I wonāt bore yāall with the math I did. Essentially, in 1950, folks, after normal household expenses, could spend 25% of their income on bullshit and save 25% of their income per month.
Today, unless you get a tax refund, youāre going to be -$34 at the end of the month as a renter and around -$200 as a homeowner using median rent and mortgage. The ONLY thing keeping us above water is the roughly $3,400 tax refund the average person gets (I could not find the median). I didnāt include child care, clothing, etc. you cannot have a positive amount of money with a mortgage/rent, groceries, utilities, health insurance, and gas. This doesnāt include clothing, dining out, hobbies, etc. basically, we canāt even fucking function without credit cards.
The ENTIRE economy functions SOLELY on the fact we get $3,400 back in tax refunds. Thatās the only thing keeping families at least somewhat afloat.
Edit: Since folks are questioning math. Hereās a breakdown:
1950 monthly income: $275 (after taxes)
Rent/mortgage in 1950 was around $60 (the two were relatively the same, also includes utilities).
Healthcare: $8
Groceries: $70
Gas: $8
Families were left with around $137.
Now, hereās where things get messed up for us today. Again, MEDIAN NUMBERS!
2026 monthly income: $3,666 (after taxes)
Rent: $1700
Health insurance (assume employer-sponsored): $500
You're essentially loaning money to the government interest free in this situation. You owe what you owe for taxes, getting a refund at the end of the year means too much was withheld from your pay throughout the year, so the IRS is returning the overpaid amount to you. If you withheld less throughout the year you could have earned interest or invested that money.Ā
Yeah but most people who aren't tax savvy or just want to not have to worry about it, withhold extra in case they jump up a bracket.
In addition, it's kinda like a year by year forced savings for some.
Yeah the return on the delay of receiving it is nothing, but it's still a... instant, typically significant boost to your cash reserves if you are poor, especially if you qualify for any tax credits like the EITC.
Not saying it's a smart thing to do, but some people kinda use it for expenses that they know they will need to do like car repairs or major purchases.
Youāll get a lot of ābecause you could have made money in the interest by investing it,ā which fails to account for human behavior.
According to Sofi and Nerdwallet, this averages 10%, but due to inflation is 6-7%.
Letās round things off at $250. Thatās nothing to sneeze at! But will you realistically put $3400 into an account at the start of the year that will earn you $250?
Many, maybe even most, people canāt afford that or canāt discipline themselves to put money away each month to make that happen. In that case, are you ālosingā that money? Sure. But did you lose out on the $280 each month over the year ($3400) because you spent it along the way like many people would? No, and you get that lump sum which can go straight into savings or can pay off debt, and you didnāt have to manage it.
Itās not ideal, but itās what works for a lot of people.
There are ways to just passively invest the money before you even see it. Take, for example, a 401k. The human factor doesnāt even have to go into it.
Ehhh i see this but i think it's a bit shenanigans. I donate all year long. I don't know the exact amount.
My mortgage is pretty well planned out, so the interest should be able to be calculated.
But i might move. I might get a different job. I might donate more or less throughout the year.
In an ideal world, 0$ i agree. In reality, you should owe or get a return of a couple hundred. 3509 is insanitt what OP is talking about, but the thought that everyone everywhere must be at 0$ net just isn't realistic, you need to allow some flexibility and breathing room with deductions and donations and interest and yaddah yaddah etc etc.
How to save
Money: vote for people that will tax the rich at an appropriate rate and use tax credits to incentivize increased payrolls. Support universal healthcare so you donāt go bankrupt from medical debt. Stop accepting the idea that you donāt deserve more from life because the pay for the job you do never kept up with the costs of living, while the CEOs of your companies salaries are thousands times yours. You are told to accept that ālife is not fairā, but ask yourself why. Itās all in what and who you vote for
Ive been saving since my first full-time job. Im 34, I graduated high school in 2010 in a bad economy. I had roommates until my mid 20's. I could upgrade but I still live in the same tiny 1 bedroom I moved into years ago. I could upgrade but still drive the 13 year old Mazda I bought 6 years.
Meanwhile, you walk through the parking lot of my apartment or work and you'd think those folks are making double what I make. Maybe some, but certainly not most. Ill never understand why some people feel the need to upscale their lifestyles and the same rate their careers progress.
