Tag: t_midClass22

Chinese middle-class esp. in U.S.

[22]midclass livelihood ]Chn as well-off as SG@@ #w1r4

Posted on by tiger40490

My concept of Chn’s middle class is mostly-urban, white-collar, usually college-educated. A concept confirmed in a book by XS.L (梁晓声 Xiaosheng.Liang).

When I interact with my relatives, ex-classmates, /repatriated/ ex-colleagues, repatriated young graduates (acquaintances) …   I often have a vague, unfounded livelihood assumption that the Chinese middle-class has some advantages + some disadvantages[2] vis-a-vis SG middle-class counterpart, but on balance equally well-off. This assumption has a theoretical cornerstone — the middle-class’s definition. This definition implies that the middle-class in any country is well-off (小康富足) although the numerical criteria depend on location. Those criteria are vastly different in Bayonne vs 天津 vs 建德 vs Cambodia vs Manila due to PPP-FX.

[2] A lot of times, I could feel a strange sense of inferiority. Highly distorted and irrational. This is the same illusion as (not similar-to)

  • my distorted illusion that HwaChong JC and NUS were possibly perceived as inferior to 实验 and Tsinghua.
  • my distorted illusion that 实验 was somehow inferior to 四中, when both high schools produce top graduates on par with each other
  • my distorted illusion that Singapore was a /backwater/ compared to Hongkong or Shanghai

In this blogpost, I want to point out some of the hidden but crucial differences between SG and Chn middle class livelihood. Not a Chn-watcher, I won’t go in-depth. Mostly based on hearsays, but from trusted sources such as serious intellectuals.

  • :(▼healthcare .. different people in Chn and SG give me very different descriptions. I feel well taken care of in SG. XS.L said for many lower middle-class families, a medical event could sink the family to cashflow low ground, and grandpa agreed.
  • 🙁 long-term inflation .. hurts the retirement livelihood. I feel confident about SG esp. the medium term.
  • :(▲precarious .. worry about drop-out from middle-class exclub , as XS.L described. I feel secure. Overall, in SG there is some level of safety net, perhaps not as strong as in the western welfare states.
  • 🙁 full-time nursing .. this cost is relatively affordable in SG (thanks to foreign workers) but very high according to my parents’ earnest market research.
  • 👍 food, transport, outpatient medical .. probably cheaper in Chn.
  • difference: CRBR .. My parents have adequate pension. Not sure about the 20Y prospect for current cohort of middle-class. I feel most of the middle-class in Chn or SG don’t feel very safe about retirement income. However, CPF-life is better than nothing.
  • 🙁 environment .. PAP government has a reputation for tackling long-term environmental challenges
  • 🙁 caring society .. (for the /vulnerable/, but hey folks do drop out of middle-class, as XS.L pointed out.) I feel Singapore is overall a slightly more caring society than the Chinese cities I know. Vague feeling. If I have to be specific, then most of the reasons are related to government services; some nonprofit organizations and individuals also play a part.
  • 👍▼Chn’s economy will keep growing at a speed higher than SG. However, in the foreseeable future, living standard will remain lower than SG. Chn is decelerating more rapidly than SG which has reached maturity decades ago. It remains to be seen if faster growth translates to better livelihood for Chn’s expanding middle-class.
  • — Some differences are not exactly about “livelihood”:
  • 🙁 aspiration for branded degree .. harder to achieve for the Chn middleclass, partly due to lower absolute income. Large portions of the urban middleclass aspire to an overseas education/experience.
  • 👍 gap from median .. Suppose we compare the ratio of middle-class household income to the national median. Somehow, I feel the Chn counterparts “enjoy” a higher ratio than the SG counterparts.  If (a big if) that’s the case then the Chn middle class feel more self-conceived superiority and satisfaction (Shuo.L) than SG middle class would. How important is this self-esteem?

— 🙁 Difference: housing … The most intriguing difference. If a Chn middle class family of 3 could avoid buying a 2BR home [3] in a tier-1 city, then livelihood pressure can be tolerable. I just don’t know how many of the urban middle-class can avoid it. They are drawn into it by some invisible force, unable to free themselves.

