvard, only to graduate into a job every other college graduate does? If you're in the top 0.1% academically, the expectation becomes that you should be in the top 0.1% of your profession too. That's a heavy backpack to carry.
Peer Pressure Makes It Hard To Say No
If your household makes $400,000+, one or both parents probably work in tech, finance, consulting, law, medicine, or is an entrepreneur. When most of your peers are sending their kids to private school, you'll naturally wonder whether you should too.
The conversation with your partner revolves around providing the best education and most opportunities possible. It also helps make grinding 50+ hours a week and missing your kids' events more palatable.
Some parents feel less guilty paying for private school precisely because they're always working or traveling. Others simply value education above everything. Even if a private school is a subjective 10% better than the neighborhood public school, some parents will decide the extra $20,000 to $70,000 a year is worth it. To each their own.
One thing nobody mentioned in over 1,400 comments: this family drives a paid-off Honda CR-V, right in line with my 1/10th rule for car buying. Instead of splurging on a depreciating asset, they funneled their money toward their children's education. Admirable, is it not?
2) We Consume Less Food And Eat Healthier Than We Realize
Travel abroad and ask what folks think of Americans, and one of the top three answers is that we are big people. The others are that we are loud, rich, and free.
The data agrees with the stereotype. According to the latest data from the CDC, approximately 73% of American adults are classified as overweight or obese, with about 43% falling into the obese category. During COVID, roughly 80% of those hospitalized were overweight or obese, and American life expectancy declined for the first time in decades.
And yet, the second most common pushback was on food. Commenters thought $3,000/month to feed a family of four in a HCOL city was way too high. Some said they could easily cut $500 a month, which I agree with. But many more said they spend $1,800 or less for families of four to six!
To me, that's incredible, especially the dad spending just $700 a month for his family of four. Maybe San Francisco and Honolulu prices are just crazy. Or maybe my wife and I lack the skill and patience to buy in bulk and cook every meal. But there's no way we could spend only $300 per person a month on food.
Here's the thing: if both parents are grinding 50+ hours a week, it's hard to find time to grocery shop and cook. You get home at 6:30 pm, and the last thing either of you wants is to spend an hour making a mediocre meal when Uber Eats can deliver a better one. Time becomes more valuable than money when both parents work. So cooking at home may not be the most productive task.
Regardless, if most Americans are truly living off $300 a month or less per person for food, I'm greatly comforted. Because unless you're spending that entire budget at McDonald's, it's mathematically difficult to eat enough unhealthy calories to become overweight. The national health statistics must simply be wrong. Somebody at the CDC should double-check the math.
3) We Pay Less In Taxes Than We Think
Roughly 40% of working Americans pay zero federal income taxes, leaving the other 60% to foot the bill. That's how American society works. The healthy visit the doctor less often so the sick can get easier access to care. Workers earning above 400% of the Federal Poverty Level pay unsubsidized healthcare premiums so lower earners can be subsidized.
We are a country that tries to take care of those who cannot take care of themselves. It's not a perfect system. But the spirit of paying more to help those with less should be appreciated.
That said, one constant from six- and seven-figure professionals is complaining about their tax bill. W2 income is taxed at the highest rates, and it's demoralizing to work long hours and watch a big chunk go toward government waste. This is one of the reasons why I encourage people to start building as much passive income as possible. One day, you may get tired of work.
Interestingly, in my budget I used a 32% total effective tax rate, and not a single person said it was too low. They all said it was too high. Here's an example.
Here's how I calculated the 32% using an online tax calculator and cross-checking with AI:
- Federal effective income tax: 20% to 22%
- California effective income tax: 5.5% to 6.5%
- FICA and Medicare of 7.65% on two earners up to $184,500 of wages each: 4% to 5%
- Total effective tax rate: about 30% to 33% of gross income
So 32% is in the ballpark, though perhaps 2% too high, which would save the household about $8,000. Then again, at this income level there's AMT exposure and phaseouts to contend with, partially offset by the SALT cap rising from $10,000 to $40,000 under the One Big Beautiful Bill Act.
I also didn't account for the $4,000 in charitable deductions. With a good accountant, maybe the effective rate drops to 28%, for roughly $16,000 in savings.
One painful note for dual-income households: FICA is charged on each parent's wages up to the cap ($184,500 for 2026), so this couple pays Social Security taxes twice. You'll get benefits back eventually, but it's a relatively bad deal compared to investing the same money in the S&P 500 for 30 years.
4) Housing Is More Affordable Than We Realize
Visit any media outlet's real estate section or any research think tank and they'll tell you housing affordability is near the worst levels in history. Yet everybody who criticized the $5,000/month mortgage said it was ridiculous, and that they live in much cheaper housing with great schools.
