An annual household income of $200,000 is nearly four times as much as the median annual income in the United States. But although bringing in that much puts you in the upper class, it doesn’t guarantee that you’ll feel rich.
To illustrate this point, personal finance blogger Sam Dogen of Financial Samurai broke down the hypothetical budget of a couple living in San Francisco with one child, each making $100,000 a year, for a $200,000 total annual income.
Here’s exactly how this family could spend its money — and end up without much left over.
For a detailed breakdown of how Dogen arrived at each of these numbers, read the full post on Financial Samurai.
In this example, the couple contributes to their 401(k) plans — although they don’t max them out — and are working on paying down credit card debt. But even though they qualify as “upper class,” after taxes, fixed costs, childcare and discretionary expenses, there’s only $5,700 left each year to go towards other savings goals, investment accounts or retirement funds.
They’re rich by many standards and yet they appear to be just getting by.
This deficit highlights a crucial lesson: Thanks often to lifestyle inflation, as well as the high cost of