[3] XS.L specified 70 sqm 居住面积 for an a stereotypical white-collar young couple planning to have kids, but XS.L didn’t say Tier-1 city.

Tier-1 city’s home price is comparable to, if not above, SG condo (at least 100% above HDB flats) but typical Tier-1 city salary is still lower than SG. The price tag is so large as to require contributions from 3 generations of a middle-class family, as XS.L confirmed. When we compare livelihood, this price tag is the elephant in the room.

I used to feel this peer pressure was exaggerated by the media, but XS.L, my parents, and my Chn bachelor colleagues all confirmed that this peer pressure is both pervasive and entrenched.

A major factor is mate selection, which affects entire families! Girls often demands not only a tier-1 city dowry home, but a 100 sqm [grandpa said, 建筑面积] home. So if you have a bachelor son, can your family avoid “it”?

— personal medical reserve .. This is not a SG^Chn difference per see, but quite relevant.

In the late 2000s, my mom said CNY 400k (si4shi2wan4) was a good-enough medical reserve for each retiree, on top of public health insurance (reimbursement-based). Such insurance has coinsurance, and numerous exclusions such as elective treatments [imported medication, supplements,,].

In early 2022 my dad recalled that consensus figure among retirees of that time — regardless of the medical condition, if CNY 500k is spent over and on top of insurance, and still the life can’t be saved, then it’s reasonable to give up. As such CNY 500k was a reasonable last-resort personal medical reserve, for millions of well-informed Chinese retirees.

Fast forward to 2022, CNY 500k-1000k of family savings is common according to my dad, living in Beijing. I think this improvement in savings reflects (medical++) inflation, rising income, rising wealth esp. in rEstate.

U.S.midclass income [def] #UK

Posted on by tiger40490
  • Criteria 1: Pew Research defines middle-income Americans as those whose annual household income is two-thirds to double the national median (adjusted for regional cost of living and household size). For a family of three, that ranges from $40k to $120k for 2018 incomes.
  • Criteria 2: According to 2019 numbers, the range for a mid-middle-class family of three was an income of $53,413 to $106,826 (twice). The same three-person family needed an income between $106,827 and $373,894 to be considered upper-middle-class.

Note the Pew research calculator shows that even with $180k pre-tax income I’m still in the middle class not the upper class. This is consistent with my self-assessment.

https://singlemotherguide.com/single-mother-statistics/ shows median income for single mothers (45k) vs couples (94k). This site is presumably accurate on single-mothers.

2022 UK figure: lower-midclass income is GBP [18-25k]/Y, up to USD 31k

BR]US^ cflowPrjn]US^ outlay_figure^ cmcUS

Posted on by tiger40490
  • t_outlay_figure .. covers Singapore, Chn and country-agnostic topics.
  • .. burn-rate and beyond
  • .. Not_suitable for U.S. because there are many other tags/categories for U.S. burn rate.
  • .. If “overcrowded”, then I will pick some frequently reviewed posts for possible untagging, provided they are under cflowPrjn or t_BR]US
  • t_BR]US .. all-encompassing burn rate
  • cflowPrjn … includes any incomes or burn rate, in a projection. Not_suitable for past burn rate analysis in the U.S.
  • t_midClassUS .. is more specific, about middle class

[19]cohort family BR=USD 6k ex.housing+med

Posted on by tiger40490

See also big-ticket discretionary spends4Chinese middle-class]US

I know our monthly burn rate in SG = SGD5k (6k including $700 tax), with zero rent or mtg. How about U.S. ? My estimate is USD 8k, or 6k Excluding the big 3 housing costs [pTax/mtg/rent]. Below is my quick survey.

Beware: rather few individuals would spend the time to understand the true burn rate including mtg monthly, excluding income tax. Therefore, their estimates can be 20% off the mark.
Beware: Melvin3 highlights the omission of infrequent but large repair costs.