Think about what this means. To carry a $5,000 monthly payment on San Francisco's median-priced $2.2 million home at today's 6% mortgage rate requires a 62% down payment, or about $1.37 million. If $5,000 a month is considered too expensive, then everybody must have well over a million dollars lying around for a down payment.
In other words, Americans are far, far wealthier than the statistics suggest.
The Federal Reserve's latest Survey of Consumer Finances pegged median household net worth at about $193,000 and the average at $1.06 million as of 2022. But the S&P 500 is up roughly 80% since that survey, so the average American household may now be worth closer to $2 million. The median figure simply has to be wrong. Hundreds of confident repliers can't be mistaken.
There are, of course, alternative explanations. Perhaps every responder locked in a 2% mortgage in 2021, which supports a $1.35 million loan at $5,000 a month, requiring a more modest $850,000 down payment. Or perhaps they all bought before the COVID boom at much lower prices. Or, and I hesitate to even suggest this, perhaps hundreds of readers were simply viewing a HCOL city budget through the lens of their own MCOL circumstances.
No, that can't be it. I choose to believe everyone is heavily invested in the stock market and has benefited tremendously. After all, I've written before about how housing affordability is actually at an all-time high for investors. For those with significant tech stock and private AI company gains, housing in San Francisco and Manhattan is practically on sale.
5) Taking More Than Two Weeks Of Vacation Is Excessive
The final major pushback: three weeks of vacation a year, comprised of two destination trips and one staycation, is apparently an unreasonable luxury. I thought this was a normal middle-class lifestyle. According to the replies, only Europeans and the idle rich take more than two weeks off.
This may explain why I didn't make Managing Director my final year in banking. I took my full six-week allotment after 11 years of service. If they were going to deny my sabbatical, I sure as heck wasn't going to lose my vacation days that don't carry over!
My colleagues and I were constantly stressed by client demands and management expectations. We needed those vacations to minimize burnout. Getting in at 5:30 am, leaving after 7 pm, then checking the phone at 10 pm so your client wakes up to answers gets tiresome after a decade.
But apparently, the X replies have no problem working these hours indefinitely, and consider more than two weeks off a privilege reserved for the soft.
Americans Are Super Hard Workers
So I apologize for the oversight. Americans are work juggernauts! In my defense, we enjoy staycations in San Francisco because there's so much to do in an expensive city.
We've gone to Six Flags twice so far this summer in Vallejo, a 52 minute drive away. Gas probably cost about $20 round trip plus $79/person for a season pass. Recently we hosted World Cup matches, NBA All-Star Weekend, and the Super Bowl. Even attending Startup Grind and YC Demo Day felt like vacations too because they were so fun. .
Mostly, I'm proud of the millions of Americans who take two weeks of vacation or less. As a shareholder, it warms my heart to know employees are working this hard to generate more revenue and profits for us.
Writing about FIRE since 2009 clearly warped my view that plenty of work-from-home techies just get to play pickleball during the weekdays. I believed most Americans wanted to break free to travel, spend more time with their children, and pursue passion projects. Based on the feedback, I was wrong, which makes me even more bullish on my investments.
Live to work and make your investors money, baby!
Americans Are Doing Great. Read The 1,400+ Comments Yourself
Thank you to everyone who read, commented, and shared. It was genuinely entertaining and insightful to hear how you spend your money and live your lives. I know not everyone in America is doing great. But it sure seems like people are doing better than the statistics let on, or at least everybody online is.
Americans are also resourceful. Plenty of people mocked the family for having only $1 left each month. Others rightly pointed out that a budget where everything is spent, saved, and invested should come out close to $0. Nobody sticks to a rigid budget forever. Families adapt, cutting costs when they must and spending more when they feel flush.
This is the same concept behind my dynamic safe withdrawal rate in retirement. No retiree robotically withdraws 4% forever. They adjust to economic conditions, which is why I've pegged my recommended withdrawal rate to 80% of the 10-year bond yield as a dynamic guide.
Some of you correctly noted the budget is missing kids' activities, which absolutely add up. It also excludes household help like childcare, house cleaning, and gardening, because there simply wasn't enough money left. If you're tight on cash flow and can do the work yourself, you probably should.
Finally, that $1 of monthly leftover was there to illustrate a point. From the outside, this family earns good money and lives comfortably. But with $1 a month in residual cash flow, they likely feel financial strain anyway. The difference between a rich millionaire and a poor millionaire is cash flow and liquidity. If your assets are all tied up and inaccessible, you won't feel very wealthy at all.
As for me, I'm writing this from Honolulu, where I'm spending a month with my parents. This morning's three hours of pickleball were free, and so were both trips to the beach. Turns out if you're nice to your parents, you might get to stay with them for free and look after them on your next vacation too. Now that's a travel hack no budget critic can object to.
