How to Live the American Dream on $50,000

How much does the American Dream really cost?

Last month, USA Today made waves by putting a price tag on the American Dream: $130,000 per year. That number seemed inordinately high to me. After I dug into how the paper arrived at that number, it became clear that there were numerous mathematical errors, none more egregious than overstating taxes by over 50%. I concluded that the average American family could live happily on an income of about $88,000.

But would it be possible to live the American Dream on an even smaller income? What about $50,000? Probably not for the average American. But if you're willing to change you're internal narrative surrounding "wants" and "needs" -- and perhaps radically change your behavior -- such a lifestyle is entirely within reach.


There is no single definition of the "American Dream," nor should we automatically assume that it's something everyone feels is worth pursuing. Furthermore, even if we all had the exact same thing in mind when it came to the American Dream, the costs would show enormous variation depending on where we lived.

But it's hard to ignore the depressing implications of the $130,000 price tag. While it's always prudent to over-estimate how much something might cost, it's also worth focusing on the power of optimism and the factors that are under our control.

How much is your American Dream?
In that vein, I set out to see how much the American Dream would cost if I started from scratch -- knowing that the exact number wasn't important but rather the spirit behind finding it.

I decided not to use government statistics or databases to come up with my numbers. I understand why most people think using the average household value or spending habits makes sense.

However, as I alluded to above, I'm not discussing the average American. This is because -- by and large -- the average American is terrible with their finances. More than one-third of us have debt collectors on our tails, we are woefully underprepared for retirement, and we tend to over-spend when we have the chance to sock away more money.

I'm not concerned with how much the average American Dream would cost because I don't think we should aim to be in the average American's financial situation. Instead, I want to see what's possible. But how can we do that?

Enter our hero
The hardest part of finding out how much financially savvy Americans spend each year is that they don't generally keep detailed notes on every little expense. And even when they do, they rarely broadcast the results publicly.

But that's where one of my favorite Internet celebrities, Mr. Money Mustache, a.k.a. MMM, comes in. MMM retired at the age of 30 and finds time to do pretty much everything that makes him feel purposeful and alive. He resides with his wife and son in Colorado.

Mr. Money Mustache at FinCON12. Source: Jeremy Vohwinkle via Flickr. 

And he keeps copious notes on his spending habits, which he releases for the world to see.

If you already follow MMM, you'll have a hard time arguing that this man isn't living the American Dream. He gets ample time both outside and with his family, he has taught himself everything from carpentry to alcohol distillation, and he sets his own construction work schedule (sometimes he gets paid, sometimes he doesn't). So how much does he spend every year?

Last year, the total bill came to $25,182. And that includes paying for health insurance in its entirety. If you subtract the unnecessary extras in his family's budget -- e.g., donations, travel, gym membership, organic food, and home renovations -- the number drops all the way down to $19,295. Check out the breakdown of these numbers here.

Could you live on that number?
For many of us, chances are that this number is too low. MMM doesn't have to save for retirement (he's already retired), nor does he pay a mortgage (he's already done paying it off). But what if we took his expenses and factored those costs in -- along with a little savings for junior's college expenses?

Let's assume you keep all of the extra goodies MMM had, like the summer vacation, organic food, and gym membership. Let's also assume you buy a $200,000 house with 20% down at today's going rates, put away $3,000 per year for college, save 15% of your income for retirement, take standard deductions and exemptions, and pay 7% in state and local taxes. In the end, your annual budget would look like this:



MMM budget


Mortgage  and maintenance


College savings


Federal and local taxes paid


Retirement savings






The American Dream for $50,800?
Chances are, if we surveyed everyone who read this piece, had them calculate what they needed to live their American Dream, no one would have exactly this number. Some would be lower, and many more would be higher -- especially for those who live on the coasts or in popular urban areas.

More than anything, MMM keeps his costs low because he loves learning how to do things for himself. Instead of going to fancy restaurants, he cooks home meals with his family. Instead of paying for cable, he takes advantage of the world around him -- friends, family, libraries, and public parks -- for entertainment. He also bikes practically everywhere and encourages his family to do the same.

In short, he's hyper-aware of when he might be spending money on something unnecessary.

We might view these decisions and say: "I could never live a life of such denial and sacrifice." But most of us don't have any idea of what that's really like. To him, his way of living is simply "slightly less ridiculous than average," with "average" being the family that constantly strives to keep up with the Joneses.