In the job loss scenario, austerity can cut family burn rate by 20%+ but more likely I would return to Singapore, where my burn rate is roughly half the U.S. level, after FX conversion.

  • Jenny ——– said 5k minimum for 4-people family, excluding housing/pTax+medBx. This would be Melvin1. Jenny said her bank statement shows minimum 3k+
  • CSDoctor —- said $9k including mtg and pTax so I guess non-housing burn rate = 6k.
  • CSY ———- said household expenditure might be under 5k, excluding A) med insurance, B) pTax, C) mtg. If Including A+B+C, he estimated 6-9k.
  • XR ———– said he did his income taxes many times, each time summing up his total outlay as 100k+. This total used to include mortgage but now it includes 2.4k childcare + pTax and zero mortgage. By my standard, his monthly burn rate is 9k
  • Deepak —– said $9k for a family of three, including $2200 rent and $250 med insurance sponsored by employer. In 2022, he estimated their combined take-home was 160k+ and saving target was 55k
  • https://transferwise.com/us/blog/cost-of-living-in-the-usa says excluding income tax or rent, average in NY = 4k
  • median family pretax income is typically equal [1] to total burn rate including everything, so after tax total burn rate is probably 65k/Y across the country. Pretax is 79k/Y according to https://fred.stlouisfed.org/series/MEFAINUSA646N
  • https://howmuch.net/articles/how-americans-spend-money-2017 shows 57k/Y excluding income tax, for an average American family. Per month = 5k
  • https://www.valuepenguin.com/average-household-budget#nogo and https://www.usatoday.com/story/money/personalfinance/budget-and-spending/2018/05/08/how-does-average-american-spend-paycheck/34378157/ show breakdown by expenditure category

[1] My own estimate — most American families save less than 5% over long term like 5Y+

luxury(+special) Edu: unaffordable to 中产华裔

Posted on by tiger40490

opening eg: In the U.S. context, medical school is for the upper class, as Tao.Chen of RTS told me.

In the U.S. branded college is comparable to top MBA schools or Joseph Schooling’s expensive training.

Similarly, top schools (in all countries), top colleges, private tuition, enrichment programs… can be considered as luxuries that lower middle class (like me) can’t afford easily.

I would have to struggle, sacrifice, endure a lot to afford them…

My barebones ffree is insufficient for this level of luxury. Before college phase, I think luxury education could be 70% of the annual family burn rate. This luxury alone can derail my carefree life.

Similar experience — the prospect of a 700k home (with pTax + mortgage) became a threat to my cashflow carefree /position/, until I devised the lease-spread idea/plan.

XR and YH have kids attending special-needs schools. My son is smart, but to protect him from bad influences, I may need to consider expensive school districts or charter schools. These choices can increase my burn rate by 40%. However, there’s a risk —

Some of the additional spending on education may have /unimpressive/ ROI, and waste my limited resources. This would be similar to SG government spending past reserve on the wrong covid19 rescue areas — wasting limited reserve.

Therefore, before I commit to spending the money, I need to weigh the cost and benefits.

  • top school districts cost me hugely in commute, pTaxes etc
  • private schools have high fees but may not help my son grow better

 

##[19] big discretionary spends 4中产华裔

Posted on by tiger40490

Original title “big discretionary spends4Chinese middle-class]US”

Trigger: If I benchmark with those earning 200k, my wife and kids would want vacations to Japan, Europe… When I tell them “not necessary”, they might feel impoverished, right? (It’s again the struggle between FOMO and livelihood.)

Not sure. Useful to zoom into the biggest discretionary spends. Figures below are monthly outlays.

Deepak CM pointed out that the immigrants middle class leave their home countries and come to the U.S. to live a “better” life. “Better” means discretionary spends.

I arrange the monthly amounts from big to small. This analysis is similar to Melvin3, and different from the “amortized” calculations.
[M=part of Melvin3 US^sg]

— [M] USD 3k->5k-7k/M : mortgage P/I + pTax.
They would want a bigger home. I can accept a small home, but prime location!
Wife may want a top school district.

