A Tale Of Two Budgets

by Kelly · 13 comments

in Notes On Culture

I thought it might be interesting to do a (highly unscientific) comparison of two different families’ budgets… one in France and one in the United States. For easiness’ sake, I’m using my budget for the French family; a friend of a friend agreed to do the math and be my American guinea pig.

This is how our American family describes themselves:

We are a middle class family of four, living in a medium size city on the East Coast. The parents are both college educated and white collar professionals (the wife works part time); the two children are in elementary school. We own our own home (with a mortgage), attend church regularly and take vacations regularly. We consider ourselves to be moderate spenders. We have no credit card debt and own our two cars free and clear. We have some money in savings for our retirement. Regarding spending, I wouldn’t call us frugal, but I wouldn’t call us excessive. We spend within our means and are willing to pay good money for good quality things.

This is how I describe my family:

We are a middle class family of five, living in a medium size city in the French Alps. The parents are both college educated and white collar professionals (the wife is on a year long maternity leave and works part time from home); the two oldest children are in preschool. We rent our home, do not attend religious services and take vacations regularly. We consider ourselves to be moderate spenders. We have no new credit card debt but are making payments on a fixed rate, low interest loan that paid off our one credit card. We have car payments for our two cars. We have no money in savings for our retirement. Regarding spending, I would call us frugal, mostly through necessity. If we had more disposable income we would probably spend more, although we would continue to try to be as frugal as possible.

Now for the budgets. All the numbers are percentages of total income spent in each category, in an Us (France)’ versus ‘Them (United States)‘ format. For irregular expenses like home repair, medical care or (for us) savings, I’ve taken an average over the year. I’ve also used, for us, our minimum income, without counting any extras like snowflakes.*

  • Housing 8.3% / 16.98%
  • Utilities (gas, water, electricity) 2.9% / 4.64%
  • Phone and Internet 1.0% / 2.36%
  • Insurance 1.1% / 9.22%
  • Medical Care 3.6% / .34%
  • Transportation 8.5% / 12.13%
  • Entertainment 4.8% / .69%
  • Savings 13.6% / 5.20%
  • Federal/State Income Tax 28.4% / .68%
  • Home Repair 5.0% / 4.16%
  • Groceries 4.2% / 13.86%
  • Dining Out 3.6% / 3.47%

There are some interesting things here, or maybe it’s just the classes I took in statistics as a sociology major that are talking. First, what we pay in housing is almost double what they pay, and I suspect (from what they pay in taxes) they are in a higher income bracket than we are. Either they bought a long time ago, in a good market, or this serves to reinforce my suspicion that the market where we are is vastly overinflated.

Secondly, we pay much more than they do in insurance. I didn’t ask for details, but I assume that they are paying for health insurance.** We aren’t and we’re still paying nine times more than they are, for cars and life/disability insurance. On the other hand, when it comes to medical care, we are paying a much lower percentage. I didn’t include costs that are reimbursed for us, like doctors visits and medicine, because, after all, they aren’t costs. They manage to save much more than we do, nearly three times as much, which I think is great. They also pay way more than we do in taxes! We are lucky to be in one of the lower tax brackets in France; the generous taxation system favors low income earners and families with children. We haven’t paid income tax since the birth of our first child; we only pay local council taxes and the television tax.

One thing I did not mention is what percentage of our income is used for loan repayment. They didn’t include this category, as they don’t have any loans, but we pay 20.79% of our income in student loan and past credit card payments. Up until February it would have been even more: 25.41%. Ouch.

When I first received the email with their numbers I was struck by a funny thought: It’s normal to be debt free. After all, here’s a family in about the same situation as we are (white collar, professional, young children at home) and they have no car debts, no credit card debts and they are paying a mortgage for their own home. It shouldn’t seem exceptional to me, but it does. One day, I hope, it won’t, because we’ll be just like them.

*By the way, if you would like to do your own calculations, but are feeling too lazy or clueless to do the math, this site will do it for you.

**As it turns out, their health, life and disability insurance are all paid for by his employer.


1 Amy June 6, 2008

Interesting comparison! I too was struck by the difference in taxes. Also, it is so much easier to save when you aren’t paying big chunks to debts. Like you, I can’t wait until that debt-repayment part of my budget is gone!

2 Frugal Trenches June 6, 2008

It would be interesting to have controls on this like having same income, owning home for same number of years, having same number of children to see what the actual statistical differences are – also to do a large randomized control study – can you tell I do research??
I don’t know many Americans that don’t have debt, particuarly car debt. I was watching ABC news on the BBC late night last night and it was looking at typical US family spending, was very revealing!
Another thing I find interesting is quality of life measures.

Great post!!!!

