Can You Afford the American Dream?
A home, a car, a couple of kids – for many North Americans, this picturesque vision represents the ultimate goal. But for people here and in other parts of the world, the American Dream may be sadly out of reach, as they tackle more pressing concerns: figuring out where their next meal will come from, planning which bills to pay, and working multiple jobs simply to get by.
Using post-tax salary numbers and cost of living data, we analyzed the accessibility of the American Dream to residents of various countries. Who can afford it? Who falls short? The results offer a poignant view of dreams versus reality – and a sobering glimpse at living conditions for people around the world.
Note: For this project, we defined the costs of the American Dream as a mortgage, a car payment, gasoline, utilities, food and water for a family of four, four inexpensive restaurant meals per month for the family, one movie for the family, and one date night for the parents (a three-course meal at a mid-priced restaurant).
Which countries’ average citizens can afford our definition of the American Dream in their respective homelands? Not a single one. Residents of every single country would need to earn more than the average U.S. post-tax salary of $2,717 (USD) per month. Ironically, ranked at third place, Americans themselves would need to earn $842 more per month to fulfill their own country’s dream.
The Top 10 Countries for Living the American Dream
Five of the top six countries best able to afford the American lifestyle are located in the Persian Gulf. People in Saudi Arabia come closest – a worker would need to earn only the equivalent of $74 more per month to make it work. The country’s oil-fueled economy makes it among the wealthier nations in the world, but Saudi Arabia is also home to violent capital punishments, strict laws on freedom of speech, and stringent restrictions for women (who must be accompanied by male chaperones, do not drive, and are banned from wearing certain types of clothing).
Where is the American Dream Least Affordable?
Next, we looked at which countries’ citizens are least able to afford the American lifestyle. Cuba ranks last by a wide margin: With an average monthly salary of about $25, a Cuban worker would need to earn more than 95 times their wages in order to fund the preferred way of life in the United States. The limited earning power in the socialist country means even skilled employees must struggle to scrape by: Many residents live with family or roommates in small, crumbling homes, and residents rely on the government for everything: education, employment, food, and health care. Groceries are rationed – residents visit small “bodegas” to get staples, and many set aside a portion of their small salaries to buy supplementary meat and vegetables at markets.
Residents of Venezuela, too, fall far short. With the worst inflation rate in the world, the socialist country’s economy is crumbling. Though Venezuela is rich in oil, life is difficult for those who live there: Wages have plummeted, ATMs have implemented low daily withdrawal limits, and supermarkets must ration supplies.
How Affordable is the American Dream Worldwide?
What portion of the average local salary would workers around the globe need to earn in order to achieve the home/car/two kids lifestyle? The map above offers a comprehensive picture based on workers’ current local salaries: Residents of North America, Western Europe, and the South Pacific fare best overall; citizens in Asia, Eastern Europe, and much of South America and Africa would need to earn much more.
What if we used the average monthly American salary ($2,717 USD) in our analysis of someone’s ability to afford a home, a car, and two children? We examined hypothetical scenarios in which a person lives abroad and telecommutes for an American employer.
The Most Affordable Countries to Live the American Dream on a U.S. Salary
Not surprisingly, many of the nations on the top 10 list are developing countries, where daily life is not easy. In top spot Libya, a telecommuter could live comfortably on 60.7% of an American monthly salary, or $1,649. However, there’s no happily-ever-after lifestyle there: Political upheaval and rampant violence colour life for citizens of the war-torn nation. Once Africa’s wealthiest nation, Libya now is home to various warring factions who subject innocent bystanders to shelling, abduction, and execution.
In second-place Nepal, a worker would need to make only $1,782 to live the dream. Sadly, though, 80% of people in Nepal live in rural areas and lack access to health care, safe drinking water, sanitation, and education. Hunger is an issue, too: Half of children under age 5 are undernourished.
Next, we examined which countries are least affordable for a person who, in our scenario, telecommutes for an American employer and earns an average U.S. salary of $2,717 USD per month.