— USD 5K/M/child (60k/Y) for a branded college
CSY’s son has a 60k/Y college fee (similar to Ivy League). 50% paid by parents i.e. 2500/M. With such additional burn rate, my idea of “lower stress, lower pay” easy job is impractical.

— [M] USD 1k/M (minimum) luxury car. Figure is TCO including amortization and depends on usage.
They might want a brand new car, not pre-owned.
In Singapore, I have debates about the need for a private car. In U.S., the debate is about how many cars and how big.

— USD 1k/M/child enrichment, special training? Not sure how prevalent. Figure varies a lot.
— USD 0~2k/M/child private school? Not prevalent.
— smaller items.. lifestyle creeps:

  •  vacations? Not sure how prevalent
  • family outings, dining out
  • sportswear? very much discretionary.
  • electronic gadgets
  • musical instruments
  • photography
  • toys

[20]ffree^FOMO #9K/M #Gary/Yin

Posted on by tiger40490

See also my blogpost on

After talking to Gary.Guo, I realized that I could be ffree but not free from peerComp pain — when I notice so-called “peers” earning a lot higher, and their families enjoying those things I used to dismiss as unnecessary… I would feel FOMO/FOLB i.e. left behind in the slow track. I think Henry.Yin also said that RMB 500k salary felt too low for an unmarried tech worker. I would hear similar sentiments if I talk to more people.

On one hand, minimum acceptable food[1] cost is dropping globally, and I have way more than enough income to survive. On the other hand I feel lousy seeing some so-called “peers” earning 20 times more than that minimum, and twice my salary. Each of them seems to complain about cost of living.

[1] see globalization reducing minimum cost@acceptableFood

FOMO … The tendency to feel envious, and the tendency to compare to our neighbors are … basic human tendencies. Even a child would experience that. However, it takes a rational mind (wisdom) to control the tendency. Other people’s envy is the damper of my bare-bones ffree.

If we don’t compare to the (wrong) peer group we CAN actually feel pretty comfortable and carefree, basking in a glowing self-esteem.

So why do we choose to engage in the unnecessary comparison? In this question, I’m confronting the paradox of my adulthood. In pursuit of a more rational perception, I have a chance to find and restore some balance in my world view. I feel Theordore Rubin’s books shed some light. He introduced some good descriptors.

This is a confusing, subtle topic, with multiple layers. One of the analytical techniques is a list of questions.

Q: How much monthly (passive) income is enough ? Note Annual income is not very granular.
A: Philip Che said $5k would be comfortable for a family of 4. Wife said 4-5k for my family of 4, as discussed in SG: bare-bones ffree=realistic #WBank^wife^Che^3k

In the Chinese middle class family burn rate the single biggest poisonous element is top schools. Top schools entail humongous housing cost [1] + college funding. This single element has the (destructive) power to transform a carefree life into a stressful, miserable life.

Q: What did grandpa say when I said my son would go to an average American school while other immigrant Chinese families mostly live in top school districts?

Q: What would the early-retirement-extreme author say?

[1] actually you may be able to rent in a top school district.

— Q: With my low burn rate of, say, 3-5k, what if my wife earns 3k and I earn 6k from work like the Teo family? In theory my carefree easy life would be sustainable but would I really find Peace?

Main street tech jobs pay about SGD 5k.

A: I think most people in that situation would probably feel below-average in salary, and unsatisfied. Those without kids or not yet over the peak would feel /wasted/ at that salary.

With 9k salary, some exclusive “clubs” would reject my family members.

— See also the blogpost on khmer villagers and similar cultures in SEA, Latin America, and some Buddhist cultures — more satisfied, less striving.

[18]Y I feel ffree !!US cohort despite higher pay #Deepak

Posted on by tiger40490

See also big discretionary spends

Background, by definition, my “peers” all have kids, and working in (financial) IT, often with 2 incomes.