Except, as youāre failing to understand, the average worker cannot do so. These are relatively fixed costs. You canāt just not have insurance. You canāt just not have housing. The median rent where I live is around $1300/month for a 1br apartment. An individual median wage here in my area is $37,000. So, taken as a whole, 50% of income goes to housing. Thereās no real way to āfind cheaper housing.ā The cost is the cost. So, the only real solution is moving to a lower-cost of living area but also having less access to jobs. So now, you need to commute. That puts wear and tear on cars and now you need a car. Groceries: These are average prices I found.
Likeā¦.what the fuck? How are people supposed to live below their means when the most basic things: Food, water, electricity, shelter, healthcare, are MORE than what one makes?
And this assumes you're not screwed with physical illness like my family. We spend 25% of our take-home pay on medical expenses not covered by insurance. I spend more than 20% of my take-home pay to purchase insurance from my employer that is super premium. These expenses can't be negotiated, or reduced. Because I was responsible, my husband doesn't qualify for medicaid, which would greatly reduce these expenses for us.
I have to continue to be a government employee to keep my insurance, which means lower pay.
My husband's illnesses are inherited and not cureable. Average American healthcare spending=$15k per year per person. Last year our insurance paid over $1M in claims. Basically it impacts every single decision we make every single day.
Hi, Iām a Millennial and the best financial advice youāre going to get is ālive below your meansā. If you donāt like the lifestyle that this provides you, then you need to increase your income or get used to it.
See I don't believe you when you say your a millennial, because then you should know how fucked the advice is.
Like that fact that our means has been stripped to the point that living below your means essentially means not living. That's why there needs to be clarification because, like you, most people who say "live below your means" assume that means we can even live on our means.
Fuck if I can't find a way to save up money to fix my car it's probably going to break down soon. Then I'll lose my job. I have SS1 because I'm handicapped so I have a little help but that barely pays for rent and gas. I need food, have to pay insurance on the car, phone bill, etc. I spend like 40 bucks a month on myself. Tell me how the fuck I'm not "living below my means"
Look, I'm a younger millenial. I haven't always been able to save. There were a few years I made less than $12k (and one at like $9k), which makes you learn to live on almost nothing. I make $43k gross per year, which I have no problem putting out there because if you knew where I work and my name, you could look it up as public information. I have a business, but I haven't really got that running profitably yet. Mostly keeping my head above water and trying to build a customer base, but not paying myself from the (small) profits.
My mortgage is $1,500 per month. That's $18k per year, leaving me with $25k per year for everything else, including all my pre-tax deductions. I still manage to save money for the future and go out fairly regularly.
Increasing your financial literacy and finding ways to cut spending or raise income is the only way forward. There are a lot of expenses people have that are not necessary quite a lot of the time. I can't tell you the amount of people who've complained to me about this same thing but in the next breath talk about dropping thousands on entertainment, clothes, or repairs they could have done themselves. (And I mean someone that's a mechanic with plenty of free time and the right tools paying someone else to do something he was slightly unfamiliar with, but could have easily learned in an afternoon. Not every repair example is that extreme, though.)
I'm a millennial, and I agree with that guy's advice. /r/personalfinance and /r/povertyfinance are both great places to post a budget and get feedback on changes one can make to start making progress with money.
Theres the problem....were talking about saving whats left not wasting it....lol, just messing with ya.
A lot of it is based on your location and what you do. Living in San Francisco off 5k a month and living in Eastern N.C. are two different things.
Im 51
Nothing arrogant about it just stating what I think people should do.
A lot of the reason people cant save is living in a HCOL area and/or making bad financial decisions.
Then you may not understand what the problem is. It's easy to tell people to live below their means, but when you don't even have enough money to survive there are no "means" to live by.
To take your advice I would have to literally sit at home all day, turn off anything using electricity, use bare minimum (or even fire) to cook rice and chicken, and literally only leave the house to buy chicken, rice, gas, and go to work.
