I have started a research project based around that very concept and I will be publishing it here on this blog in a series of reports. The concept is simple home economics...but applied to the averages of the present market (April 2013).
Report of Expenses for the Entry Level American
Report Summary
The following report outlines the expenses of a typical entry level American. It is a collection of data presented in an understandable way as applied to citizens of Weber County, UT. Most of the data is easily applicable to other counties in the US. This report does not take into consideration the retirement plans of such individuals and merely focuses on the early stages of adult life, living independent, marrying, and having children. The report operates on the American assumption, that an individual will start at the bottom level of the workforce and work their way up; and as they do so will progress into marrying and having children.Objective
The primary objective of this report is to explain the minimum wage necessary for an individual to follow the American dream and America's cultural ideals. These ideals are defined as living on their own, starting a family, and having children.Findings of Fact
It has been discovered that in order to enter adult life, i.e. live on their own, an individual will need to earn $25,800 per year or $12.40 wages working 40 hrs per week. Married without kids, a couple will need to earn $48,600 per year and with kids $64,050.
Conclusion
In order to maintain the American culture of becoming an adult by moving away from one's parents, marrying, and having kids; and to keep up the American lifestyle by consuming the average amount of goods, individuals will need to earn at least $12.01 per hour or $25000 annually before moving out of their parents' homes. Alternatively, ambitious individuals may get married and move in with their spouse and earn $23.07 per hour, or an average of $11.54 per hour each, where both husband and wife work 40 hours per week.
Based on the findings of this report, it is my opinion that our society will face several negative changes in the near future relating to the structuring of the family. In previous generations only the husband worked; now both husband and wife are required to work in order to survive. With the cost of primary expenses rising, individuals will need to postpone having a family for much longer to ensure that they can both survive. The cost of primary expenses may also lead to a lower standard of living for Americans.
Data
Situation A
Single Shared Home |
||||
| Primary Expenses | ||||
| Name | Year | Month | Week | Day |
| Housing | $4,488.65 | $374.05 | $86.32 | $12.30 |
| Gasoline | $2,123.54 | $176.96 | $40.84 | $5.82 |
| Groceries | $2,964.00 | $247.00 | $57.00 | $8.12 |
| Wireless Bill | $600.00 | $50.00 | $11.54 | $1.64 |
| Utilities | $1,004.09 | $83.67 | $19.31 | $2.75 |
| Car insurance | $2,099.00 | $174.92 | $40.37 | $5.75 |
| Medical Insurance | $4,281.00 | $356.75 | $82.33 | $11.73 |
| Student loans | $0.00 | $0.00 | $0.00 | $0.00 |
| Clothing | $1,698.50 | $141.54 | $32.66 | $4.65 |
| Discretionary Income | $1,375.00 | $114.58 | $26.44 | $3.77 |
| Total Expenses before tax | $20,633.78 | $1,719.48 | $396.80 | $56.53 |
| Esimated Individual Income | $25,000.00 | $2,083.33 | $480.77 | $68.49 |
| Federal Taxes | $3,112.50 | |||
| State Taxes | $1,250.00 | |||
| Total Estimated Taxes | $4,362.50 | |||
| Total Balance | $3.72 | |||
Married (no children) |
||||
| Primary Expenses | ||||
| Name | Year | Month | Week | Day |
| Housing | $7,918.30 | $659.86 | $152.27 | $21.69 |
| Gasoline | $4,247.08 | $353.92 | $81.67 | $11.64 |
| Groceries | $5,928.00 | $494.00 | $114.00 | $16.24 |
| Wireless Bill | $1,200.00 | $100.00 | $23.08 | $3.29 |
| Utilities | $1,048.11 | $87.34 | $20.16 | $2.87 |
| Car insurance | $4,198.00 | $349.83 | $80.73 | $11.50 |
| Medical Insurance | $8,562.00 | $713.50 | $164.65 | $23.46 |
| Student loans | $0.00 | $0.00 | $0.00 | $0.00 |
| Clothing | $3,397.00 | $283.08 | $65.33 | $9.31 |
| Discretionary Income | $2,640.00 | $220.00 | $50.77 | $7.23 |
| Total Expenses before tax | $39,138.48 | $3,261.54 | $752.66 | $107.23 |
| Estimated Combined Income | $48,000.00 | $4,000.00 | $923.08 | $131.51 |
| Federal Tax | $6,307.50 | |||
