Your Overpriced Apartment May Be Costing You Your Future
You know that sinking, nauseous feeling you get every time you get out your checkbook to pay the rent? It’s not just you.
According to a new study put out by the Economic Policy Institute (EPI) on July 3 highlighted the severe lifestyle disparities that exist across American cities.
As Reuters pointed out, the median cost of living for an American family of four is $63,000 a year, which covers basic things like food, transportation, housing, child care, health care and taxes — but no extras like vacations or savings. If you were living in Newaygo County, Michigan, this would not be a problem.
However, in New York the same lifestyle would cost you $93,500. For those lucky ones living in Marshall County, Mississippi, you could live like an average American family for only $48,000.
This data is based off an updated Family Budget Calculator, developed by the EPI using information from 615 different communities throughout the country.
So what’s the reason behind these regional disparities? Well, you guessed it: rent. Never-ending, always climbing, bane of any city-dweller’s existence, rent.
In recent years, "housing cost has taken up an increasing share of budgets" explained Elise Gould, one of the researchers who put together the study.
The report states that in places like San Francisco, where the average rent is now $1,998.82, housing costs can eat up as much as 25% of a family’s budget.
Now imagine what that amounts to in New York City, where the average rent is 50% higher than San Francisco, at $3,017 a month.
As expected, New York, Washington D.C. ($88,600), Boston ($85,600) and San Francisco ($84,100) were deemed the top four most expensive cities to live in.
Urban areas like Oklahoma City and Salt Lake City are more family friendly, with median budgets around or under $60,000.
Concern about rising costs isn’t one reserved to lower income households. Even those who consider themselves middle class may have trouble continuing to do so. According to a 2012 Pew Research study, 61% of adults fell within the middle income tier in 1971. By 2011, that number had decreased to 51%.
In 2012, 85% of self-described middle class adults said it was more difficult to maintain their standard of living than it was a decade ago. What’s more, their median wealth (assets minus debt) has shrunk by nearly 28% in that time, to $93,150 in 2010 from $129,582 in 2001.
For Gould, the one thing that keeps lower income families from reaching the middle class is the very thing they can least afford: savings.
"To me, middle class means economic security, and there are no savings in these budgets whatsoever," she told Reuters.
The message? Unless you live in Marshall County, Mississippi, you can pretty much wave goodbye to your dreams of financial stability.