Are you REALLY a middle income household?

[AnyDream]

I've found out how you can work out whether the govt thinks your family REALLY is a low, middle or high income.

It's a statistical measure called Equivalised Disposable Household Income (EDHI) and it gives a measure of what your income is worth in real terms based on your family's structure.

STEPS:
1. Calculate the gross income, minus the tax and medicare you paid for the whole year = disposable income.

2. Each member of the household gets a score (based on the idea of how much of the household's resources that person uses compared to how much they contribute).
1st adult = 1.0
Each additional person who is older than 15 yrs = 0.5
Each child under the age of 15 years = 0.3

Add the scores up for each person in your household (Eg, mum dad & 3 kids one of whom is a teenager = 1.0 + 0.5 + 0.5 + 0.3 + 0.3 = 2.6)

3. Divide the total from step 1 by the figure from step 2.

4. Divide that number by 52 to get the weekly figure.

That's your Equivalised Household Disposable Income figure. The average EHDI is $859.

Divided into 5 quintiles or layers (each layer being 20% of all households),
AVERAGE income for each 20% of the popn:
1st 314
2nd 524
3rd 721
4th 975
5th 1704

So if your figure is somewhere around those middle values, you're a middle income family. If it's around or above the average figure in the 4th quintile, you're a high income family. And if it's around or below the average value in the 2nd quintile, you're a low income family.

Expressed as the weekly EHDI at the TOP of each 10th percentile:
10th 344
20th 425
30th 525
40th 619
50th 715
60th 832
70th 971
80th 1145
90th 1448
This means that if your EHDI was $619 p.w. then your income is more than 40% of households in Australia.

Got it?

I was surprised to discover that although I thought we were pretty solidly middle-income, we're much more marginally middle-income, and in fact there are a LOT more households doing better than us . Add the exhorbitant child care costs (yes, we pay more than double the "average" weekly cost) and it's no wonder we seem to be going backwards!!


* ABS Household and Income Distribution 09-10 Figures from the tables on p.16 and calculation from Appendix 3.

[PumpkinZulu]

Ummmm...DH is the accountant, so I'll get him to take a look at all of that, I'm embarrassed to say that made my brain hurt. At the moment, we are but lowly students, so definitely nowhere near high- or even -middle income right now.

[Jennifer13]

Our income for tax purposes is what we say it is. We're both self-employed. So basically it's wherever the govt says we can cut it off and still benefit from our self-employment/tax status.

So I don't feel the need to do the maths.

Interesting though, MD!

[AnyDream]

Thought I might get a few OW my head hurts answers. But it's pretty simple maths. And we've got a few maths news/people who claim geekdom around the place...

[Miss E]

Interesting... Seems we're pretty middle of the road. Nice to know how they get to those calculations... But unfortunately they don't take into account the cost of living in different regions, to me that is probably one of the biggest determining factors in where you sit.

[Rouge]

Middle income here too. Scary.

[PumpkinZulu]

Interesting... Seems we're pretty middle of the road. Nice to know how they get to those calculations... But unfortunately they don't take into account the cost of living in different regions, to me that is probably one of the biggest determining factors in where you sit.

I agree with this. We live in an expensive area close to the city (our choice ofcorse) and our living costs are huge. We pay $460 pw for a two bedroom flat, whereas if we moved 30 minutes out, we'd have a 2-3 bedroom house.

[Babyluv]

Thanks

[Nai]

Yep - marginally middle income here as well. I guess a lot of that is to do with me working part time. If I was to work more then we would be significantly better off but that is the choice you have to make with kids.

[SunnyRain]

Simply put, it's dividing your disposable income by the number of people in the house (given a weighted value).


But what if you have 2 adults contributing equally? They should both have a value of 1.0

Anyway, I'm clueless about how much (or little) dh earns. I suspect if I didn't have savings we'd be living on the street, quite honestly.

--'--,--'--<@
Jude 07/10/08 | Lilac 16/06/11

[Miss E]

I agree with this. We live in an expensive area close to the city (our choice ofcorse) and our living costs are huge. We pay $460 pw for a two bedroom flat, whereas if we moved 30 minutes out, we'd have a 2-3 bedroom house.

That's it, we also pay ridiculously high rent and child care costs that are close to double what many others pay. And yes, we do make that choice. But for us the trade off would be moving further out which would mean more travel time each day, which would mean less family time. Right now we're not willing to make that sacrifice... Mind you we have been toying with other lifestyle changes that would reduce our cost of living.

ETA: Just realised I calculated this wrongly. I did two adults at 1.0 each, rather than having the second adult at 0.5. That puts us in the higher income brackets. But we're definately not a high income family, well at least not in the area we live.

[PumpkinZulu]

That's it, we also pay ridiculously high rent and child care costs that are close to double what many others pay. And yes, we do make that choice. But for us the trade off would be moving further out which would mean more travel time each day, which would mean less family time. Right now we're not willing to make that sacrifice...

Agreed! DH needs to be close to his uni in the city, and once he has finished, close to the city as that's where his career aspirations lie. We choose not to own a car so we need to be close to public transport, moving to a cheaper area would mean buying a car, longer commutes etc. It's a tough one.

[Nai]

ETA: Just realised I calculated this wrongly. I did two adults at 1.0 each, rather than having the second adult at 0.5. That puts us in the higher income brackets. But we're definately not a high income family, well at least not in the area we live.

Me too! We are solidly middle income based on that. We live inner city too but we cycle everywhere so we cut down on travel and time expenses.

[Jakabella]

According to that we are low income earners.... still cant get any help from CL or govt though! Never mind we scrape through....

[lilima]

Based on that, we are high income. we are semi rural, so transport costs are huge for us, plus I am a student as well as working part-time. So we use more income on transport to work etc.

[RainbowBrite]

I am below the 1st quintile
So I supposed we are classed very low income but on saying that we do alright, eat well, clothes, nice rented house, electronics ect.
It is hard at times, but what is on paper does not always accurately represent how you live.
We all live to our means.

[Astrolady]

Yeah another low income family here too. Nothing that I didn't already know LOL.

[Rowellen]

But what if you have 2 adults contributing equally? They should both have a value of 1.0

I think it has more to do with how much an extra adult would "cost" rather than how much they contribute. ie the cost of the second adult's food & clothes but not fixed costs like rent. ITMS