Readers, do you believe the responses reflect financial reality in America, or do people present their best financial selves online? Why do you think a straightforward household budget triggered such strong reactions? And where do you think the biggest gap lies between what Americans say about money and what the data shows?
Build Wealth Regardless Of What The Comment Section Says
If you want to build real wealth instead of just winning arguments online, pick up a copy of my USA Today bestseller, Millionaire Milestones: Simple Steps To Seven Figures (Portfolio Penguin). It provides a step-by-step guide to accumulating your first million and beyond, so a $408,000 budget becomes a curiosity rather than a stretch goal.
Curious where you actually stand versus these statistics? Track your net worth for free with Empower's financial tools. I've used them since 2012 to monitor cash flow, spot hidden portfolio fees, and stress-test my retirement with their Monte Carlo planner. The people confidently commenting on my budget could probably use it too.
To sharpen your finances every week, join 60,000+ readers and sign up for my free weekly newsletter. You can also get every new post delivered to your inbox as soon as it's published, ad-free for the first few hours. Financial Tips began in 2009 and everything is written based on firsthand experience, because money is too important to be left up to pontification.
so was going to the beach twice. So you see, if you're nice to your parents, you might get to stay with them for free and take care of them on your next vacation as well!
I would just say, take the 1,400+ comments on X, with a grain of salt in regards to “most Americans are doing financially ok.”
I say this because, all commenters have arrived on that page/post because they were interested in finances. This by itself is skewed towards individuals who are most likely financially savvy and financially responsible.
An irresponsible financial person “poor” or bottom 50% of American households is almost certainly never viewing a finance post/page.
So although, a 1,400 sample size of commenters is a good sample, the sample is still most likely made up of the top 50% of American households, which is not representative of the average random American household.
Your REAL luxury is having these concerns….
I don’t have kids but I’d live in a cardboard box under a bridge before I’d let them go to public schools!
The problem with stats on the US is that you can make any argument you want and there will be a sub-population that fits. “Everyone is poor” yet I see $1M RVs cruising down the road towing full-size SUVs, cruse ships are full… We are a large populous country. Plenty of poor, rich, financially stressed, name your category. What matters are trends. Are the poor increasing or decreasing over time? Is the middle class growing or shrinking? Those are the stats that matter.
Your content is always interesting and can be very educational. A humble request, for rational discussion: please stop extrapolating anecdotal comments as genuine (or even loose) data from which to make conclusions about. I’d wager that your reader base skews FAR wealthier and more educated than the average American, but you frequently come to the conclusion that “the media” has a poorer understanding of Americans than what you can clearly see in your comments section, and that things are swell for most people. Do a poll of readers if you earnestly want to understand representativeness, compared to US pop. Ask for anonymous household income. Or please stop claiming conclusions without data.
median household income is 85k
No problem. I understand the FS audience skews wealthier and more interested in personal finance. Here are my reader demographics based on dozens of polls.
But the now 3.7 million views and 1,400 comments on Twitter/X are not my regular readers bc I don’t have that many followers on social. It is a great representation of how Americans overall think.
guessing the readership of this blog do not mirror the typical american.
We (family of 4) just returned to the US from overseas, and based on this sample size of life experience I can state with certainty the following:
So about that budget and really any family budget here’s my opinion: spend money according to your priorities. Money is a tool and we use it to solve problems. Expenses after basic needs are not “right or wrong”, they are relative to your values and your local context.
Great feedback! And welcome home. It would be great if more Americans lived and traveled abroad to appreciate how good we’ve got it. Only about 62% of Americans own passports supposedly.
What made you move away and back?
We spend USD 1700 on food per month for a family of 4 in Australia. This includes restaurants (restaurants while on vacation are mostly not included). We also travelled to China (family) and Vietnam for about 5 weeks…
What a fantastic and funny article! Both the X post and this review of comments are eye opening, to say the least. Thank you for your commitment to helping people – those who need it (I may be the only one left now – please email me in private!) and are open to hearing a different view :)
Wow congrats on going viral. Those are some crazy high view counts! And I had a few laughs reading your post. I enjoy your sense of humor. It’s always interesting to see what other people say and how different people react when looking at the same information.
One item you may have missed is what I call “There’s always something else every month.” Could be new car tires, HVAC upgrade for better comfort, lavish birthday/holiday spending, assisting other family financially, so forth. And while it is preferable to not carry CC debt, I’m not sure all of these responders got to this level with out it along the way.
One way to interpret these replies is through what responders didn’t talk about. And gambling.
That’s true about there’s always something. Good to budget for that unknown.
I agree with your budget for a HCOL city. With two children, we moved to a suburb of NYC known for its top schools. My thinking was if I have to pay $45k+ in property taxes, with two children I can save money and get the same level of education. If I had only one child, we would have stayed in the City and probably paid $45-60k (more than Harvard tuition!) for private schools per child, so your budget is spot-on.