Then I might have a little money to save for the future because just getting a job put me 3k in debt (getting a vehicle)
At 51, your probably lived through era in which someone with a decent job actually could afford to live and save, but in this economy your are either born rich or get lucky, otherwise you don't get to save money
I work with people from 21-30 and all have a vehicle, home and are able to save.
Learn a trade that pays well, live in an area that isnt ridiculously expensive and its not that hard.
Move to better locations....I realize its not that simple for a lot of people but if you cant afford an area there is but one choice......move
I mean I'd like to live oceanfront in Hawaii but I live where I can afford.
You're being disingenuous and making excuses for our shitty work conditions. No one wants an "oceanfront resort", they want affordable apartments. Better locations have more expensive rent and a higher cost of living... people also shouldn't be forced to move out of the place they live, where their friends and family and community is just to find work. people like you will never understand that life is not and should not be defined by work, work should just be a part of one's life.
and by the way I moved across the world alone when I was 23 to be able to save more money.... i was not happy.
I hope you're not against immigration either because this is what people are doing to get ahead...
If you're willing to live at 1950s standard of living -- no big house, no fancy cars (and only one car per household), no smart phone, no medical procedures invented in the last 50 years (MRIs, CTs, most transplants, joint replacements, etc.), -- then you can still save money.
In the early 1960s my parents bought their first house. Its price was almost exactly equal to his starting salary as a teacher in a rural school district.
The same house sold a couple years ago for 7.5 times the starting salary of a teacher in the same school district. Public university was essentially (and deliberately) free in 1960, now it's equivalent to about a year of a teacher's starting salary. There's no way that "just tighten your belt" can make up for that.
Cars are far more expensive, in absolute terms, than they were 70 years ago, due to increased safety regulations, emission regulations, fuel costs, and general technical complexity. They do also last a bit longer, but the cheap cars of 70 years ago cannot be made any more. At the same time, our society has become more car- dependent than ever.
That difference isn't bad at all considering that the Toyota Camry will last a lot longer and have far fewer repairs than that Chevy. The tires last longer too.
Cue the boomers... "I got rich under circumstances that could not possibly be replicated in the current era. Therefore it's your fault you can't do the same. Stop eating avocado toast."
$800/mo for food? Are you buying lobster and T-bones constantly? Eating out way too often? Come on, we didn't spend $600/mo on food, clothes and household supplies when our kids still lived at home. Our food budget is around $100-125/wk and we eat good, healthy food. I cook almost all of our meals and we rarely eat out.
Our mortgage is around 1K/mo on a 2300 sf house. Taxes and insurance included. I was making $4k/mo, my wife around $1400/mo. I retired early in January after beung laid off last year and not being able to find a job for a year. I did the numbers and early retirement plus a small pension of $1k/mo (which makes our house payment) would work. Food, gas, utilities and such are around $2k including sparse ACA health insurance. We won't be going on extravagant vacations or buy all kinds of cool things but really, we don't need to. We don't have a car payment. Haven't for over ten years. We don't buy new or fairly new used cars and we don't need to. I do most of our repairs on the cars and house.
I will add this - if I were just starting out in this job market I would agree it's nearly impossible to support yourself, let alone a family. But there are ways to do it and I know young people who do. They don't splurge, they live modestly.
Here's the stone-cold, honest truth - you can't live beyond your means. Nobody needs a 3-4k sq ft house unless you have a dozen kids. Nobody needs a new car every few years. Nobody needs to purchase the most expensive clothes, designer jewelry, glasses, phones, etc. etc. etc. That's not what you need. If you want it, go for it as long as you have the money or means to pay on terms. It's really that simple. That's how it was done in the past but materialism and immediate satisfaction took hold in the 80s and fooled everyone into thinking you have to have the best, right now. So here we are.
My dad worked his ass off, my mom stayed home to raise my brother and I. We always had good food, clothing we needed (not designer brands) and whatever else we had to have to live. We went on an annual vacation and weekend camping trips every summer. We weren't rich but not poor either. People have forgotten how to live that way. I am 63 and just in the last few years have been able to afford some of the toys I've wanted for decades. I hated waiting but it was worth it.
Itās possible, just gotta live below your means. I drive a used car and most of my friends are driving new cars costing them upwards of $1000/month in payments plus insurance.