The Least Affordable Countries to Live the American Dream on a U.S. Salary
Three of the 10 most expensive nations are in Asia. In top spot Singapore, a wealthy city-state known for having a high cost of living, a worker would need to earn almost four times the average American salary to fund the American dream – nearly $11,000 per month.
Though Singapore is home to a rich culture, renowned cuisine, and a diverse population, daily life is even more expensive there than it is in New York City. Many of its staggering population live in public-housing tower blocks, and virtually everything (education, clothing, gas, groceries, and alcohol) tends to cost more than it does in the U.S. (Singapore is also home to strict laws; for instance, spitting or singing an obscene song in public can draw fines or jail time.)
Switzerland is the sole European country on the least-affordable list. A Swiss worker would need to earn more than three times the average American salary – $8,200 – in order to achieve the dream lifestyle. Interestingly, though, based on local wages, Switzerland comes in seventh among countries best able to afford the dream: A Swiss worker would need to earn only around 1.5 times the average local salary to afford a home, a car, and two kids.
Where Can You Live the American Dream on an Average U.S. Salary?
The map above paints a picture of the world’s affordability (based on a telecommuter who earns an average U.S. salary of $2,717 per month). Coloured red, the most expensive nations are spread across the globe: In Ghana, Argentina, Belarus, Iran, Venezuela, Australia, China, and Norway, the American Dream is most elusive. Nations shaded dark green – much of Africa, the Persian Gulf, and Eastern Europe, as well as Kazakhstan, Pakistan, and India – are the most affordable. Regions in the middle include North America, Russia, and a few other countries.
Where can you afford the American Dream? Enter your salary to find out which countries you could live in – and which are simply too costly.
Where Can You Afford to Live the American Dream?
Living the Dream
For many people around the world, it’s clear that the cost of living to North American standards exceeds salaries, making it difficult or impossible to live the traditional definition of the American Dream. For some, the concept of living the American Dream simply means leading a rich and fulfilling life in a comfortable home, surrounded with loved ones.
Are you ready to start living your dream? Finding the right home for your family may be the next step. We are an industry-leading brokerage in the Greater Toronto and Vancouver area, but we will expand to the rest of Canada in 2016. Give us a call at (416) 800-0812 or visit TheRedPin.com.
The majority of the data were gathered from numbeo.com on November 14, 2015.
Average post-tax salaries were taken directly from Numbeo.com. Salaries reflect a single-income household. The numbers for telecommuting were obtained by swapping the average local monthly salary with the average U.S. monthly salary.
All expenses were calculated on a monthly basis using pricing data from Numbeo.com.
- Housing: The median U.S. home size (1,480 square feet) was taken from census.gov. The cost for the median-sized U.S. home for each country was established, and the monthly mortgage payment was inferred from their mortgage rate data (assuming a 20% down payment and 30-year term).
- Utilities: Cost covers electricity and high-speed Internet (10 Mbps, unlimited data).
- Car payment: In order to calculate monthly payments for a new car, we made the tacit assumption that car loans and mortgages are essentially analogues, as they are both property loans, so the auto loan APR by country was computed using the ratio of mortgage rate to auto loan rate in the U.S. The average APR for a 60-month new car loan in the U.S. on November 18, 2015 was 4.31%, according to bankrate.com. Monthly payments were then computed with the assumption of a 20% down payment and a 60-month loan.
- Gas: The average gas consumption (40 gallons per month) was taken from energy.gov, and the cost of gas was found by using local prices.
- Food: The monthly minimum per person was multiplied by four (for a family of four).*
- Dining out: Cost covers two dates per month for adults (three-course meal for two at a mid-priced restaurant) and four inexpensive meals per month for the family.
- Entertainment: Cost covers the cost of a family attending one movie together each month.
The interactive map was designed using a 31.5% tax rate, which is the average tax rate in the United States.
*The monthly minimum cost of food was not available for Cuba; upon determining its food costs are close to average, we substituted the average cost of food across the world for Cuba.