Money Guy Show | Episode Summary
Podcast: Money Guy Show
Hosts: Brian Preston and Bo Hanson
Episode: The Average American Needs HOW MUCH to Feel Comfortable in 2026?
Date: December 31, 2025
Episode Overview
This episode tackles a provocative new study from the Economic Policy Institute (EPI) on how much income the average American needs to feel comfortable in 2026. Brian and Bo dissect the headline-grabbing numbers—which suggest astronomical income thresholds for comfort—challenge the study’s assumptions, and provide practical advice for defining and achieving “comfort” in your own financial life. The episode shifts into a listener Q&A, touching on net worth, Roth IRAs, kids’ savings, and more, with the lively, candid style that Money Guy fans expect.
Main Discussion: EPI’s Report on “Comfortable” Income in 2026
Headline Findings from the EPI Study
- Single Adult: $106,745/year needed to be comfortable ([02:20])
- Two Adults, No Kids: $138,000+
- Two Adults, One Child: $194,000
- Two Adults, Three Kids: $278,000
- Single in California: $163,000
- Family of Five in California: $480,000
“If you are a single individual with no dependents, in order for you to live comfortably on average in America, the income required to do that is $107,000.”
– Bo Hanson ([02:20])
Hosts’ Reactions to the Numbers
- Both Bo and Brian call the study’s income levels "asinine," "bonkers," and "out there."
- They point out that, by these measures, most Americans would not be “comfortable,” which defies reality.
- The study gives some geographic variation (e.g., $87,000 in low cost-of-living states), but even these seem high.
- California’s estimates are especially “outrageous.”
"Who has. What percentage of people is making $500,000? Not even in California."
– Brian Preston ([05:32])
"If this is what it takes...then that must mean that the vast majority of Americans are not living comfortably because the vast majority of Americans fall below these income thresholds. And I just refuse to believe that."
– Bo Hanson ([03:04])
Why Are the Numbers So High? Breaking Down the Study’s Assumptions
- The EPI’s definition of “comfortable” appears to be exceptionally generous:
- Transportation Costs: Over $1,000/month for a single adult.
- Discretionary Spending: About $2,600/month per person.
- Hosts view these amounts as unrealistic for most Americans and potentially discouraging for listeners.
- Study fails to acknowledge how most people actually budget and live.
"Discretionary spending for a single adult would need to be somewhere around $2,600 a month...For a lot of Americans, that would be a big fun money budget."
– Bo Hanson ([07:36])
“To say that that's what you need to be comfortable, that's a bridge too far.”
– Brian Preston ([07:44])
Key Insights & Practical Advice
1. Comfort Is Personal & Within Reach
- Median U.S. household income is about $84,000, far below the study’s threshold.
- Personal finance is personal—everyone should define their own version of "comfortable."
2. Focus on What You Can Control
- Live Within Your Means: Adjust spending based on your actual situation ([08:55])
- Use Smart Rules: Car buying (23/8/20 rule) and home buying (3/5/25 rule) to prevent big-money mistakes ([09:40])
- Pull Your Levers: You can
- Increase income (career, side hustles)
- Decrease expenses ([10:37])
"Those are really your two options and you have a lot of control over those options. Sometimes it may take a while...but they're there for you and that is something you can control."
– Brian Preston ([10:49])
3. Enjoy Life Creatively
- Make memories with low-cost or free experiences.
- Life has financial seasons; comfort doesn’t require constant high spending.
- Embrace “bedazzling your basic life.”
“...I think that there's a lot of opportunity to make memories with your community, with your family that aren't super expensive...You don't have to do [Disney] to enjoy your life, or dare I say, to live comfortably.”
– Bo Hanson ([13:06])
4. Use the Financial Order of Operations
- The FOo (Financial Order of Operations) helps reduce anxiety and defines your next financial step, especially when "comfortable" feels out of reach ([14:27]).
- Fully funded emergency fund is a foundation of comfort.
"...If I finished step four and I had that in place, that would allow me to feel more comfortable in other areas of my life."
– Bo Hanson ([14:44])
Listener Q&A: Timestamps & Highlights
[16:13] – Retirement Number & Age
- Q: “Is there an age or a net worth level where I must know my number?”
- A: No specific age. Early on, focus on saving 25% of gross income—being directionally correct.
- Consider knowing your specific retirement number when you’re 5–7 years from retirement.