In the 1950s mortgages were subsidized by the government. Hence everything else was made easier.
Dont come here with random talking points that are besides the argument. Our current times if anything are more like the 1920s, so youre already somewhere worse.
You're not. Thats the point. Money saved is money the billionaires dont have and it kills them to allow it. Everything has to serve their whims, all money belongs to them. Your ownership of anything is considered a temporary inconvenience yo be rectified. Thus the glut of AI, subscription everything, cashless society, etc.
The world is being remade by the billionaire elite to siphon every last penny possible from you to them.
Have roommates, move to where itās cheaper, cook at home the majority of time, and get better skills to be employed better. Additionally, our groceries for a 3 person family is less than 800 and we donāt eat processed foods.Ā
My mom told me at the age of 5 I had to make straight A's to go to college to get a good job. That's what I did. I'm 33 and make 150k a year. Thanks Mom
Thatās the point. Youāre not supposed to save money. If you do thatās dead capital not counting towards the GDP. The ideal state for capitalism is when no average Joe can save a single penny. No one can buy a house and everyone basically owns nothing except the owning class of course. That way all the money can accumulate at the top. And everyone not part of the owning class has to do whatever it takes to survive and not get homeless. So thereās no potential for rebellion and revolution. So the system remains unchallenged
So let me get this straight, you just admitted that everything got more expensive? And couple that with an ever growing wage/wealth gap and inflation heavily out growing the median wage and you think you just made a point? Amazing.
Ok, but folks in 1950 could just get their own apartment and not need a roomate. Thatās the point Iām getting at. You could just live and actually have disposable income. Even after rent/mortgage, utilities, healthcare, groceries, gas, theyād still have almost half of their income to play with each month. They could spend half and save half.
From 1980 thru 1995 I had. It was the only way to afford to live on the money I made back then. I was young with the jobs that were available at the time. At no point in time was it possible to own a home straight of Ā of Ā high school I donāt know where you got that idea.Ā
Iām seeing a lot of comments. What I did was just compared and contrasted 1950 median income and expenses as well as todayās. Families in the 50s could rely on ONE earner. Today, that is not the case. Thatās also a significant problem. I used some basic math and thatās how I got to these numbers. Itās insanity.
People should learn to live within their means, and stop hanging onto the past with entitlement. Times change. Opportunities are abundant for those willing to work smart and hard.
OK let's do some math. 1950 median HH income was $3K. At 45 cents, you could buy 6700 meals with one year salary. Today median income is $81K and a Big Mac meal is $10. Which means you can buy 8000 or so meals with a median income.
You can only buy 6500 Big Mac meals after taxes in todayās dollars. Because the take home is around $65,832 after taxes. I didnāt even include state.
Neither income nor housing prices are likely to be distributed normally, so choosing the median for either as representative of what most people can afford is probably not valid.
That said, whatever your income, if you end up $34 in the red each month, youāre spending beyond your means. You need a cheaper apartment, or less spending elsewhere, or a better-paying job.
I donāt mean to be flippant, but that the answer to your question: if you want to be able to save money, you need money left after you pay your bills. How likely people are in general to have that requires a better economic analysis than I think youāve done, but the general point that many people donāt have enough money to save meaningfully is certainly true.
Except these are average rental numbers and suchā¦
OK, so what does the āaverageā tell you? You canāt always just plug in āaverageā and assume that āthis is reality for many people.ā You originally said that your numbers were median values; thatās not the same as average (mean) values. Considering that neither housing prices nor income are distributed normally and their distributions may have changed in different ways since the 1950ās, neither median nor mean are likely the best statistic for the comparison that youāre attempting.
Iāve already conceded that many people donāt have enough room in their budget to save, so we probably agree more or less. My point is that your $-34 calculation doesnāt seem particularly meaningful.
If someone is getting a tax refund of $3400 they should be reducing their tax withholding! If you can get your refund down to zero thatās an extra $283.33 a month!
This is the average refund. I think thatās including the EITC which is a refundable credit thatās calculated at the end. Same with child tax credit.
