Podcast Summary
Exploring personal finances beyond comparisons: Comparing personal finances to others can lead to inadequacy and negativity, instead focus on understanding your unique situation and learning from diverse perspectives.
Comparison can be a double-edged sword when it comes to managing personal finances. While seeing someone else's financial choices can inspire better decisions, it can also lead to feelings of inadequacy and negativity. It's essential to remember that everyone's financial situation is unique, and comparing oneself to others may not provide a complete or accurate picture. In the spirit of exploration and insight, we delved into data from our audience's budgets and shared some intriguing findings. The results showed a wide range of income levels, ages, and housing expenses. While some numbers seemed surprising, we verified their authenticity to ensure accuracy. The episode also featured perspectives from individuals outside of the Money with Katie team. Overall, the goal was to encourage a more expansive and insightful approach to understanding personal finances, rather than focusing solely on comparisons.
Unexpected high earners in unexpected places: High salaries can be found in unexpected locations and industries, debunking the stereotype that they're only attainable in major cities or specific industries
The Morning Brew team members were surprised to find a significant number of high-income earners in their dataset, with some earning over $300,000 per year, even in unexpected locations like Detroit, Michigan. The highest earning single earner was a 34-year-old woman in Detroit. This finding challenged the common assumption that high salaries are only found in major cities like New York or the Bay Area. The median respondent age was 31 years old, and the median single earner income was $111,000 per year. While some respondents, like Maddie, a single earner and journalist, aspired to earn over $100,000 per year, others had already achieved that income level. The data also showed that a majority of single earners, 77 out of 131, earned more than $100,000 per year. Overall, the findings debunked the stereotype that high salaries are only attainable in certain areas and industries.
Starting young and saving: Key findings from the Rich Girl Nation survey: Many young people save and live frugally, with median income surprisingly high and a 22-year-old couple saving 40% of $85,000 income, inspiring financial discipline and rethinking income assumptions
It's never too early to start saving and building wealth. The results of the Rich Girl Nation survey showed that many young people are saving and living frugally, despite having lower incomes than some might assume. Median income for dual income households was surprisingly high, with many top earners not living in high-cost cities. A 22-year-old couple in North Carolina, earning $85,000 a year, was able to save roughly 40% of their income and had $65,000 in investments. The income picture in the US might be more positive than initially thought, with median family income for two full-time earners at $130,000. These findings inspire the importance of financial discipline, starting young, and rethinking assumptions about income and wealth.
Median income for full-time workers in top 100 metro areas exceeds $100,000: Single earners should aim to save $1,000 monthly with a 19% save rate for retirement, while also being mindful of income and spending to achieve financial stability and growth.
The median household income for full-time workers in the largest 100 metro areas in the US is above $100,000 per year, according to US Census data. This is a significant jump from the median household income of $86,500 for a household with only one individual working full time, which was found in Milwaukee, Wisconsin. Our survey data also showed that the median monthly retirement contribution for single earners was $1,000, with a save rate of 19%. Notably, 7 respondents were not contributing to their retirement accounts but were still saving significant amounts. This insight inspired Kelsey and Naya to reassess their spending habits and set more strategic savings goals for the upcoming year. Overall, the discussion emphasized the importance of being mindful of income, savings, and spending to achieve financial stability and growth.
Examples of Individuals Saving Significantly for Retirement: Individuals on moderate incomes save significantly for retirement, demonstrating the importance of prioritizing savings and living below means. The median savings for dual income respondents was double that of single income earners.
There are many individuals saving significantly more for retirement than one might expect, even on moderate incomes. For instance, Caitlin in Madison saves nearly 60% of her $7,000 monthly income, and Carol in Chicago saves 60% of her $5,274 monthly income. These examples demonstrate the importance of prioritizing retirement savings and living below one's means. The median monthly retirement savings across dual income respondents was $2,000, exactly double that of the single income group. While some high-income earners save aggressively, others, like the couple in their fifties, have less savings due to a later start on their financial journey. Understanding these savings habits can inspire individuals to reassess their own retirement contributions and strive for financial freedom.
Understanding Housing Expenses: Variability and Affordability: Aim to keep housing expenses at a manageable level to avoid being 'house poor'. Median housing costs in the US were $2,025 a month, but median expenses for single income earners were lower at $1,600 a month. Dual income households had median expenses of $2,000 a month with 20% of take-home pay spent on housing.
Housing expenses vary greatly among individuals and couples, with some paying a large percentage of their income towards housing while others manage to keep it at a reasonable level. The average housing cost in the US was $2,025 a month in 2022, but median housing expenses for single income earners were lower at $1,600 a month. The most expensive housing expense for a single person was $39,100 a month, while the person with the smallest housing expense as a percentage of income was Rebecca, a single 30-something in Pennsylvania earning $102,000 a year but paying only $875 a month for housing. Median housing expenses for dual income households were $2,000 a month, with the median percentage of take-home pay spent on rent or mortgage being a manageable 20%. However, some individuals and couples, particularly those in high-cost living areas, reported high housing expenses as a percentage of their income. It's important to be aware of housing expenses and aim to keep them from consuming a large percentage of income to avoid being "house poor."