| State Taxes | $2,400.00 | |||
| Total Estimated Taxes | $8,707.50 | |||
| Total Balance | $154.02 | |||
Married with two Children Early life stages(1 boy, 1 girl) |
||||
| Primary Expenses | ||||
| Name | Year | Month | Week | Day |
| Housing | $11,090.62 | $924.22 | $213.28 | $30.39 |
| Gasoline | $4,247.08 | $353.92 | $81.67 | $11.64 |
| Groceries | $8,892.00 | $741.00 | $171.00 | $24.36 |
| Wireless Bill | $600.00 | $50.00 | $11.54 | $1.64 |
| Utilities | $1,114.14 | $92.84 | $21.43 | $3.05 |
| Car insurance | $4,198.00 | $349.83 | $80.73 | $11.50 |
| Medical Insurance | $12,213.00 | $1,017.75 | $234.87 | $33.46 |
| Student loans | $0.00 | $0.00 | $0.00 | $0.00 |
| Clothing | $5,095.50 | $424.63 | $97.99 | $13.96 |
| Discretionary Income | $3,437.50 | $286.46 | $66.11 | $9.42 |
| Total Expenses before tax | $50,887.83 | $4,240.65 | $978.61 | $139.42 |
| Estimated Combined Income | $62,500.00 | $5,208.33 | $1,201.92 | $171.23 |
| Federal Taxes | $8,482.50 | |||
| State Taxes | $3,125.00 | |||
| Total Estimated Taxes | $11,607.50 | |||
| Total Balance | $4.67 | |||
Situation B
Single Shared Home |
||||
| Primary Expenses | ||||
| Name | Year | Month | Week | Day |
| Housing | $4,488.65 | $374.05 | $86.32 | $12.30 |
| Gasoline | $2,123.54 | $176.96 | $40.84 | $5.82 |
| Groceries | $2,964.00 | $247.00 | $57.00 | $8.12 |
| Wireless Bill | $600.00 | $50.00 | $11.54 | $1.64 |
| Utilities | $1,004.09 | $83.67 | $19.31 | $2.75 |
| Car insurance | $2,099.00 | $174.92 | $40.37 | $5.75 |
| Medical Insurance | $4,281.00 | $356.75 | $82.33 | $11.73 |
| Student loans | $574.23 | $47.85 | $11.04 | $1.57 |
| Clothing | $1,698.50 | $141.54 | $32.66 | $4.65 |
| Discretionary Income | $1,419.00 | $118.25 | $27.29 | $3.89 |
| Total Expenses before tax | $21,252.01 | $1,771.00 | $408.69 | $58.22 |
| Esimated Individual Income | $25,800.00 | $2,150.00 | $496.15 | $70.68 |
| Federal Taxes | $3,232.50 | |||
| State Taxes | $1,290.00 | |||
| Total Estimated Taxes | $4,522.50 | |||
| Total Balance | $25.49 | |||
Married (no children) |
||||
| Primary Expenses | ||||
| Name | Year | Month | Week | Day |
| Housing | $7,918.30 | $659.86 | $152.27 | $21.69 |
| Gasoline | $4,247.08 | $353.92 | $81.67 | $11.64 |
| Groceries | $5,928.00 | $494.00 | $114.00 | $16.24 |
| Wireless Bill | $1,200.00 | $100.00 | $23.08 | $3.29 |
| Utilities | $1,048.11 | $87.34 | $20.16 | $2.87 |
| Car insurance | $4,198.00 | $349.83 | $80.73 | $11.50 |
| Medical Insurance | $8,562.00 | $713.50 | $164.65 | $23.46 |
| Student loans | $574.23 | $47.85 | $11.04 | $1.57 |
| Clothing | $3,397.00 | $283.08 | $65.33 | $9.31 |
| Discretionary Income | $2,673.00 | $222.75 | $51.40 | $7.32 |
| Total Expenses before tax | $39,745.72 | $3,312.14 | $764.34 | $108.89 |
| Estimated Combined Income | $48,600.00 | $4,050.00 | $934.62 | $133.15 |
| Federal Tax | $6,397.50 | |||
| State Taxes | $2,430.00 | |||
| Total Estimated Taxes | $8,827.50 | |||
| Total Balance | $26.78 | |||
Married with two Children Early life stages(1 boy, 1 girl) |
||||
| Primary Expenses | ||||
| Name | Year | Month | Week | Day |
| Housing | $11,090.62 | $924.22 | $213.28 | $30.39 |
| Gasoline | $4,247.08 | $353.92 | $81.67 | $11.64 |
| Groceries | $8,892.00 | $741.00 | $171.00 | $24.36 |
| Wireless Bill | $600.00 | $50.00 | $11.54 | $1.64 |
| Utilities | $1,114.14 | $92.84 | $21.43 | $3.05 |
| Car insurance | $4,198.00 | $349.83 | $80.73 | $11.50 |
| Medical Insurance | $12,213.00 | $1,017.75 | $234.87 | $33.46 |
| Student loans | $1,148.47 | $95.71 | $22.09 | $3.15 |
| Clothing | $5,095.50 | $424.63 | $97.99 | $13.96 |
| Discretionary Income | $3,522.75 | $293.56 | $67.75 | $9.65 |
| Total Expenses before tax | $52,121.55 | $4,343.46 | $1,002.34 | $142.80 |
| Estimated Combined Income | $64,050.00 | $5,337.50 | $1,231.73 | $175.48 |
| Federal Taxes | $8,715.00 | |||
| State Taxes | $3,202.50 | |||
| Total Estimated Taxes | $11,917.50 | |||
| Total Balance | $10.95 | |||
Definitions
Summary of Scenarios (Single Shared Home, Married, Married with Children)
Single
This scenario represents non-married individuals who live with others. The cost of housing is calculated using the average cost per room. For example, if two people share the cost of a two bedroom apartment, they are each paying for the price of one room.
