I think this might come down to opinion and lifestyle expectation, but I think 10% could be feesable for the median American in their 20s.
According to this forbes article, the median wage of someone in their 20s in the states is about $45,000 US—this puts you in the realm of the top 1% of earners worldwide (hard to know exactly).
Yes the cost of living is higher in America than many countries, but its less than the majority of other high income countries. I think that giving away 5,000 dollars-ish annually and living on 40k could be feesable for the majority on median wage—although there are loads of scenarios where it wouldn’t be (single mother, living in expensive city, health issues etc.).
I fully acknowledge here’s a lot of subjectivity as to what “financial security” means, especially in a country like America where the government safety net isn’t what it is in other high income countries.
TDLR: I agree with the general idea that many more people could do it than are currently doing it, but I suspect that asking the median American in their 20s to do it would involve some level of financial challenge/hardship, such as living with roommates when one doesn’t want to, or not saving money for retirement. I’m reminded of the numbers a few months ago showing that about half of Americans wouldn’t be able to cover a surprise $400 expense without borrowing money.
Like a lot of personal finance, the personal aspect of it matters a lot. If I have a salary of $45,000 in the USA, then I’ll be receiving about $35,000 per year.[1] The estimated annual cost of living for one adult (with no children) is higher than $35,000 in most major American cities.[2] I haven’t seen any US city with a population more than 400,000 that has an annual cost of living lower than $35,000 (they might exist though, I didn’t do a rigorous search). Of course, this doesn’t account for any wiggle room in the budget, so we better hope that the car doesn’t breakdown on the way to work, or that we don’t suddenly find a swollen lymph node and need to pay $10,000 for a CT scan.
So there are tradeoffs. And it can be difficult to put oneself in another person’s shoes. For people with many resources, for people who have a strong family network they can rely on, for people who were raised in households that were financially stable enough to allow children to focus on studies, for people who have the prestige of a fancy pedigree (and the door that it opens), it can be hard to understand the difficulties of living without these advantages. I suspect many EAs fall into one or more of these categories.
EPI’s numbers are somewhat suspect for this purpose in my opinion—it gave me about $975 per month for transportation in the rural county where my parents live for a single person with no kids, which seems high. Other methodological assumptions seem to err on the side of producing too high rather than too low an estimate for basic decent standard of living, like assuming no employer-provided insurance, using the 40th percentile for housing stock, etc.
This was basically my thinking. I think it is reasonable to keep an emergency fund to cover things like (in particular) unexpected healthcare bills, and that giving away 10% would make this hard to do. My anecdotal experience of high cost of living cities in the US is that it would be challenging to live there on $35k of take home salary.
Of course, in a strictly utilitarian sense, I guess it isn’t “reasonable”, because it’s not more “reasonable” than protecting someone from a deadly case of malaria—but then none of us lives out that maximalist thinking in reality anyway. (E.g. everyone commenting on this post spends at least some money on themselves in a way that could be redirected elsewhere.)
I’m really quite interested in how much disagreement my original comment got, even as a professional promoter of effective giving myself. It’s informative!
I think this might come down to opinion and lifestyle expectation, but I think 10% could be feesable for the median American in their 20s.
According to this forbes article, the median wage of someone in their 20s in the states is about $45,000 US—this puts you in the realm of the top 1% of earners worldwide (hard to know exactly).
Yes the cost of living is higher in America than many countries, but its less than the majority of other high income countries. I think that giving away 5,000 dollars-ish annually and living on 40k could be feesable for the majority on median wage—although there are loads of scenarios where it wouldn’t be (single mother, living in expensive city, health issues etc.).
I fully acknowledge here’s a lot of subjectivity as to what “financial security” means, especially in a country like America where the government safety net isn’t what it is in other high income countries.
TDLR: I agree with the general idea that many more people could do it than are currently doing it, but I suspect that asking the median American in their 20s to do it would involve some level of financial challenge/hardship, such as living with roommates when one doesn’t want to, or not saving money for retirement. I’m reminded of the numbers a few months ago showing that about half of Americans wouldn’t be able to cover a surprise $400 expense without borrowing money.
Like a lot of personal finance, the personal aspect of it matters a lot. If I have a salary of $45,000 in the USA, then I’ll be receiving about $35,000 per year.[1] The estimated annual cost of living for one adult (with no children) is higher than $35,000 in most major American cities.[2] I haven’t seen any US city with a population more than 400,000 that has an annual cost of living lower than $35,000 (they might exist though, I didn’t do a rigorous search). Of course, this doesn’t account for any wiggle room in the budget, so we better hope that the car doesn’t breakdown on the way to work, or that we don’t suddenly find a swollen lymph node and need to pay $10,000 for a CT scan.
So there are tradeoffs. And it can be difficult to put oneself in another person’s shoes. For people with many resources, for people who have a strong family network they can rely on, for people who were raised in households that were financially stable enough to allow children to focus on studies, for people who have the prestige of a fancy pedigree (and the door that it opens), it can be hard to understand the difficulties of living without these advantages. I suspect many EAs fall into one or more of these categories.
This is after state taxes and federal taxes, although of course the details will vary. This assumes no IRA, 401(k), or similar investments.
This is according to the Economic Policy Institute’s family budget calculator.
EPI’s numbers are somewhat suspect for this purpose in my opinion—it gave me about $975 per month for transportation in the rural county where my parents live for a single person with no kids, which seems high. Other methodological assumptions seem to err on the side of producing too high rather than too low an estimate for basic decent standard of living, like assuming no employer-provided insurance, using the 40th percentile for housing stock, etc.
Good point! I should be a little more skeptical rather than blindly accepting EPI’s numbers. Thanks for pointing this out for me!
This was basically my thinking. I think it is reasonable to keep an emergency fund to cover things like (in particular) unexpected healthcare bills, and that giving away 10% would make this hard to do. My anecdotal experience of high cost of living cities in the US is that it would be challenging to live there on $35k of take home salary.
Of course, in a strictly utilitarian sense, I guess it isn’t “reasonable”, because it’s not more “reasonable” than protecting someone from a deadly case of malaria—but then none of us lives out that maximalist thinking in reality anyway. (E.g. everyone commenting on this post spends at least some money on themselves in a way that could be redirected elsewhere.)
I’m really quite interested in how much disagreement my original comment got, even as a professional promoter of effective giving myself. It’s informative!