3 Nicole June 6, 2008

That is so interesting. What Americans see is a paid healthcare system but it’s easy to see you are paying for your health care in many other ways…

4 Frugal Trenches June 7, 2008

You inspired me!
Here in England:

Based on percentage of my Take Home pay:
Housing 45.23%
Utilities 3.28%
Phone and Internet 3%
Insurance 0%
Medical Care 0% (all free here) – I do get accupuncture, but for this I wouldn’t see it as medical care
Transportation 2.3%
Entertainment 2.85%
Savings 23.8%
Home Repair 0%
Groceries 4.76%
Dining Out 1%
Local Tax 4%

In terms of federal tax, it makes up a total of 22% of my income – EEK!

5 Canadian Saver June 8, 2008

Very interesting!! I will go do my calculations too 🙂

6 Dough Roller June 8, 2008

This is a great comparison. The housing costs really struck me. I get real uncomfortable when I’m paying more than about 20% for housing. Of course, when we were just starting out, we didn’t have much of choice.

7 Jon June 10, 2008

French income taxes seem lower than US taxes because there are so many other taxes taken out of your paycheck before you get it (typically 25-30%). Then income taxes are paid on top of that (around 8% in our case but probably nothing next year, now that we have a child). So even if you pay no income tax, you will still have a hefty difference between your salaire net and your salaire brut.(Whereas in the US, an employer may withold income taxes ahead of time, but everything ends up under that one big heading of "income tax".)

8 Emma June 15, 2008

From Canada: My status would be lower income, single person, university graduate going into her 2nd year of working full-time. My age is 23, no vehicle, no consumer debt, but paying off large student loansHousing: 39.21 *NOTE: I rent and my landlord include utilities, phone and internet in the price*Insurance 0%Medical Care 0.42% (this is on average for prescriptions and over the counter medication when I get sick)Transportation 5.23% (monthly bus pass)Entertainment 5.23% (varies between $75 and $125, so I went with $100 as my average)Savings 6.5 (includes a minimal RRSP payment)Home Repair 0%Groceries 13.06%Dining Out -0% (I include this as entertainment)Local Tax 0%Unaccounted for: Student Loan payments: 16.99% to 19.60 (depends on the what amount went unused in other categories that I can throw to this)Shopping/gifts/donations, which account for 3.92%This total was 90.56-93.17 (pending student loan payments), as I based it off of the "true" amount a salary provides over a twelve month period. My actual net monthly income is $1765, not the $1913 used for the calculations. Those bonus pay days get divided into savings/debt/fun.

9 Charlie Parker July 8, 2009

Bonjour Kelly,

First of all, you are assuming a great deal about the American reporting. I am an American and frankly speaking, I would not bet even one Euro that they reported the absolute truth. If what they say is true, then they must be in the top 1% of American income rank. Very, very few Americans fit their financial profile.

Which leads me to my second point: les Pommes vs. les Oranges!!
Such a country-country comparison is virtually meaningless (actually counterproductive) unless its made between two families in, at least; the same income range, age group and living in a city with a comparable COLI (Cost-of-Living-Index).

By example, the Americans report that insurance is 1.1% of their budget – which given that they only report moderate savings… lets say is approx 80% of income. With two autos, health insurance premiums for a family of 4 (US avg Out of pocket expense = $3K alone), disability, home insurance, mortgage insurance, life, etc My guess totals about $7K/yr in most pop centers of the US. If 1% = 7,000, 80% = $560,000.

Therefore, either they are woefully under-insured or their HH income is well over US$650,000 per annum (the 99.5 percentile)!!! With no disrespect, from what I have read here, I am pretty sure your household income is not over a half million EUR a year. Even if I am off by 10% they are still VERY high income folks.

In conclusion, I think your idea of a comparison is very good… but you will need to get a lot more accurate information -and then use it to find a closer economic match before one can draw any meaningful conclusion from the families’ budgets.


p.s. I just looked at their reported Tax Rates – impossible. If they are earning what they must for car/home/health insurance to be 1% of their budget, their effective tax rate would be 36% last year (FED taxes alone) plus state/local. I smell some dodgy numbers…

10 Kelly July 8, 2009

Hi Charlie,
Thanks for your comment! As I say in the very first sentence of the post, this is a highly unscientific comparison of two situations, in approximately the same geographic and familial situation, but otherwise in very different straits.
I have no way of knowing if their numbers are accurate. I can only take on faith what they told me, and trust that, as family members of a very close friend of mine, they would be interested in telling the truth.

11 Charlie Parker July 13, 2009

Hi Kelly,
I am hoping you didn’t take it as a personal admonishment as it wasn’t intended to be ! The fact is there really is no comparison whatsoever to be made if they are indeed “in very different straits”. Period.

