Can they afford a middle class lifestyle with just 100k? My understanding of costs of living in California puts people in that range in the working class with a very low rate of savings (no hope to escape into middle class even with compounding) or they could afford a small family and no savings.
What does the alternative look like though? Sure tech companies pay engineers well, but there's plenty of other jobs requiring a college degree that don't reach that salary level.
… but not in most cities in CA is the OP’s point, actually not even is most large cities on either coast. Which isn’t to say it’s not possible, you could definitely live well elsewhere on that salary but there is an obsession with coastal cities.
They're just matching your energy. $100k is an entry-level number in this conversation and, yes, solidly middle class in most cities in California. There's no shortage of homes in nice neighborhoods available here for under $600k, including in large metros like Sacramento. You aren't going to find that in the Bay Area, but the Bay Area isn't representative of the whole state. Not even close.
They're not going to take jobs across California. They could just move further inland and take jobs towards the coast. In fact, I met many blue collar folks who did precisely that. Stockton to SF is just a bit more than an hour.
If I were an 18 year old financially savvy person making $100k a year in California, I would probably take home about $70k. About $1k, maybe $2k at the highest would be set aside for rent with roommates because I'm 18 and there's very little upside to me having my own apartment yet.
Groceries here in Finland are more expensive than I remember them ever being in the United States, and so based on my current budget I would set aside about $300 per month for food for myself. Maybe $400 if I wanted to go to restaurants more often. $500 is reasonable too. Over $1000 and you are deluding yourself or need to buy a rice cooker.
I'm still saving about $40,000 per yer, over half of my take home pay, conservatively. I'd consider that really good! What I do with that is my business, but on one extreme, if I threw all of that directly into my retirement fund, at a 7% real rate of return (reasonable given past index fund performance, already adjusted for inflation), I would have roughly $1 million in today's money by the time I'm 65.
But of course that's ignoring the real elephant in the room, which is that wages are famously sticky, and getting paid $100k by 18 is probably the single most surefire way to get paid $1 million by 30. The kinds of things and the kind of person you have to be to pull that off are where that price signal is coming from, and so I take away from this that, as is often the case in finance, these kids are probably not going to have to worry about that much money-wise even if they don't stick to a strictly calibrated plan.
I actually don't, those are the only two expenses my family has. Come to think of it those are the only two expenses I've ever had. I guess if we lived in the countryside we'd need a car, so, three expense categories total.
But alright, gather all of these other miscellaneous expenses up and take out another $10k per year to cover them. You still have $30,000 left if you're paying $2k a month on rent.
You don't pay for utilities, or public transport? Your family has never had to pay for clothes, or school books, or healthcare expenses (I know those aren't completely socialized in Finland)?
I agree an 18-year-old earning $100k is doing great even in the most expensive parts of California, but you don't sound like you've ever actually had to think through a household budget.
I would think that there would still be other expenses in some form:
- Utilities on shared apartment with roommates (unless you are lumping this into rent)
- Doctors co-pays (or the money to spend out of pocket until you meet your deductible, depending on your health insurance)
If you have a car,
- car insurance
- gas
- car maintenance costs such as 6 month services
At 18? Who is starting a family at 18 years old in that climate?
Claude Opus's Fermi estimate of the number of 18 year olds, making at least $100,000 a year, in California, with children, to be about 8 people. Not 8 thousand, not 8 hundred. Eight. Single digit. In a state of 40 million people.
I'll give you even odds that the number is within 4 orders of magnitude of correct. That is to say, in the year of 2025, there are/were fewer than 100,000 18 year olds, resident in the state of California, who have at least one child, and who made over $100,000 that year. If you prove me wrong I'll happily concede the point.
The demographics stats say no. It is not the job of the individual to engage in self destructive life plans because the previous generations have eaten the future and wrapped in nostalgia extruded plans think they can now comand them around like plantation owners cattle.
