What if I told you there's a premium you pay to be an American?
Sure, we all have to pay the standard, unavoidable expenses like rent, utilities, groceries, cell phones and cable bills.
But as Americans, we also pay a hefty "freedom tax" in the form of individualized, privileged expenses that are almost considered today's norm.
I'm referring to mostly healthcare, higher education and housing, and they're all large expenses that have become obstacles for many families trying to make it in America.
But what if there was a country you could live in where you didn't have to pay for all of these privileged expenses by yourself? That country exists, and it's called France.
Yes, France has a relatively high -- up to 40% if you earn more than $93,000, and 30% if your household earns between $35,000 and $93,711 -- but that's not bad when you consider what perks you get in return:
1. No Crippling College Tuition Expense
American college seniors who graduated in 2009 owed an average of $24,000 in student loan debt, up nearly 50% from 1996, according to The Project on Student Debt. New data released by the U.S. Department of Education shows a sharp increase in the rate at which student loan borrowers are defaulting. The official "two-year cohort default rates" show that 8.8% of student loan borrowers who entered repayment in 2009 had defaulted by the end of 2010, up from 7% in 2008.
France's state-run university system, on the other hand, guarantees an almost-free college education (tuition is just around $250 a year) to every high school graduate who passes the baccalaureat exam.
It works like this: France has a dual system for college education, divided between "universites" and "grandes ecoles." Less than 5% of students enter grandes ecoles, which have a competitive selection process and entrance exams. The rest are steered toward public universities that are districted according to local high schools for enrollment.
2. No Out-Of-Pocket Healthcare Expenses
In the U.S., if you find yourself in the hospital without health insurance, you could easily be buried under medical bills for decades -- if it doesn't lead to bankruptcy, that is. Bankruptcies in the U.S. due to medical bills increased by nearly 50% in a six-year period, from 46% in 2001 to 62% in 2007, mostly affecting middle-class, well-educated homeowners, according to a report in the August 2009 issue of The American Journal of Medicine.
If you live in France, your healthcare is covered. It's not exactly free -- you pay for it with via annual taxes typically taken out through payroll deductions -- but it's a universal system that covers every tax payer, regardless of whether or not you're employed. This unique system helps keep the overall costs low, not to mention the population healthier and protected from crippling bankruptcy.
3. No Bank-Breaking Childcare Expenses
Childcare in the U.S. can cost you $500 to $1,000 a month – and that's for the most basic programs. For more specialized private care, such as a Montessori preschool program, be prepared to spend $1,200 to $2,000 a month -- per child.
In France, preschool children go to state-subsidized nursery school. Parents pay a contribution based on their income, but for most middle-class families, the cost is $7 a day - and that includes lunch. These programs must meet national standards and are sufficiently subsidized by the government to enable children from middle-class families to attend at little or no cost.
4. No Car Payment or Car Insurance Necessary
Car ownership in the U.S. can take a toll on your monthly budget; from the monthly car payment -- anywhere from $200 to $600 a month and up -- to insurance, to upkeep and the rising cost of gasoline. Add it all up, and your car is a liability that is costing you tens of thousands a year.
Cars aren't any cheaper in France, nor are they free. But, owning an automobile in France is an, not a near-necessity like it is in the U.S. The French pride themselves on their complex network of inexpensive public transportation, which allows most of its citizens to easily get around without the need of a car.
As company-funded pensions become a thing of the past and questions abound about Social Security's solvency, a self-funded retirement is becoming more of a reality for many of us who wish to maintain the same quality of life going into our golden years.
[InvestingAnswers Feature: The Death of Pensions: 5 Emerging Trends That Will Affect Us All]
If you make the median household income of $50,000, your magic number for retirement is $800,000 (80% of your income multiplied by 20 years). To meet this goal, you would need to sock away $1,375 a month for 20 years and receive an annual return of 8%.
[Simple Savings Calculator: How Much Could I Save Up Over Time?]
In France, only 1% of those between the age of 60 and 69 still work. By comparison, 20% of U.S. citizens in that age group are still working. Whether there's a difference in each country's work-ethic mentality or not, one fact remains; French workers don't have to save nearly as much for retirement as American workers do.
Thanks to its social pension program, workers are granted 50 - 55% of their income (if they've worked 40 years). In addition, workers can create their own corporate or personal plan depending on the company they work for.
The Investing Answer: We're not trying to say that France is better than America, nor are we advising that you should move there. But, we can use what we have learned about France as good inspiration:
- Use publicly funded community colleges to save thousands on tuition expenses (Save more on higher education with these cost-cutting ideas).
- Use your car less and try walking or using your city's mass transit services to get to places -- even if it's just one day a week. (Learn ways to save money on your commute every day with these gas-saving tips).
- Save more money for retirement and take advantage of 401(k) matching if your employer provides it.
As smart consumers, we can think beyond the social norms within our country. Get creative, and know that it's never too late to start saving money.