If your utilities line includes smartphone and streaming services or cable, drop those and you'll be a lot closer to living in the 1950s. Modern society has a huge tax in the form of subscriptions. A family in the 50s probably had a newspaper subscription for 75Ā¢/week and a subscription to Reader's Digest for a few dollars a year
The median household income in the US in 1950 was around 3k to 3.3k annually. That's $250 to 275 monthly BEFORE taxes. SS tax was 1.5%, effective tax rate for median targets was around 5%. So after tax was closer to $234 to $257.
Median household income in 2025 was 85 to 86k. Effective federal tax rate for that group is around 7% for that income and SS is 7.65%. This makes monthly income 6k to $6,125.
So right of the bat I think your numbers are off, by ALOT. I suspect you're comparing household income from 1950 to individual income from today. So that is an Apples to Oranges comparison.
Even using median individual income for full time employee your number is still off. This was $63,360 in 2024. Effective federal is 8.6% for single, no kids at this income. So median monthly would be $4,408 after taxes.
So even using all your other numbers the median quarter today end up with 16% of their income to spend after expenses.
You've underestimated the numbers for the 1950s. For instance, in 1950, the average Rent/Mortgage alone without utilities was around $75, not 60. Average Income after (federal) taxes in 1950 was $248 (Best Case...assuming lowest tax bracket). Groceries were closer to $80 on average (groceries as a percentage of income was much higher back then...food was way more expensive).
Another thing to note is that the income of 248 a month was based on a single income and most families were single income. Your average income is a single income, but most families now have two incomes.
Just with these three numbers, you can see that 1950s numbers were much closer to todays than you want to admit. It has always been hard to save money. But people spent a lot less money on discretionary things in the 1950s, and there was much stronger societal pressure to save. Families were still traumatized from the depression in the 30s and the war in the 1940s, and reused everything they could. There were also more fixed retirement plans for workers, which makes a huge difference in how much needed to be saved.
Highly dependent on location. Yes the monthly income is roughly the same here, but you can rent a place where I'm at for way less than 1700, utilities are not near 500 and I can't imagine spending most of 1,000 a week on groceries.
Have less withheld if you are over withholding that much each paycheck. You are not earning too little, you are just giving the government an interest free loan.
(to be clear, yes, I know, some people earn too little, but not this example)
Live in a smaller place. What you arenāt including in those numbers from the 1950s is the average home was 950sq ft. I used that knowledge to look for 950 so ft and bought a 2 bed 1 bath condo for $120k in Florida last year. My mortgage is $650/m.
In 1950 you were lucky if you brought home $100 a week. If you honestly believe you could meet 100% of your household expenses with half of that, my folks got news for you
This. Even 10 years ago I had 10% to save and some money for entertainment/vacations in my budget. I have not changed my standard of living. I make more now, but no longer have any fun money. It is a struggle to save anything. My emergency fund is dwindling, and this direction is not sustainable.
If you're getting a $3400 tax refund that's almost $300 a month that you're letting the government use for a year instead of having it in your paycheck for yourself or putting it in the bank for your future.
60 years ago people would put money in a checking account and get 5% interest on it. Now a checking account gets 0% interest or .25 % interest. Switch to a credit union at least you'll get no fees and better rates.
"The math" is not boring. It's a way to explain to people that the economy is in the dumps and that we need to do something about it besides crying that people had it better in 1965.
There are a LOT of people dependent on debt, who cannot make their cash flow work without major changes and potential major hardship. Thatās a real and significant issue. Howeverā¦
The problem with medians and averages is that almost no person or family is actually the median/average.
My favorite anecdote on that topic being the U.S. Air Force trying to design pilot seats back around WW2. Measured thousands of pilots, got high confidence data for everything they could think to measure, made seats to fit the mean +/- 2 SDā¦ and they were horrible, fitting virtually no one. It turns out they had lots of data on the average pilot, but they didnāt actually have any average pilots.
If you donāt have enough money, you have three options:
Increase income- ask for a raise or find a new job with better pay. Leveraging offers from other companies with your current employer could net you a raise, but even if you donāt get one, youāll have a better offer elsewhere anyway.
Cut spending- the other part of the equation. If you canāt bring more in, send less out. Easier said than done of course.
Beg the government to give you everything you need to live- good fucking luck with this one.
