Are You Middle Class?

Posted By on March 26, 2010

Household Net Worth

The typical household has a net worth of about $84,000, according to the Federal Reserve.   That’s down 30% since 2007, thanks to losses in stock portfolios and declining home values.

For the 50% of families in the middle of the scale, household income ranges from $51,000 to $123,000 for a typical two-parent, two-child family. The median is about $81,000.  Those numbers, from 2008, have probably fallen by 5% to 7% since then because of the recession.  Median income for a single-parent, two-child family is about $25,000. For two-parent families, the typical home is worth about $231,000 and accounts for $17,600 in mortgage payments and other costs per year.

Housing costs have risen more than twice as fast as income since 1990, a trend that may be reversing as housing prices weaken.  The housing bubble was one factor that boosted housing costs, but the typical family also now lives in a much bigger home. From 1979 to 2007, the median size of a new single-family home grew by 40%, to about 2,300 square feet.   That trend may now also be reversing as families downsize from homes they can’t afford.

The median two-parent family spends $5,100 per year on health insurance and non-covered expenses — assuming an employer provides health insurance.   Health care costs have risen far more than any other aspect of the family budget since 1990, with no end in sight.

The typical family spends about $12,400 per year on two medium-sized sedans or the equivalent, with a total new-car value of $45,000.

The typical family puts aside $4,100 for college expenses for two kids, estimated to cover about 75% of expenses at a state university. Financial aid helps with the rest.

One week at the beach or another destination is standard, at a cost of $3,000 or so for a family of four.    More affluent families can afford two weeks, at around twice that cost.

Clothes, food, utilities, entertainment and other living expenses amount to $14,200 a year for a median-income family.

In 76% of two-parent families, both parents work.

Few parents would be surprised to hear that Moms and Dads are working more than they used to. The total number of hours worked in a two-parent family is 3,747 per year, up 5% since 1990.   The increased hours add up to more than four 40-hour weeks of additional work per family.

The typical household head has a high school degree plus about two years of college education, up by more than a full year of college since 1990.    That’s a good thing; education is a key factor in lifetime earnings, and high school dropouts face a dimmer future by nearly every measure.

What’s your top priority? In a 2008 poll by the Pew Research Center, it wasn’t healthy kids, a strong marriage or a great career; 68% of respondents said it was free time.   And just 12% said that being wealthy was the top priority.

About 18% of disposable income, on average, goes toward mortgage payments, auto loans, credit cards and other forms of household debt.   That’s a bit higher than it was in the ’70s and ’80s. But since debt payments peaked at the beginning of 2008, at 18.9% of income, they’ve been steadily falling.

Summary from…….http://articles.moneycentral.msn.com/Investing/Extra/are-you-middle-class.aspx?page=all

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