Money in the US

Personal experience

Anastasia Savinova

Journalist

I live in Miami. I came to Florida in December 2017 as a tourist and decided to stay. I applied to change my status from tourist to student. The process is quite long, you cannot leave the country during the process. I was recently approved for a student visa and have started college.

Taxes

Each year, almost all working U.S. citizens must file their own tax returns with the Internal Revenue Service (IRS). Every U.S. resident has a Social Security card that helps record wages and income for taxes.

The main types of taxes are FICA and income taxes.

FICA includes the Social Security tax and the tax on the health insurance programme for the elderly and disabled (Medicare). Social Security tax is 6.2% and is only paid on income up to $132,900 per year, Medicare is 1.45% and is levied on all annual income.

As for income tax, the tax rate increases with income and ranges from 10 to 37%. The federal income tax system in the States is progressive. The amount of tax varies depending on whether you are single, married, or head of household.

The table shows the data for federal income tax for unmarried Americans. It reflects the rates for tax year 2018, which means taxes paid at the beginning of 2019.

Example: The maximum tax rate for an applicant with $50,000 of income would be 22%. However, the taxpayer would not pay this rate on the entire $50,000. The rate on the first 9,525 USD of income would be 10%, then 12% on the next 29,175 USD, and then 22% on the last 11,300 USD falling into the third tax bracket.

Savings, deposits, investments

56% of citizens invest in the USA. The main instruments: stocks, investment funds, bank deposits and real estate.

For example, the situation in Russia is different. 46% of Russians invest in real estate, 29% in bank deposits and only 7% in shares.

“My husband and I once invested in property. During the boom we made good money on it, selling what we had and making a good profit, but in the crisis we lost everything. Now I invest with the help of STASH INVEST and Fidelity Investments.”

Lassie, Sunny Ice Beach

Medicine

There are both public and private medical clinics in the United States. At a public clinic, when filling out an application form, you will be asked about your income level. If your income is less than $1000 per month, each visit to the doctor will cost $35, which must be paid immediately at the visit. You can pay for tests in instalments.

In a private clinic, the standard cost of a visit to a doctor in the absence of health insurance is $150. Dentistry is more complicated: it is much more expensive in the USA than in Russia. To have a tooth treated will cost 200-500 dollars, to have a crown put on will cost 500-1000 dollars.

Medicine

There are both public and private medical clinics in the United States. At a public clinic, when filling out an application form, you will be asked about your income level. If your income is less than $1000 per month, each visit to the doctor will cost $35, which must be paid immediately at the visit. You can pay for tests in instalments.

In a private clinic, the standard cost of a visit to a doctor in the absence of health insurance is $150. Dentistry is more complicated: it is much more expensive in the USA than in Russia. To treat a tooth will cost 200-500 dollars, to put a crown – 500-1000 dollars.In case of urgent need a citizen of the USA even in the absence of insurance has the right to use medical assistance. In this case, payment can be made in instalments.

The majority of Americans nevertheless purchase medical insurance. Its price varies from $250 to $800 per month depending on age and state of health and what medical services it covers. Most often, health insurance does not include dental care.

“To be honest, if there is no urgency, I prefer to have my teeth treated in South America, it costs two or three times cheaper there.”

William, Aventura

Credits

In the States, it is very important to have a good credit history, otherwise you will not rent a house and may not even get a prestigious job.

Interestingly, most average American families live “in debt” and take out loans even for small purchases. My friend, for example, by the age of thirty has fifteen credits and here this figure does not shock anyone.

Credit history is now carefully checked, especially after the 2008 crisis, but if there are no problems with it, it is relatively easy to get long-term loans with minimal interest and a fixed rate.

Credit cards are also widely used. It turns out that on the one hand you have the opportunity to enjoy the benefits of life today, on the other hand – you become a hostage of the credit monster, condemning yourself to endless payments, and spinning like a squirrel in a wheel. Losing your job can lead to bankruptcy and confiscation of property. That’s how they live: Spend more than they earn. But they smile all the time.

“I don’t have a steady job right now and my credit card debt is ten thousand dollars, I don’t even know how that came out, flat rental costs, insurance, airfare. The debt is growing like a snowball.”

Bridget, Miami

“All of America lives on credit, and it is very convenient. I opened my first business on credit cards: I bought equipment, materials, paid rent for the premises. I managed to pay off the debt within six months, which had a good effect on my credit history. Now I can borrow larger sums on credit”.

John, Boca Raton

Housing

Americans spend about a third of their income on rent or mortgage, utilities and home improvements.

The approximate cost of renting a 2-bedroom flat in Florida – $ 1200-3000 per month, depending on the city and neighbourhood. Housing is most often rented without furniture.

The cost of buying a property from 200 000 and above, depending on location and size.

Utilities will cost an average of $ 850 per month per family. If you add here and housing tax, a family living in a private house in a good neighbourhood will have to pay 1500-2000 dollars a month.

“I rented an unfurnished flat for $1200, I bought the furniture from hand, and if I move I will either sell it or move it to a new flat. With furniture, the same flat would cost me 1800 per month”.

Jesse, Miami

Nutrition

Food ranks third in the budget of most Americans. These expenses depend on social and family status and state of residence. For example, in California, Florida and New York State people spend about the same amount on food “out of home” and “at home”, while residents of the central states prefer to eat at home.

The cost of food in the USA is much higher than in Russia. For comparison: a litre of milk costs $4.5 (283 rubles)*, and a one and a half litre bottle of plain water costs $1.3 (81 rubles).