Totally makes sense. It a bummer some feel they need to pay for private school on top of large property tax bills. Doesn’t make one excited about paying more taxes if the government isn’t doing a great job.
3.5 million views and 1,400+ comments is a fantastic and statistically significant sample set indeed! I can see Ivy League University professors try to raise $500,000-$1 million in Grant money and only coming up with maybe 1000 person sample set.
The feedback does show the human condition that we all think we’re doing great, one of Course statistically speaking we are not. And we all think we’re doing better than average, when that’s not possible either.
People tend to just show the world. They’re highlight reels without displaying their difficulties, especially on social media.
I’m sure there’s a vast audience that doesn’t know about this blog and many more folks probably would rain down on this blog post.
What is obvious is: spending wisely on a car and hopefully one that last for at least a decade or more. I’ve always wondered about car drivers living in non-snowy climates if they even realized how lucky they were not to contend with all weather tires, road salt, pick marks from big hail storm, etc.
There are additional Costs living in wintery snow-ice climates.
The private school can be contentious. Bf has been a public school teacher for 25+ yrs. In rural areas. Sometimes it can be better for private but there are problems of entitled children who misbehave often at school. Unless the child has good friends from across the socio economic spectrum….
And this is why many Americans struggle financially. Unrealistic expectations, inability to rationally process facts, and unhealthy emotional relationships with money. You showed the math – anyone making $400k in a HCOL city explicitly understands the reality you described.
If anything, this shows more people should be reading Financial Tips. I’d say your work here is far from done, Sam.
It doesn’t help that there is literally zero financial literacy education being taught in schools.
I agree with TK. All of these people are out of touch with those of us who live in HCOL cities. I love all of your articles and they have helped me navigate tough financial decisions to live a life that I enjoy living.
Thank you. Almost 50% of the US population lives in an expensive coastal city. But someone someone living in a LCOL area’s reality is more real that the half who don’t.
I would agree with most about the private school. It’s crazy. They are saving $30K/year in the 401K, but it seems like a paltry sum given the gross income. I have often had very little left over at the end of the month but only because my biggest expenses were IRA, solo 401K, taxable brokerage, and paying off my mortgages. This is the first year of my adult life where I’ve consciously stopped putting so much away and started using some of the money my taxable and rentals are producing. Those are incredible salaries to waste away. If it were me (and it’s NOT) I would not be living in such a HCOL area. I would save what I could to get out of the rat race and live in a calmer, smaller town that’s not as expensive. I’ve always prioritized my freedom and have no mortgage or car payments is key to that alone with investing in income.
The comment about three weeks vacation…I’ve been a big advocate for travel and that’s always been my big spend category in lieu of hobbies, fancy gear, cars, collectibles, etc. A vacay per quarter is a MINIMUM for us. And since my dad passed, we have been doing more than that and including my mom to keep her busy and engaged.
Anyway, that blessing of an income could be better optimized to buy their freedom much sooner than later. But…it’s not a priority for everyone.
A 11% saving rate on gross income is pretty good compared to the pathetically low 3.5% national median saving rate in America. But yes, they could save more if they wanted to. But it’s hard for folks to think in two timelines to build wealth.
If only people can get better at forecasting their misery. Bad things can and will happen. Sadly, good times don’t last forever.
Median saving rate also includes retirees dissaving…
This is crazy, we give starting engineers 3 weeks vacation just to be competitive with our job offer. Plus they get to work from home 2 days a week. In three years with my company they get 4 weeks paid vacation. There are very few jobs where people only get 2 weeks vacation.
Yes, pretty standard. So I was very surprised by the backlash of taking more than 2 weeks of vacation a year.
Sure, if you just graduated at our first starting out, try to take only one vacation or no vacation for first year. But 2 vacations is just humane.
<<But with $1 a month in residual cash flow, they likely feel financial stress anyway.>>
This is where the disconnect of “we can’t seem to get ahead” or “the economy is no good” is for me. It seems like saving into a Roth or 401k is so ingrained now that it is treated as another expense and not savings. I know us savings people are taught to treat it as an expense to make sure we save (mental gymnastics), but it is still “leftover” budget after expenses are paid. It is just good financial planning…not a necessary expense.
They could chose to not save into retirement accounts and spend 15k per year to each lease a 100k car, then perhaps they wouldn’t feel so “tight”. They have $1 left AFTER saving and eating well and taking two vacations and sending kids to private school…and saving 30k. That is not a “tight” budget.” These are the same folks who have 5M in their 401k when they are 50 and act like it is an entitlement. No, it should take some kind of sacrifice to build that wealth.
Other than private school all the other items seem reasonable to me and koodos to no car payment.