"Early on in the journey? Don’t focus on the finish line, focus on the pacing. Focus on 25%. 25%. 25%."
– Bo Hanson ([16:38])
[21:45] – Net Worth Statements: 529 Accounts
- Q: Should kids’ 529s be included in the net worth statement?
- A: Treat 529s as prepaid future expenses; list them in the footnotes, not in your main net worth.
“…they’re an expense that you’re likely going to pay…they’re more of an income statement item than a balance sheet item.”
– Bo Hanson ([23:26])
[27:56] – Pay Off Mortgage or Invest?
- Q: With $23,000 left on a low-interest mortgage, pay it off or invest?
- A: If you’re on Step 8 of the FOo, you get to choose: pay it off if it brings peace, or invest if it’ll make a difference in your wealth-building. Make sure it’s not a major portion of your assets ([28:24]).
[30:21] – Roth IRA: Contribution Deadlines
- Q: Can you make a Roth IRA contribution after year-end?
- A: You can fund for the prior year until the tax filing deadline in April (for 2025, you have until April 2026) unless you missed 2024 entirely ([30:35]).
[32:28] – Finding a Financially Compatible Partner
- Q: How do you find a partner who shares "mutant" (financial) values?
- A: Shared goals matter more than both being financial nerds; being aligned in values and communication is key ([32:28]).
"What matters in our relationship…is that we have the same goals..."
– Bo Hanson ([33:24])
Fun: Mutants Mingle, Met Worth—listeners suggest names for a financial dating app!
[38:52] – Roth IRA for Kids’ Earned Income
- Q: Can an 11-year-old with earned income open a Roth IRA?
- A: Yes, if you file a tax return with their income. Alternatively, consider a custodial account until they get “official” income forms ([38:52]).
[45:24] – Employer HSA vs. Emergency Fund
- Q: If employer contributes to HSA but emergency fund isn’t full, what should you do?
- A: Let HSA funds stay in cash as part of your emergency reserves until your emergency fund is fully built; then invest ([45:24]).
[49:05] – Saving for Kids: 529s vs. Other Support
- Q: Should you prioritize 529s or providing tools for wealth (cars, test prep)?
- A: 5,29s are step 8 in FOo—prioritize emergency fund, retirement, and then 529s. Instilling financial skills trumps just gifting money ([49:05]).
"Money is not a goal. It's a tool that allows us to achieve our goals..."
– Bo Hanson ([52:47])
[54:14] – Not Messing Up: Roth IRAs & Investing
- Q: Fear of making mistakes opening/spousal Roth IRAs with only 401(k)s
- A: Investing need not be intimidating—use a Target Retirement Index Fund if unsure. As long as you meet income thresholds, Roths are direct and simple.
"If you can answer two questions, how much can I save? When do I need the money? You've answered everything you need to know when it comes to investing."
– Bo Hanson ([54:14])
Notable Quotes & Memorable Moments
"Those numbers become discouraging. So what we said in true Money Guy fashion is, let's dive in."
– Bo Hanson ([05:41])
"Personal finance is exactly that, it is personal. And so you have to define for you and your life, what does comfortable mean?"
– Bo Hanson ([08:03])
"Very often. Nope."
– Rapid-fire affirmation/disagreement during practical advice on living within means ([09:27])
"Mutants Mingle... That's the winner. We're launching."
– Bo Hanson on the idea of a finance-nerd dating app ([37:46])
"Money is not a goal. It's a tool that allows us to achieve our goals..."
– Bo Hanson ([52:47])
Key Takeaways
- Don’t let sky-high “expert” income estimates define your sense of financial comfort.
- Focus on living within your means, making smart big purchases, and pulling the levers of income and expenses you control.
- Build your comfort and financial future step-by-step—with an emergency fund and the FOo.
- Enjoy life and make memories, even on a budget.
- The Money Guy community is active, supportive, and maybe even playing matchmaker for financial “mutants”!
Resources Mentioned
- Money Guy FOo (Financial Order of Operations): moneyguy.com/resources
- Net Worth Statement Template: moneyguy.com/resources
- Roth IRA & Backdoor Roth guides: moneyguy.com
- Making a Millionaire Series: YouTube channel, every other Monday
This summary captures the central debate, practical wisdom, and the community feel of this Money Guy Show episode. Whether you’re concerned about your own comfort threshold, worried about being “behind,” or puzzling out next financial steps, Brian and Bo deliver reassurance, clarity, and motivation to keep building your best financial life.