It’s hard to feel financially secure when the cost of living is taking a bigger bite out of your budget. Although wages increased by 5.1 percent between December 2021 and December 2022, wage growth did not keep pace with inflation, which averaged 8 percent in 2022.
Ultimately, inflation has affected everything from the cost of housing to the price of eggs, making it even harder to live comfortably in America’s biggest cities. With that in mind, SmartAsset set out to find out the after-tax income now needed to live comfortably in the nation’s 25 largest metropolitan areas.
To determine how much money is needed to live comfortably in major metro areas, we used the 50/30/20 rule to define a comfortable lifestyle. This rule is a budgeting strategy in which 50% of after-tax income is allocated to basic expenses (needs), 30% to discretionary expenses (wants), and 20% to savings or paying down debt.
“A budget is the foundation of many people’s financial plans. It’s especially important to understand and track your spending when the costs of everyday items rise,” says Susannah Snider, certified financial planner and editor-in-chief of financial education at SmartAsset.
“Keeping a 50/30/20 budget means you have enough to fund short- and long-term goals while paying for essential living expenses.”
Data and methods
SmartAsset used the latest data from the MIT Living Wage Calculator to compile the basic cost of living for a person without children in each metro area. The data covers the cost of living in each city as of 2022. The online tool calculates the cost of living by adding up each metro area’s average cost of housing, food, transportation, medical care and other expenses.
We assumed that MIT’s cost of living figure for each metro area would cover the needs (ie 50% of the budget) and then calculated the total take home pay that allows people to spend 30% on extra needs and 20% on savings or debt. dues.
This is SmartAsset’s second study of how much money is needed to live comfortably in the 25 largest metro areas. You can read the 2022 edition here.
St. Louis is again the most affordable. The St. Louis metro area is the most affordable place for the second year in a row, requiring $57,446 after taxes to live comfortably. The San Francisco Bay Area, meanwhile, again requires the highest take-home pay — more than $84,000 — to maintain a comfortable lifestyle.
Income requirements in this Southern California metro area increased by nearly 30%. None of the 25 places in our study had a more acute one-year increase in the after-tax income needed to live comfortably than Riverside-San Bernardino-Ontario. A year ago, $52,686 was required for a comfortable lifestyle. The number has since increased by 27.28% to $67,060 in 2023.
On average, you need $68,499 after taxes to live comfortably. In our study, the average after-tax income needed for a comfortable lifestyle in the 25 metro areas increased about 20% from a year ago, when it was just $57,013.
Five positions that demand the highest salary
1. San Francisco-Oakland-Berkeley, CA
A single person with no children needs $84,026 after taxes to support a comfortable lifestyle in San Francisco-Oakland-Berkeley. Using the MIT Cost of Living Calculator, SmartAsset found that an average person spends $42,013 on annual living expenses in the San Francisco area. A person following a 50/30/20 budget sets aside $25,208 for discretionary spending and $16,805 for savings or paying down debt. Despite being the most expensive place in our study, San Francisco-Oakland-Berkeley had the smallest one-year increase in needed tax revenue from a year ago (13.12%).
2. San Diego-Chula Vista-Carlsbad, CA
San Diego-Chula Vista-Carlsbad jumped four spots in this year’s rankings after the annual cost of living rose a whopping 21.32 percent, according to MIT. As a result, one person now needs to earn $79,324 after taxes to live comfortably in that part of California. After basic living expenses ($39,662) are covered, a person can spend $23,797 on necessities and set aside $15,865 for savings or paying down debt.
3. Boston-Cambridge-Newton, MA
The metropolitan area surrounding Boston and extending into southern New Hampshire demands the third highest take-home pay for a comfortable lifestyle. A single person needs to earn $78,752 after taxes to cover basic living expenses ($39,376) and still devote half of their income to necessities and savings/debt. A person living comfortably on a 50/30/20 budget would spend $23,626 on discretionary spending and $15,750 on savings or paying down debt.
4. New York-Newark-Jersey City, NY-NJ-PA
The New York metropolitan area may be the most populous in the country, but it’s not where you need the most after-tax income to live comfortably. However, the New York-Newark-Jersey City area requires a take home bonus of $78,524 because the typical cost of living is $39,262 per year. This means that a person following a 50/30/20 budget would set aside $23,557 of their income for discretionary spending and either save the remaining $15,705 or use it to pay down debt.
5. Seattle-Tacoma-Bellevue, WA
To live comfortably in the Emerald City and its surrounding areas, you need $77,634 after taxes. The cost of living for a person living in Seattle-Tacoma-Bellevue is $38,817. As a result, an individual would spend 30 percent of their take-home pay ($23,290) on discretionary spending and the remaining $15,527 on savings or paying down debt.
Five positions that require the lowest salary 1. St. Louis, MO-IL
Living comfortably in the St. Louis area, your taxable income should be $57,446 – the lowest amount of money in all 25 metro areas. That can cover basic living expenses ($28,723), with enough left over to set aside 30 percent for your needs ($17,234) and another 20 percent for savings or paying down debt ($11,489).
2. Detroit-Warren-Dearborn, MI
A single person needs to earn $58,358 after taxes to live comfortably in the Detroit-Warren-Dearborn metro area. With basic living expenses rising to $29,179 a year, someone following a 50/30/20 budget would have $17,507 left for discretionary spending and $11,672 for savings or paying down debt. While living comfortably in the Detroit area requires the second-lowest take-home pay in our survey, that number is up 24.39% from a year ago.
3. San Antonio-New Braunfels, TX
To live comfortably in the San Antonio-New Braunfels metro area in Texas, one person needs to earn $59,270 after taxes. The typical cost of living in this part of the Lone Star State is $29,635 per year, which means a comfortable individual would have $17,781 in discretionary spending and another $11,854 in savings or debt.
4. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
The typical cost of living in the Philadelphia-Camden-Wilmington metro area is $30,839 per year. That means one person would need to take home at least $61,678 a year to live comfortably in the greater Philadelphia area, which spans four states. This would allow them to spend 30 percent of their after-tax income on necessities ($18,503) and leave 20 percent to save or pay down debt ($12,336).
5. Charlotte-Concord-Gastonia, NC-SC
One person can live comfortably in the Charlotte-Concord-Gastonia metro area in the Carolinas for $62,110. The average cost of living in the Charlotte area is $31,055 per year, which means someone following a 50/30/20 budget would spend $18,633 on discretionary spending and either save the remaining $12,422 or use it to pay down debt.
Tips for budgeting during inflation
Be realistic with your budget. Use SmartAsset’s budget calculator to create a cost plan, but don’t be afraid to make changes as needed. “Stick to a spending plan is important, but give yourself flexibility and grace. A plan that’s too restrictive can quickly be abandoned,” says Snider. “So if buying your daily latte is one thing that brings you joy every morning, make room for it in your budget and think about where else you can cut back.”
Talk to an expert. A financial advisor can help you budget, create a financial plan, and invest your assets to weather periods of increased inflation. SmartAsset’s free tool connects you with up to three vetted financial advisors serving your area, and you can interview your advisor for free to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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