Does that mean we should all be able to live our dreams on $50,000? Not necessarily. That begs the question: If this number isn't reliable, why figure it out at all?

The answer: Because it's about the spirit in which we arrived at the number, the ability to view life optimistically, and the empowerment that comes from realizing how much control we have over our financial lives.

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Read/Post Comments (22) | Recommend This Article (31)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 09, 2014, at 11:10 AM, Chinaorbust2 wrote:

    Come back Fool come back.. from lala land

  • Report this Comment On August 09, 2014, at 2:08 PM, Tianshin wrote:

    Of course, you can make the american dream come true with $50,000, but you have to be smart, frugal, and sacrifice your wants. I did it, so can you.

  • Report this Comment On August 09, 2014, at 5:07 PM, jjc0319 wrote:

    Great article. At 44 I am at the peak of my career looking to retire at 50 or 55. I want more from life than MMM, for example international travel (beyond Canada), but he sets a good example of simple living.

    I think most people choose to live up to their income and not at a set level. It's hard to do. I set my level 14 years ago and it has increased a few times. But for every 5% raise my cost of living went up only 1% ... allowing a greater amount to be invested.

    I could retire most anytime now; but I've grown to like the work.

  • Report this Comment On August 09, 2014, at 11:56 PM, Ostrowsr wrote:

    This is true. Most people can budget their lives but choose not to do it. Then the call those 800 numbers that claim to "lower your taxes that you can't afford to pay". Apparently it's legal. But if they don't need to pay all they owe, who makes up the difference? You and me. They live with reckless abandon and then cry "I can't make it in retirement". Not all but many do. There are also the legitimate poor who just can't make it. I teach a budget course twice per year and guess how many sign up for the class. Usually about 7 or 8. I don't know if it's laziness or what. I offer a $15 class that shows them their next 4 years of gains (or losses) based on their lifestyle and show where the problems are. But most people just don't care.

  • Report this Comment On August 10, 2014, at 7:09 AM, Mathman6577 wrote:

    A lot of assumptions go into this article ($200,000 house, 20% down, etc. etc. etc.). You know what they say about assumptions?

  • Report this Comment On August 10, 2014, at 9:42 PM, TMFCheesehead wrote:


    Agreed, assumptions play a big role in the final number. But as I said at the end, it's not the number itself that matters--it's the spirit in which we arrive at it.


    Brian Stoffel

  • Report this Comment On August 11, 2014, at 4:27 PM, TrackMagicFormul wrote:

    Mr. Money Mustache has a great website, and yes we too are retired early in Florida where housing, taxes, and food is pretty cheap!

    Secret number one: stop using your car so much! Bikes are great. You will save A LOT on gas, insurance, and repairs if you don't automatically jump in the car for everything. Do the math, you will probably see like us that driving costs us over 50¢ per mile, ouch!

  • Report this Comment On August 11, 2014, at 5:04 PM, chrisa19 wrote:

    Great article, Brian! Whatever the numbers one thinks reasonable, this makes you think about what you are doing with your available money and why. And since my experience has been most folks give little thought to their spending decisions beyond "We need to find a way to pay for our latest gotta-have," just taking even a brief pause to think could be paradigm-shifting.

  • Report this Comment On August 12, 2014, at 12:03 PM, atani0 wrote:

    Learning the principles of frugal life is very beneficial. Showing an exact number is "foolish". I could live great with $40,000 /yr in Idaho but in Houston that number is more than double that for a family of 3. You know: safety, traffic, not having to live 30 miles from downtown, staying alive (we do lock our doors here and pay ADT to keep an eye) and so forth.

  • Report this Comment On August 12, 2014, at 12:11 PM, SkepikI wrote:

    ^ excellent point, but leaves unasked the most important points- CAN you live the American dream in Houston on any amount of money? (I could not, so I didn't) and more to the point, if you could live great on $40,000 in Idaho, why aren't you? Rhetorical questions.... no doubt resulting in storms of angry rebuttals and counter questions... ;-)

  • Report this Comment On August 12, 2014, at 12:28 PM, notyouagain wrote:

    Wow. Move to the country anywhere here in the Ozarks if it costs you 50G's to live.

    If your house is paid for you'd be amazed how well you can live on 20G.

    Sure glad I don't live any of those places...

