When it comes to spending, the sky isn’t the limit on the average U.S. salary.
As of 2022, the median household income was $74,580, according to the U.S. Census Bureau. This might produce enough money to pay the bills — and maybe even afford a few indulgences — but taking spending too far can add up fast and wreck your finances.
“Keeping up with the Joneses is a real thing,” said Brian Dudley, SVP, financial advisor at Wealth Enhancement Group. “Those with average salaries who have a champagne taste on a beer budget can get themselves in trouble very quickly.”
Curious about what you might not be able to afford on an average salary? Here’s a look at 10 expenses that might not fit your budget.
Costly Apartment
“Too many times, I have seen younger people who want to live close to a metro area overspend on their monthly rent,” Dudley said.
He said it’s important to remember it’s just a rental — and that you’ll also need to furnish it.
“If you overdo it, you may be buying furniture that fits a space that you may not be living in the following year,” he said.
After viewing the apartment, he advised against signing the rental agreement right away.
“Research and see if there are similar options within a certain mile radius or maybe with fewer amenities to help offset the monthly expense,” he said.
Luxury Vacations
“You can get caught up in trying to stay at a five-star hotel or a pricey resort because you want to live the life you see others living online,” Dudley said. “Do not do that if you do not have the money.”
He said there are cheaper ways to travel and create lifetime memories.
“My travel recommendation is to plan well in advance and save the right amount to go on meaningful trips,” he said. “If it’s a luxury destination that will fulfill you, that’s fine, but save up for that well in advance and then enjoy your time away.”
New Luxury Vehicles
Driving a flashy new car might be fun, but that doesn’t mean it’s a good financial move.
“If you can only potentially afford the lowest-end model of that well-known luxury brand — pick any: BMW, Mercedes, Audi, etc. — then it’s time to reevaluate the purchase,” Dudley said. “In most cases, you are buying the name and are overpaying for the value received from that car.”
Homeownership
“The biggest item which may not be realistic with an average income these days is a house, whether it be one’s first residence or an upsize from their current abode,” said Chris Diodato, CFA, CMT, CFP, founder and lead financial planner of WELLth Financial Planning, based in Palm Beach Gardens, Florida.
He cited an October 2023 Redfin report that claimed you need an income of $114,627 to purchase and qualify for a mortgage on a median-priced U.S. home. Specifically, the average U.S. home sold for around $420,000, as of August 2023.
Census data revealed the income needed to purchase a median-priced U.S. home is $40,000 above the average household income.
“Without lower interest rates or home prices, home ownership goals may be out of reach for most,” he said.
Private Yachts and Aircraft
“Owning a private yacht or aircraft, even a small one, can be incredibly expensive,” said Skyler Fernandes, founder at Finally Fund Admin. “Maintenance, insurance, docking and fuel costs add up quickly.”
For someone earning an average salary, he recommended exploring rental or shared ownership options for occasional usage of these luxuries.
High-Value Art and Collectibles
“Acquiring valuable art, rare collectibles or antiques can be an aspiration for many,” Fernandes said. “However, these items often require a significant financial investment that may be beyond the means of those with average incomes.”
If you’re an art and collectibles enthusiast, he advised starting with more affordable pieces and gradually expanding your collection over time.
Fine Dining and Gourmet Food
You might have a taste for luxury, but that doesn’t mean you should satisfy your craving.
“Dining regularly at high-end restaurants, indulging in gourmet ingredients or purchasing premium wines and delicacies can quickly add up,” said Noah Schwab, CFP, a financial advisor at Stewardship Concepts Financial Services, LLC in Spokane, Washington. “These expenses may not be sustainable for someone with an average income and it’s often more sensible to budget for occasional special occasions.”
Elite Memberships and Clubs
Belonging to a prestigious club might be fun, but it probably isn’t affordable.
“Memberships in exclusive clubs, golf courses or country clubs often incur substantial annual fees and additional expenses,” Schwab said. “These costs can be challenging to maintain for individuals on an average salary.”
Private Education
Every parent wants the best for their children, but sending them to private school might not be a realistic financial option.
“Tuition fees can be comparable to college expenses and may not be sustainable on an average salary without scholarships or financial aid,” said Reagan Bonlie, founder and CEO of NUDGE, a virtual money coach.
Major Home Remodel
Like many homeowners, you might dream of giving your space an overhaul, but doing so isn’t cheap. In fact, the average cost to remodel a house is $20,000 to $100,000, according to HomeGuide.
“Major home remodels can seem like a worthy investment, but they often have a way of exceeding initial budgets and can lead to significant debt if not carefully managed,” Bonlie said.
Instead, you might consider looking for more affordable ways to update your home. This could involve painting, having a few pieces of furniture reupholstered or getting new carpet in a few rooms.