Munna posted his view about living and saving money in USA as a comment the blog post Why Saving Money in USA is Difficult Than You Think (Video)
He had very practical view about expenses and saving money in USA. I’m promoting his comment as blog post with minor edits.
It takes some time to understand the system here in USA – 1 year to 5 years to fully know how we can save more and smartly use our money.
1. Bank Interest Rates
USA is a country of low-interest and profit for Big Banks. They punish people who want to save money as they hardly give 0.5% or 1% interest on your savings account and fixed deposited (called CDs).
On the other hand, they flood you with credit card offers and car offers to take more and more loans.
Apartment rent in high. 1 bedroom cost atleast 500-600 dollars in Texas to 1500 dollars in California and NJ.
Tax is very high in USA. We have to deal with Federal tax, State tax, Medicare, Social security deductions.
See Sample tax calculation below.
4. Health Care is Expensive
Healthcare is expensive in USA. Don’t think that you have medical insurance and everything will be fine. After insurance also, you have to pay.
My friend had a good insurance, still he had to pay 10,000 dollars for his appendicitis operation.
Even after insurance, get ready to pay 1000 dollars for MRI scan or tooth root canal treatment.
Eye glasses are very expensive.
Utilities are expensive. Cable TV cost you 100 dollars per month. Add electricity, water and so on.
Telephone service is most expensive in the world. 50-60 dollars per month.
6. Learn to Cook
Learn cooking if you want to survive in this country. That will save you lot of money.
Eating fatty food outside and rotten Indian restaurant food will make you ill.
Most of USA do not have any public transportation. Even if they have, it is erratic and you will not be able to reach from point A to point B. Many places, there is no footpaths to walk and they do not allow cyclist on road and with no bus/train system, one is forced to buy car.
That opens up a new source of expenses. Car payment, gasoline, car insurance (car insurance is 50 times more expensive then India), county tax, motor vehicle inspection, car repair.
Car Repair is an experience of life-time here. Very common to get billed 200-300 dollars or even 1000 dollars for car repair.
Last but not the least, tickets/fines for over speeding and parking at wrong place. Every-time you are billed 100 dollars atleast.
8. Saving Money is Still Possible
Having said that, it is possible to save money on 50 K but don’t expect to save anything if you are a Ph.D. student (recipe for Financial disaster) and Post Doc. A post doc typically gets 36K and with all above mentioned expenses get into trouble.
Biggest compromise a person can do is to share room, cook own food everyday and buy a smart old cheap car.
We Indians have a different mindset then Americans.
We would like to recover our investment on our studies as well as support our parents/family so savings make more sense.
As wait for Green card is very long, savings become more important as we do not know whether we will live here for rest of our life or not. While returning to India for good, we need some money.
.. So, that was all Munna.
My Comments on Savings
I sure lot many people from other countries have same feeling about personal finance and savings and not just Indian’s living in USA.
Here’s a basic federal tax calculation.
If you make $50,000 per year
- Standard Deduction – $6,200 (2014)
- Personal Exemption – $3,950 (2014)
- Taxable Income – $39,850
- Federal Tax – $5898
- Plus you pay State Tax ( applicable).
This is rough math for someone who is single.
Let’s say you save $12,000 per year. That’s lot of savings compared to what you can save working in India.
Lot of Entry level Software Engineers in India get paid less than $12,000 per year in India. Considering that savings of $12,000 AWESOME isn’t?
Plus life in USA comes with better quality ( and you have to miss your friends and family as well).
Do you have story to share about expenses and savings? Post it in the comments bellow.
Update 1 – There are many born-and-b