Q: why am I feeling financially free but not the U.S. peers despite their higher income
A: My advantages are 1) burn rate 2) nonwork income
A: For their USD 90k burn rate supported by employee health benefit, at 4% reliable return, they need 2.25M invested.
A: For my SGD 36k burn rate supported by medishield, at 6% rental yield, I only need SGD 600k invested

  • passive income — i.e. the incoming side —
    • my projected real-estate passive incomes add up to S$4k+. Do some of my peers have a similar income? Not sure
    • I think too few of my peers have seriously focused on reliable, consistent passive income
  • burn rate — i.e the outgoing side  —
    1. My burn rate is 20-30% lower than my peers in the same location. For example, during the initial stabilization period after my family comes, my burn rate is possibly 7k, including rent + med bx + car
    2. my actual SGP burn rate of S$4-6k is less than their USD9k, largely due to location difference and childcare. Rural China, Malaysia, India .. would be even lower. I think Rural America is somewhat lower but not sure how much. I can ask some U.S. colleagues
    3. In terms of “minimum” burn rate, I think their average in the U.S. is 2 to 4 times higher than mine in Singapore, largely due to medical, transport and rental cost.
    4. SG citizenship — offers cost advantages in terms of medical, college ..
    5. In the job loss scenario, my confidence about reducing burn rate is not echoed by U.S. peers. Can some of them cut from USD9k to USD5k? I assume yes but none of them shows confidence.
    6. I don’t aim to buy a 700k home or send my kids to private colleges. Free of these burdens.
    7. My minimalist lifestyle is rare among my peers. This lifestyle is not theoretical, but visible in action
    8. my confidence about my household burn rate is rare among my peers

— After the analysis, now a more casual look at peer’s burn rate:

I discussed with grandpa about a huge difference between me and my colleagues’ burn rates.
This difference is rooted in their long-term optimism about their earning growth and stock market returns.

(In contrast, my self-confidence about my salary sustainability is based on IV.)

One thing easy and really useful to do with money matters is break-down analysis.
I can see my younger (and some in 40’s) colleagues spending more than I do on food, rent, mortgage, car, vacations, entertainment, gadgets, kids’ enrichment ..
These are often big-ticket items or creature-comfort spending, and clearly luxury IMO

Many believe food is never a big ticket item, but I think they spend $40/D i.e. $15k/Y vs my 4k/Y.

Q: sometimes I feel I can’t (allow myself to) cut further down below my peers because my family could then feel deprived, but can I?
A: I think I some capacity to ignore the peer pressure and maintain my superior brbr.

— In Sep 2020, I discussed “livelihood pressure” with DeepakCM. I described a fictitious family earning 250k [1] combined. Deepak said after-tax 150k/Y or 12.5k/M.

If they spend 10k/M then Brbr is stressful not comfortable. I feel comfortable brbr is 2.0+ but I guess the typical family is unlikely to save half the income.

Deepak pointed out that immigrants leave their home countries behind, and come to U.S. in search for a better life, so these high-income families would spend to enjoy. Lifestyle creep — a stark contrast to my financial discipline.

Q: If these immigrants are able to “accept/cope with” a simpler life but choose to enjoy a better, more /comfortable/ (actually lavish) life, then why do they complain about livelihood pressure like depicted in 中年男士40-50压力最高@@?
A: It depends on the acceptance — like my carefree acceptance vs reluctant, grudging acceptance. I think exclub and FOMO are fundamental /drivers/ in these high-earning immigrants. They are driven to spend, and driven to endure livelihood pressure. Some are unable to say NoThanks, as I described to my sis.

Q: Are they on cashflow high ground, with their high income?
A: No necessarily.

Q[1]: 250k … what if combined income is 300k? I think by most wealth-management standards that income would put the family in a different league . Indeed, some of my U.S. (I didn’t write “SG”) friends, my ex-classmates, and possibly my sister are in the “wealthy” exclub and not comparable to the rest of us. Their livelihood pressure, their Brbr, their assets are not comparable to mine.