A new analysis has found that rising expenses mean it’s now impossible for most people in Arizona to set aside 20% of their income to savings – despite still being encouraged to meet this budgeting goal.
The researchers with Finanzas Justas analyzed average hourly earnings and average hours as reported by the Bureau of Labor Statistics, and subtracted the average essential monthly expenses as documented by the Bureau of Economic Analysis, which encompasses personal expenditures on housing, groceries, healthcare, car costs, personal care, utilities, and insurance.
Half of this residual income was then calculated as the likely amount the typical person is able to dedicate towards savings each month, as the other half goes towards ‘wants’, or non-essential expenses. This was then compared to the ‘ideal’ savings rate (20% of monthly income based on the 50/30/20 budgeting rule), to see where people need to put in the most hours at work to make up the shortfall.
In Arizona, BLS data shows the average resident makes $34.63 an hour and works for 35 hours each week, earning $5,211.82 each month. However, $4,008.92 of this is needed to cover essential expenses or ‘needs’, which covers non-negotiable costs like mortgage/rent payments, utilities, groceries, healthcare, and more.
This leaves $1,202.90 in residual income. If residents put half of their residual income into their savings – which is optimistic for many, they’d be able to set aside $601.45 each month.
“Many of us are still working towards meeting the 50/30/20 budgeting rule that stipulates 50% of our income goes on ‘needs’, aka essential expenses like rent and groceries, 30% goes on ‘wants’, and 20% goes on savings,” finance expert Olle Pettersson explains. “However, our analysis shows that the typical person in Arizona is actually having to dedicate 76.9% of their monthly income to cover the ‘needs’, leaving just over 23% of earnings to cover both ‘wants’ and savings. In actuality, 20% of the average monthly income and therefore ideal savings amount works out to $1,042.36 – so the average person is short by around $441.”
| State | Average Hourly Earnings | Average Monthly Income | Total Monthly Expenses (‘Needs’) | Realistic Savings (50% of Earnings after Monthly Expenses) | Ideal Savings (20% of Monthly Income) | Monthly Hours Needed at Work to Make up Savings Shortfall |
| Arizona | $34.63 | $5,211.82 | $4,008.92 | $601.45 | $1,042.36 | 12.7 |
To make up this $441, residents would need to put in 12.7 hours extra at work each month, assuming that they’re compensated equally for additional hours or overtime. This means over 150 extra work hours (152.8) are needed each year to save 20% of annual income.
My costs have more than doubled under the current administration.
“the average essential monthly expenses as documented by the Bureau of Economic Analysis, which encompasses personal expenditures on housing, groceries, healthcare, car costs, personal care, utilities, and insurance.”
And how many of those are subsidized, directly or indirectly, and/or required by government? And how many of those have gotten cheaper and more available for it?
In Tucson, call center jobs became the big employers for the unskilled outside of government. Those jobs days are numbered. AI will replace them in not time. Get out now.
Thanks, Biden (and his Auto-pen masters). My electric bill, my gas bill, my heating bill, and my water bill practically doubled under Biden.
2nd job is OK
but we found LIVING WITHIN OUR MEANS was far more important
and it takes time(years) to accomplish true savings
Part of the human problem…constantly tell people what they can’t do! How about you focus on telling people things they can do! I worked 60 hrs/week many years to raise 7 kids on my own after the ex left us. It’s harder but it can be done!
Averages mean nothing especially in Arizona where there is a huge population of indentured servants.
how bout you just work 40 hours a week instead of that 35 and problem is solved?