Married
This scenario represents a married couple without children. All individual calculations are multiplied by two, but some expenses, such as housing take an alternate calculation method that is more cost effective, such as renting a one or two bedroom home. In situation B, where student loans are calculated, only one individual in the marriage is calculated to have student loans.
Married with Children
This scenario is intended to represent a married couple with two children one by and one girl. This distinction is meant to compensate for differences in expenses between boys and girls in child development. I assumed that a child would consume one-half of water and food that an adult would and therefore I multiplied all individual numbers by 3.
Summary of Situations (A, B)
The only differences between situations A and B are the presence of student debt. The average student debt in Utah is $17,227 and 45% of students in the state have debt.*
Summary of Expenses
When possible I tried to use data obtained from government websites and archives, however, not all data is stored by the government and 3rd party sources were used in such instances.
Housing
My housing statistics were taken from data collected off of rental listing sites such as KSL and Craigslist. The data was taken from Weber county specifically and was a sample of size 377. The confidence interval of this data representing the total rental marketplace in the county (21,619) is +/-5 with an alpha of 95%.
Gasoline
The gasoline expense was taken from statistics on the average fuel economy of vehicles in the U.S (24.6 mpg)., the average number of miles driven by an individual age 20-34 (15,098 miles), and the average price of gas in Utah in April 2013 ($3.46/gal).
Groceries
Grocery data was taken from Chapter 2 of the USDA's Factbook 2010 in which the average American's consumption of food is broken down into the primary food groups (meat, dairy fat/oil, fruit, etc) and the expenditures per capita per year are outlined ($2,964/person).
Wireless Bill
The average wireless phone plan has leveled out recently to around $50/month according to several sources, including the wireless carriers themselves and publishers of wireless carrier data.
Utilities
Utility data was calculated using water (90/day) and power consumption (903Kw) of the average American and the average cost of electricity and water in Utah.
Car Insurance
Car insurance data was calculated from average cost of premiums nationally based on years of experience 2-10 years. I maintained the assumption that most Utah drivers start driving when they are 16 and by age 26 they will have 10 years of experience and still apply to this formula. However, the car insurance data used in my research is subject to a lot of inaccuracy since many insurance companies offer discounts to individuals who combine in a family plan and many, if not most (I assume) individuals pay on some sort of family plan and get a much more discounted rate.
Medical Insurance
Medical insurance premium averages in Utah have been gathered as two rates: family and individual. The married with children scenarios apply a family medical plan whereas the other scenarios apply individual plans.
Student Loans
Student loans are calculated based on the average student debt in Utah ($17,227) on an assumed 25 year loan. According to the same source, around 45% of students possess debt. I have created two scenarios, the first (A) without student debt to represent individuals who work in a job that merely requires a high school education. In the second scenario (B) student debt is calculated as above for all individuals.
Clothing
Data used in the clothing expense section is calculated based on the average expenses from apparel annually and services for under 25 ($1,464) and 25-34 year olds ($1,933). I averaged age shifts by taking the mean between the two numbers ($1,699).
Discretionary Income
In order to compensate for other expenses not included in this report (entertainment, saving for the future, religious expenses, etc.) I accounted for 5% of an individual's income. This is a conservative estimate considering that many religions in Utah ask for a 10% tithe.
Taxes
Calculations of taxes have been made based on state and federal tax data for 2013. The current Utah State Income Tax is 5% and the federal tax rate has been based on the 2013 tax table (about 15%).
No comments:
Post a Comment