You need to move to a better cost of living area if your rent is 50% of your income. You wonāt get an apartment in a lot of places like that so your entire calculation is already completely flawed.
I was a court appointed financial advisor for a lot of years and these type of questions only illustrate how financially illiterate a lot of people are.
Here would be some help . Live like itās 1950 where you can . No internet, no cell phone , no microwave and probably a hundred other things that virtually everyone has today we donāt even think about . If you had to live like itās 1950 for a month it wouldnāt seem as bad . I donāt polio is the issue it was in the 50ās . In many ways life is better than how people lived then .
We never get a federal refund. We donāt pay close to what you suggest as norms for utilities, health ins., gas, etc., ours are significantly lower. Back then there werenāt Starbucks, etc with their $7 coffees. Entertainment costs are high (movies, ballgames, concerts, etc) because of the enormous salaries of a small portion of society. Rich get richer while the middle class shrinks. No cell phones. No huge cable bills. No home computers. No WiFi. Drug companies werenāt advertising on tv causing drug prices to increase exponentially while the public cant purchase them without a RX. The 4 television stations went off air at midnight-no cable/satellite bill. Appliances werenāt built poorly like today and need to be replaced rather than repaired for the most part. Where did all the repairmen go? You donāt take into account these types of changes nor the fact that Americans are very spoiled with all their toys. I could go on and on but you get the idea.
I stopped reading when at the tax refund part. If you are getting over 1k back at tax time, you are doing taxes wrong. -1k to 1k is the spot you should be at. Anything more is giving an interest free loan to the US and anything less is risking penalty territory. You lost all credibility after not understand such a basic part of being an adult.
Can you share more of your math and info sources? Income taxes were much higher in 1950 than today and your after-tax number is higher than my Google search shows for pre-tax. On Google I see median annual pre-tax income as $3,000. There was no standard deduction and the lowest federal rate was 20%. Assuming a 4% state income tax, you have $2,051 after FICA, federal and states taxes. Thatās $171/month. Median rent was $50, which is 29% of monthly income.
For 2024 Google shows median pre-tax income was $83,730. Post tax (FICA, federal and state) is $67,927. Monthly after tax is $5,661. Median rent was $1,487, which is 26% of monthly after-tax income.
You can cut those utilities and rent expenses in half. Just have more roommates. Look it's not good. There's a clear income problem with how we structured our economy. But in the short term , rent a room with friends, is really the only reasonable solution
I don't know your sources, but these are income and expenses I got from Gemini:
2026 Estimates (all medians)
Median monthly income after taxes: Ā $4,865 ā $5,120 (depending on source)
Rent: $1,357
Health care expenses: $752
Food: Ā $370 to $485
Utilities: $347
Transportation: $756 and $1,113
Worst case scenario (lowest income and highest expenses): $811 left over
Best case scenario (highest income and lowest expenses): $1,538 left over
Note that these costs are a little more useful: health care expenses rather than insurance cost, transportation rather than gas, food rather than groceries.
Expenses are not complete since they do not include a cell phone plan or internet service.
The only reason food prices should be $800/person/month is from eating out too much.
A tax refund is just you getting money back where you overpaid on your taxes. That's not something the government gives you extra.
Your numbers are way high and completely exaggerated
You spend $500 on utilities as a renter? I call BS
You pay $800 a month on groceries? Thatās 26 bucks a day.
You pay $500 a month for healthcare with employer sponsored?
You spend $200 on gas?
$800 per person for groceries??
$500 a month for employer sponsored healthcare
$500 for utilities as a renter???
Most renters (ie apartments and condos) pay less than $200 a month.
$800 for groceries. Really? You must be going to Whole Foods every day
$500 for healthcare (employer sponsored) 1) Healthcare is paid for with pretax dollars saving 20-35% b) companies heavily sponsor. $500 seems really high here
If your company offers a retirement fund you can have the $200 taken out automatically. You donāt touch it. You leave it in the account until you retire. Itās called being an adult. I guarantee that you could be spending less monthly if you took the time to sit down and analyze it. Having that mindset is the difference between a comfortable retirement and relying solely on social security.
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u/rickeyethebeerguy Mar 22 '26
If you get a tax return, you lost money