Why is American Dream so expensive?
How much does it cost to live the American Dream? More than most of us can afford, according to two recent studies.
A household would have to spend more than $150,000 a year to live the dream in 29 of the 50 states, according to an analysis published in April by the personal finance site GOBankingRates.
According to the report, the optimal American lifestyle would cost $137,842 a year in Ohio, $147,535 in Texas, $159,932 in Florida, $194,067 in New York and $245,723 in California.
And how, exactly, does one quantify the American Dream?
GOBankingRates defines the dream as getting married, raising two children and owning a home, a car and a pet.
The site ran the numbers for every state, factoring in a mortgage, annual healthcare costs, utilities, education, groceries, pets and child care. After tallying the expenses, researchers doubled them, to account for discretionary spending and savings.
Hawaii ranks as the costliest state, at $260,734 per year. Mississippi is least expensive, at $109,516.
“Ultimately, this study highlights just how high of a hill Americans have to climb if they want to comfortably afford to live as a family of four,” said Andrew Murray, lead data content researcher at GOBankingRates.
Another report, released in December by the financial media site Investopedia, estimates what the American Dream costs across an entire lifetime: $3.4 million.
That is a staggering sum, Investopedia observes, considering what the average American earns in a lifetime: about $2.3 million.
And many of those figures are lowball estimates, said Caleb Silver, editor in chief of Investopedia.
The tab for lifetime car costs, for example, assumes you can live the American Dream while driving only used vehicles. The college-costs figure covers only one year at a public, in-state institution for each of two children.
“These are what we think are reasonable expectations for having a household in America today,” Silver said.
Investopedia prepared the report partly to feed reader interest: Many site visitors wanted to know what Investopedia had to say about financing the American Dream.
“The reason that the American Dream was one of our most-searched terms last year,” Silver said, “is that people thought it was further and further away from them.”
If rising prices are pushing the American Dream out of reach for many Americans, perhaps nothing highlights that trend quite like the runaway costs of owning an American home.
The median sale price for an existing home rose more than 40% between early 2020 and mid-2022,