  • Report this Comment On August 12, 2014, at 1:41 PM, TMFCheesehead wrote:


    As stated, it's more about the spirit by which the number is gotten than the actual number.


    Great question!


    Brian Stoffel

  • Report this Comment On August 12, 2014, at 4:07 PM, Rafauku wrote:

    I always love the comments in these types of posts when people continuously fail to grasp the main point that its in the spirit of how you arrive at your number. Clearly others are doing it and although that doesn't mean you have to be doing it exactly the same way there is no need to go dismissing their efforts and achievements. If your number is 20k or 100k that is on you. The important part is to truly reflect on what you want and what you need and start there. Nonetheless most fail even at that simple task as Ostrowsr stated.

  • Report this Comment On August 13, 2014, at 12:12 AM, atani0 wrote:


    My job is just too interesting to leave behind. And so far I manage to be a good family man too. Once that balance is gone, Houston will be in the past too. I agree with you, this place is not to live the American Dream...on any budget.


    I agree with you. I understand now that for the sake of the argument and creating a common denominator (amount of money) you had to use the figure. I was being unnecessarily picky.

  • Report this Comment On August 13, 2014, at 11:40 AM, bonsaibean wrote:

    Great article, and less of the overly negative comments than I expected. I retired 3 years ago at 48. Never made over $60k/year between my wife and myself, raised 2 kids, always had 2 cars, a house, took vacations, etc.

    I've not regretted my decision to live cheaply for a minute. We've tracked EVERY expense via Quicken for almost 20 years now. I lived in Iowa, and now in Tennessee, and my average total expenses for the last 10 years is about $34k/year. Again, we've got 2 cars, a motorcycle, a house, computers, cell phones, TVs, but none of them are the very latest/fastest/biggest/coolest.

    Deciding what is truly important to you and spending your money accordingly will make all the difference in the world. If having the newest thing every few months is truly important to you, then your numbers will be much higher than mine, but others can obviously get by on even less.

  • Report this Comment On August 13, 2014, at 11:41 AM, tr1ke wrote:

    MMM is an inspiration for having the courage to live by your own rules and not accepting the status quo. We aren't all willing to make the same sacrifices, but I think we can learn from the method and spirit of putting a number on it.

    I'll become semi-retired at 41 when I start collecting a military pension. My number is $40,000 now, but there are a lot of assumptions still, and I plan to work part-time and seasonally to make up the difference and continue saving to "full" retirement in 30 years or so.

    Life happens, but that's not an excuse to not live within your means.

  • Report this Comment On August 13, 2014, at 2:56 PM, Mathman6577 wrote:

    Rafauku: I always "love" comments that imply that other commentators are incorrect and have no right to comment.

  • Report this Comment On August 13, 2014, at 4:16 PM, drstrangelove wrote:

    Great, great, great, and quite Foolish, article. Living in LA, at an awesome loft in Downtown, our out-of-pocket for bare bone expenses is $37500 (renting, food, utilities, and charity donation). We get back and forth to work, eat well, go to parks and festivals (hey, it's LA) and have Internet. We make low six figures, and yes, we have no kids (yet).

    The rest goes to Student Loan debt reduction. We'll be done in less than 2 years.

    These articles are inspiring. It's more proof that with gung-ho discipline and ingenuity, anyone can live WELL, and within your means. Living well is not about the size of your check, it's how you use it.

  • Report this Comment On August 13, 2014, at 5:27 PM, MUCM wrote:

    $11500 for mortgage?? Good luck in DC!

  • Report this Comment On August 13, 2014, at 5:48 PM, ballengerm wrote:

    I believe a large part of the key to making this possible is living in a low-cost area with a short commute. Unfortunately not achievable in DC.

  • Report this Comment On August 14, 2014, at 11:01 PM, RiverRover wrote:

    Great article! I have always lived a more frugal life than those around me and I feel really good about it. My husband and I were living on $50,800 only about 5 years ago...

    By the way, ""you're" is the contraction for "you are". You meant to use "your" in your first sentence.

  • Report this Comment On August 14, 2014, at 11:02 PM, RiverRover wrote:

    I meant that "you're" is in your second paragraph.

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Brian Stoffel

Brian Stoffel has been a Fool since 2008, and a financial journalist for the Motley Fool since 2010. He tends to follow the investment strategies of Fool-founder David Gardner, looking for the most innovative companies driving positive change for the future.

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