The price depends on the level of the supermarket. In premium-class grocery shops (Whole Foods, Fresh Market) the price is about 30 per cent higher than in ordinary ones. In Walmart, Publix the price will please, but the quality of products will be far from the standards of proper nutrition. There are warehouse-type supermarkets, such as Costco – a favourite shopping destination for family Americans. Here, by purchasing an annual subscription, you can shop for groceries at a significant discount.

*At the exchange rate as of 11.07.2019.

“We go to Whole Foods once a week for groceries. Our family doesn’t skimp on food, the kids are young and they need healthy food.

Thomas, Miami Beach

Transport

Bus fare costs $1.3 – $2.25 depending on the route, metro fare is $2.25. There are special prices for low-income people. There is still an opportunity to save a little money and buy a bus pass.

In Florida, as in most states, the public transport system is poorly developed, so the main means of transport is a car.

The most common taxis in the US are Uber and Lyft. The average cost in the city is $20 one-way. There are Uber Pool and Lyft Line options: this is when a driver takes several passengers at the same time. The duration of the journey is longer, but you can save money.

“I don’t use public transport, there are too many homeless people, it’s dirty and you can get infected with something. Besides, buses run irregularly, there are a lot of transfers. I bought a car as soon as I could.

Erica, Miami

Education

The US has a free school system, but those parents who can afford it prefer to send their children to public schools. The quality of education and qualification of teachers there is higher. The cost of education in a public school is 1000-2000 dollars per month.

In the USA, higher education is paid. It costs on average from $20,000 for an academic year. However, those Americans or Green Card holders who want to, but cannot afford to study, have the right to ask the state for financial assistance for full or partial payment of tuition.

This will depend on several factors, such as how well the applicant did on the entrance exams, how well he or she did in school, whether he or she has extraordinary abilities, and the family’s income level. Students who study in such programmes are paid a scholarship by the state. Its amount depends on the number of hours of study. The student can also get a loan from a bank on special terms to pay for tuition.

“I spend half of my salary on school fees for my children because I care about their future. In a public school they can get the knowledge they won’t get in a budget school and go to a good university”.

David, Sunny Ice Beach

“I attend Miami Dade College at public expense, attend classes three times a week and receive a scholarship of $1,800 per semester.”

Dina, Miami

Pensions

Retirement age in the States is now 66 years and 2 months for people who were born in 1955 and gradually increases with the year of birth. For those born in 1960 and later, the retirement age starts as early as 67.

It is possible to retire earlier, but then the payments will be smaller. The pension system here is multi-pillar. The pension consists of the one that is paid from the state (from Social Security contributions) and the funded part.

Working Americans are allowed to contribute a portion of their salary before income taxes to their personal retirement savings accounts. The most popular private retirement plan in the United States is the 401K. The employer opens an account where the finances that the employee puts aside and the company adds to are deposited each month. This money is invested in the stock market with the help of a specially opened brokerage account. The employee can manage his/her own investments without the right to withdraw. These funds will only be available at retirement age.

“I have worked as a part-time college professor my entire life while running my own business. I prefer a 401K retirement plan for my employees, and I save for retirement through that plan myself. In my opinion, it’s the best there is. We have been working with the same brokerage company for many years.

Berta, Miami

Salaries

Salaries in the States are counted by the hour. According to the Bureau of Labour Statistics, the average salary of workers in the United States in the first quarter of 2019 was $905 per week for 40 working hours. If in Russia you are asked how much you earn per hour, the question will seem strange, here it is quite normal.

In practice, according to my observations, many people work for $10-15 per hour. The size of the salary depends on education, profession, industry, geographical location and other factors. In the USA, a person who is willing and ready to work will never be left without money and will always be able to provide a decent living.

“Compared to other states, Florida has low salaries. I’m a consultant in a famous jewellery boutique and I get seventy thousand a year, here it’s an above-average salary”.

Amanda, Miami

Entertainment

As it is well known, “he who works well, has a good holiday”. However, most Americans spend no more than 5% of their income on this area of life. These are mainly sporting events, barbecues in nature, periodic trips to entertainment centres and restaurants.

The traditional pastime is American football. Every self-respecting American periodically goes to the matches. Some, to save money, come in their trailers, stay near the stadium, eat, drink and watch matches on TV sets brought with them.

When it comes to travel, Americans prefer trips within the US to holidays abroad.

“About once a month my family and I attend a football or basketball match, have picnics in nature. Sometimes we go to the cinema and theatre. Not all the time we have to work. You have only been abroad to the Caribbean. And why go anywhere else, when America has everything you need for a holiday. You can go skiing, sunbathe on the beach and go to the mountains.

Frank, Miami Beach

What else

Unlike Russians, spending on clothes and appearance are in last place in the budget of Americans. They buy things mainly at sales and do not worry about the name of the brand. Here, it is not customary to live on show and spend a lot on shopping, except for holidays: Christmas, St Valentine’s Day, Halloween and the day of big discounts – Black Friday.

Briefly

Americans are law-abiding. Paying taxes on time is sacred.
Every second person invests in the USA, preferring safer and more traditional investment instruments.
Medicine is expensive here, but you can always buy insurance or pay for doctors’ services in instalments.
Housing and transport costs eat up a large part of the budget.
Many Americans traditionally take out loans for housing, cars, starting a business, and other needs.
The state provides funds for those who want to study, but do not have the financial ability.
Private pension programmes are popular, every working citizen can ensure a decent old age.
Residents of the United States are quite practical and frugal, they are taught from childhood a careful attitude to green notes. They will never spend their last money on clothes, restaurants and entertainment.