And it doesn’t hinge on whether they are trustworthy or not (you don’t know them so you have no way of knowing that – nor do I know or care) – regardless of the reason – the numbers just don’t, and can’t, add up. Inaccuracy has many causes (i.e. under/overestimation, secondhand info, etc) and I made no assumption as to why theirs are not be true. They just don’t add up as presented – and if they do, then these are awfully rich folks who have no place being compared to a blog author whose stated purpose is frugal living (…not usually the “lifestyle of the rich and famous” in any country ‘-)

I love your site… and hope that someone who has the time and desire actually does find some matched US v FR families to compare as that would be enlightening.

Keep well and keep on posting!

12 Charlie Parker July 13, 2009

For the record:
because %ages of budget/income vary by income-level, I will stick to Cost-of-Living figures. Over the last 30 years, I have lived/worked in NYC (urban & suburban), Chicago, San Francisco, London, the Netherlands (A’dam & suburban) and Paris, while keeping a home in the USA.
Having lived in both, here’s a breakdown of the relative C-O-L between living/working in similar areas in a world capital in the USA (NYC – W 82nd off Central Park West) and one in FR (Paris – 16eme near the Bois).
Since the site is based on being frugal – the City named in each category is the one that costs LESS of our HH income.
Housing – Paris.
less than 27% of income vs NY’s roughly 40% (an equivalent to our Paris apt would cost nearly double in rent per month in NYC right now)
Utilities – Paris.
about 30% less per month for comparable living space where heat/water chgs are collective
Phone / Internet – Paris.
In NYC – a bundle incl TV, unlimited US Telephone calling & 15mbps Internet is $100-120/month. Paris (w/unlimited calling to 60 countries incl US) is €30/mon.
Cell/Mobile phones – NYC
Paris is just catching on to price competition in mobile phone services.
Insurance – Paris.
Auto/life is about the same, home is less – but INCL Medical/Hospitalization plus “top-up cover” (i.e. Aflac in the US /”mutuelle” in FR)???
Insurance total cost in Paris is about than 35% of what our insurance cost us in NY… with lesser coverage and higher deductibles (which are nearly non-existent in France or Med Ins)
Medical Care – Paris.
The cost of services, tests, care and prescription medicine is A’dam via Thalys = 50€ vs NYC -> Wash DC on Amtrak = $155
Entertainment – Paris.
Film tix are about equal. But across the board (we are avid cultural fans): concerts, dance, museums, plays etc are cheaper in Paris than in NYC. i.e. West Side Story musical perfomance – Paris top ticket 110 vs Broadway 165 / Alvin Ailey in NYC was $165/seat vs top ticket of 105 in Paris next week.

Air Travel – TIE
Both have substantial discount airlines

Savings – France generally saves more of its income than in the US, although that has changed a great deal with the advent of foreclosures sweeping the USA
Home Repair – TIE
Groceries – TIE although fresh green groceries are a bit cheaper in Paris as are dairy products
Sundries/Electronics – NYC.
For reasons too deep to dive into here, Paris is more expensive for almost all manufactured goods including cars, household electronics, computers, tools, etc
Dining Out -TIE
one can find a range of restos at any price point in either city (altho in Value For Money, I’ll take Paris’ food and wine)
Local Tax – TIE
unless you are wealthy, there is no local tax other than a consumption tax (VAT/TVA) in Paris plus habitation and TV services tax. Paris VAT is 19.6% but (TMK) NYC charges about 10% VAT PLUS up to 8% income tax. Owned Property tax is higher per assessed value in NYC than Paris a well unless you are assessed a “wealth tax” which near evens it out.

13 Charlie Parker July 13, 2009

Ooops! hit the Submit button before ready!!

Medical Care – Paris.
The cost of services, tests, care and prescription medicine is about 10-20% of the same services in NYC. eg: an MRI in NYC = $1000-1500 vs Paris = €89, 2 wk course of antibiotics: NYC $60 vs Paris €5-7

Transport – Paris
Metro/Bus/RER system 1.50/11.40/56€ for 1 trip/10x/month pass
nYc Subway/Bus = 2.25/20/89$ for 1 trip/10x/month pass
Paris->A’dam via TGV = 50€ vs NYC->Wash DC on Amtrak = $155 (for a shorter distance)

BTW – before anyone brings up currency conversions, one who has lived overseas knows that conversion (tho hard to stop doing in your head ‘-) does not apply when talking about residents who earn the currency they spend — only to people who earn in one and spend another currency, which is quite rare. In general, its 1-to-1 units even tho NYers may earn a bit more doing a similar job, but that is impossible to discuss in this limited context.

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