Living in Expensive Cities Doesn't Always Mean Financial Struggles: Residents in expensive cities like Dallas, Maine, Chicago, New Hampshire, Long Island, Seattle, and New Jersey have a median net worth of $418,000, challenging the assumption that high housing costs lead to financial struggles. Some may have inherited wealth or previously amassed fortunes, but 13% of those with low housing costs were millionaires.
Despite spending a significant portion of their take-home pay on housing in cities like Dallas, Maine, Chicago, New Hampshire, Long Island, Seattle, and New Jersey, these residents still managed to accumulate impressive net worths, with a median net worth of $418,000. This finding challenges the assumption that high housing costs equate to financial struggles. However, it's important to note that inheritances or previously amassed wealth could be contributing factors for some individuals' high net worths. The data also showed that 13% of respondents with relatively low housing costs were millionaires, compared to 20% with high housing costs. The couple with the lowest housing costs, Liz and her spouse in upstate New York, earned $450,000 per year and paid just $1,600 a month for housing, equating to 6% of their take-home pay. They had a net worth of $1.5 million. Overall, the dataset revealed a collective net worth of over $126 million, emphasizing the financial success of the Rich Girl Nation audience.
Comparing Finances Based on Age and Income is Misleading: Age and income don't define financial situations. Some young, seemingly wealthy individuals may have inherited wealth or high expenses, while some older, lower-income individuals may have smart savings habits and high net worth.
Comparing one's financial situation to others based on age or income alone can be misleading. The discussion revealed that some seemingly wealthy individuals, even in their 20s and 30s, may have inherited wealth or have high incomes but also significant expenses. Conversely, some individuals with lower incomes or ages may have high net worth due to smart financial habits and long-term savings. For instance, a 41-year-old single income earner in Sydney, Australia, with a household income of $142,000 per year, saves $6,000 monthly and has a net worth of $1,300,000. This illustrates the importance of looking beyond age and income to understand one's financial situation. Additionally, the discussion highlighted the varying expenses among millionaires, such as food, travel, and childcare, which can significantly impact their net worth. Overall, the exercise demonstrated that people's financial situations are complex and multifaceted, and it's crucial to avoid making assumptions based on age and income alone.
Finances of Families with Different Number of Children: Families with more children tend to have higher net worths, but not all correlations are causative. Maintaining a realistic perspective on expenses is crucial even with a solid income.
Families with more children tend to have higher net worths, but it's important to note that this correlation may not be causative. Families with three kids had an average net worth of 786k, while those with one child had an average net worth of 650k, and those with no children had the lowest average net worth of 473k. A family with three kids and a combined income of 90k in South Carolina shared that they only pay 10% of their children's private school tuition, which is covered by their employers. No one in the group with at least one child was under 30, except for one couple where one member was 29. This data served as a reminder that just because one earns a solid income, it doesn't mean spending should match, and it's essential to maintain a realistic perspective on expenses. The survey did not include data on daycare costs, but a future iteration could target parents specifically and address how having children has impacted their finances. Overall, the data provided a fascinating glimpse into the financial lives of families with varying household sizes.
Feeling inspired by others' success stories: Educate yourself about personal finance and take control of your money narrative, no matter your background or circumstances.
No matter what your background is, there are high-paying jobs out there, and seeing others succeed in these roles can be a powerful motivator. Naya, a listener of Money with Katy, shared her experience of feeling inspired by the success stories of others, despite growing up lower middle class and not thinking such opportunities were possible. She emphasized that these individuals didn't inherit their wealth but earned it through hard work. For Naya, losing her mother and suddenly inheriting her assets gave her a sense of dread and anxiety, but also motivated her to educate herself about personal finance and take control of her money narrative. By listening to Money with Katie and learning about financial concepts like Roth IRAs and 401ks, Naya was able to begin the healing process and gain confidence in her ability to manage her finances independently. Overall, Naya's story highlights the importance of self-education and taking ownership of your financial situation, no matter what your circumstances may be.
Collaborative Effort from a Dedicated Team: A team of producers, audio engineer, chief content officer, and fact-checker work together to create an engaging and informative podcast experience
Our Morning Brew podcast is a collaborative effort from a dedicated team. Henna Velez and I, Katie Gaddi Taussan, produce the show, while Nick Torres handles the audio engineering and sound design. Devin Emery serves as our chief content officer, and Kate Brandt contributes with fact-checking. Each team member plays a crucial role in bringing you an engaging and informative podcast experience.
