What does a middle-class family lifestyle cost in a coastal US city? At least $300k, says financial expert

The financial expert said a middle class lifestyle includes vacations and home ownership

If you have a partner and two kids and want to be considered "middle class" in some of the most expensive coastal cities in the US, you had better be bringing in at least $300,000 a year, one financial expert claims.

The claim was made by financial expert Sam Dogen on the Financial Samurai blog, and considered the cost of living in some of the country's most expensive cities, like San Francisco, Seattle, New York and San Diego.

According to Zillow, average home prices in New York are $733,000, and a staggering $1.5m in San Francisco.

Mr Dogen's analysis works on his definition of middle class, which includes ownership of a modest home, three weeks of vacation, health insurance, and even charity giving. He constructed a sample budget illustrating how he arrived at his conclusion. His budgets are based on a family with a two-year-old and a four-year-old, and on a family with only one two-year-old.

According to Mr Dogen, the striking salary requirements are not just a result of increasing home prices, but also increasing goods and service prices, which have risen 68 per cent since 1995, while wages – adjusting for inflation – have about the same buying power they did 40 years ago, according to the Pew Research Center.

The highest price point on his mock budgets are mortgages. In the budgets, he uses a $900,000 mortgage for a "standard 1,750 sq ft, three bedroom, two bathroom home on a 2,500 sq ft lot." The payments come in at $46,900 annually, or $3,900 per month.

Babysitting and childcare were the next most expensive expenditures, costing $29,400 annually for pre-school and $20,000 a year for babysitting, which was based on San Fransisco's average babysitting rate of $20 an hour.

The budget also includes $4,200 in charity donations and $7,800 for vacation time.

For those who might balk at the idea of nearly $8,000 for vacations, Mr Dogen said that taking several vacations each year is part of what has traditionally been considered middle class.

"A middle class lifestyle includes vacationing several weeks a year. Some will say that spending three weeks of vacation is a luxury. However, I say spending three weeks of vacation is normal for two working parents who want to keep their sanity," Mr Dogen wrote in his post.

If it seems that few families would be able to achieve a middle class lifestyle based on Mr Dogen's budgets, that's the point; rising home and goods prices have not kept up with wages, effectively pricing most Americans out of a traditional middle class lifestyle, at least in large coastal cities.

"It's not an extravagant lifestyle," Mr Dogen wrote. "It's a middle-class lifestyle if you consider a middle-class person should be able to afford a modest home, have at least one car, have a kid or two. There are no private jets in this budget."

Mr Dogen noted one silver lining in his post; an unexpected positive development caused by the coronavirus pandemic is that it has become increasingly more common for companies to allow people to work fully remote.

He suggested that if the prices of expensive coastal cities are too much for people to bear, those with the luxury of working from home can simply choose to leave and work in areas with less expensive costs of living.

That, of course, is not a possibility for people working in food service, retail, most healthcare, or teaching professions in those cities, but none of those jobs would have come close to meeting Mr Dogen's definition of middle class in the first place.