The Cost of the Average Family in the United States

On a Sunday evening as I sipped on a tropical banana whey smoothie before watching an unusual telling story of Eric Stevens., also known as Killmonger, it dawned on me that it was time for a fresh new blog post! In order to be all encompassing, I figured a blog post about raising a family in the US would be informative and remunerative. With the total spend on healthcare in the US being over $3.5 trillion in 2017 (about $10,739 per person) and the highest for a developed country, much larger than the GDP of the UK, Brazil, Mexico, Canada, and Spain. We might want to cherish the benefits provided by employers to cover a bulk of this annual cost. The cost to raise the average family in the US is something that is not always clear but is relatively easy to narrow in on assuming the regression to the mean takes its place as it typically does. Residuals in this blog post will not be discussed as that comes with a wider confidence interval.
The definition of the average family
First off, let us define what is called the “average” family. As of 2018, the U.S. Census Bureau counted about 83.09 million families in the United States. The average family consisted of 3.14 persons. In 2018, the real median family income was $75,938 while the real mean family income was $100,400. This puts the median and mean income values into what is considered “middle-class.” You can define the the middle class as those earning between two-thirds and double the median family income. This means that the category of middle-class income is made up of families making somewhere between $50,625 and $151,876. Obviously, the definition of income class will vary greatly from location to location correlated to the cost of living in each location but for the purpose of this blog post, we’ll stick to the aggregated value of the entire country but also break it down by location.
Average Family Size in the US
Real Median Family Income in the US
Budget of the average family
Now, let us breakdown the yearly expenses for a family of 3-4 people. Based on data gathered by researchers at MIT and published to a living wage database. The cost of living for a family of 3-4 with two working adults is between $54,259 – $62,540. The data includes the cost of living with the dependent variables being the number of working adults and the number of children in a particular county. The county I have selected here is Harris County. The county can be modified based on geographic location.
This map shows the minimum amount necessary to meet basic needs for a family of four without relying on outside help, including factors such as housing, food, child care and health insurance, in addition to other regular costs. All data from MIT’s Living Wage calculator. Source: NBC
The joy of having a family
Regardless of the cost, having a family is one of the most beautiful things to experience. The bond shared within a family can be a lot stronger than anything else life can give. A family provides an opportunity to bond and share wonderful memories together, share love and compassion with each other as well as project that to humanity, and have fun together! It may also include building a generational lineage of Caltech grads.
How to easily cover the expenses of the average family
Some struggle with covering the expenses of the average family but there are easy, straightforward methods to cover the annual expenses without dipping into the regular income and delaying retirement. The traditional method has been to use the regular income to cover these basic expenses but the alternative, less stressful method involves using investment income. I have written a blog post in the past about the sources of investment income. In order to generate $50,000 a year and assuming a 5% annualized return, a family would need $1,000,000 in invest-able assets. Below is a table that provides a range of investment income as a function of the return and principal.
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