How much you actually require to be comfortable is greatly influenced by where you live.
For instance, in San Francisco, a person has to make at least $84,000 per year to consider themselves comfortable.
Significant Portion Of Disposable Income
In the interim, meet me in St. Louis, the city with the lowest cost of living, where getting there only costs $57,446.
Nevertheless, putting geographical variations aside, everyone feels as though their budgets are tighter than ever right now.
The fact that this year’s figures are 20% higher than they were last year is probably caused by a variety of variables, such as annoying inflation, higher mortgage rates, and a widespread dearth of rental housing.
What is good news? Although it’s still double the Federal Reserve’s target rate of 2%, inflation has somewhat decreased to less than half of what it was a year ago.
However, the majority of Americans significantly overspend on wants, such as dining out, luxuries, and pricey vacations. There is hardly anything left over to increase their savings.
The US Bureau of Economic Analysis estimates that as of February, the personal savings rate in the US was close to 4.6%.
In the meantime, the typical American household spent about 25% of their disposable income on housing expenses like rent or a mortgage.
Living comfortably can be achieved with a budget that is even marginally above these national norms.
Read more: Struggling To Keep Up: The Decline Of An ‘Average’ American Income
The Role Of Real Estate Investments
A hidden tax called inflation reduces the comfort of living. Despite reflecting a cooling, the current rate of 4% is still significantly over the near-zero average of the previous ten years and far below the Fed’s aim.
Investors and savers need assets that can withstand this annoying headwind to keep their purchasing power.
An excellent example is real estate. When purchasing power declines, the value of hard assets like homes, warehouses, and data centers tends to hold steady.
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