It’s hard to feel financially stable when the cost of living continues to take a bigger bite out of your budget. While salaries increased by 5.1% between December 2021 and December 2022, wage growth failed to keep pace with inflation, which averaged 8% in 2022.
Ultimately, inflation has affected everything from the cost of housing to the price of eggs, making it increasingly difficult to live comfortably in America’s largest cities. With this in mind, SmartAsset set out to provide the after-tax income now needed to live comfortably in the nation’s 25 largest metropolitan areas.
To determine how much money it takes to live comfortably in the largest metropolitan areas, we used the 50/30/20 rule to define a comfortable lifestyle. This rule is a budgeting strategy that allocates 50% of after-tax income to basic living costs (needs), 30% to discretionary spending (wants), and 20% to savings or debt payments.
“A budget is the foundation of many people’s financial plans. And it’s especially essential to understand and track your expenses when the cost of everyday items is rising,” says Susannah Snider, a certified financial planner and SmartAsset’s senior financial education editor. .
“If you can stick to a 50/30/20 budget, you’ll have enough to fund short-term and long-term goals while also paying for essential living expenses.”
Data and methodology
SmartAsset used the most recent MIT Living Wage Calculator data to compile the basic cost of living for a person without children in each metropolitan 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 the average cost of housing, food, transportation, medical care and other expenses within each metropolitan area.
We assumed that the MIT cost of living for each metropolitan area would cover needs (i.e., 50% of one’s budget) and then calculated the total take-home pay that would allow individuals to spend an additional 30% on needs and 20% on savings or debt payments .
This is SmartAsset’s second survey of how much money it takes to live comfortably in the 25 largest metropolitan areas. You can read the 2022 edition here.
Main findings
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St. Louis is again the most affordable. The St. Louis metro area is the most affordable place for the second consecutive year, with $57,446 after taxes to live comfortably. The San Francisco Bay Area, on the other hand, again requires the highest take-home pay — over $84,000 — to maintain a comfortable lifestyle.
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Income demands in this Southern California metro area rose nearly 30%. None of the 25 places in our study had a more acute one-year increase in after-tax income needed to live comfortably than Riverside-San Bernardino-Ontario. A year ago, $52,686 was needed for a comfortable lifestyle. That number has since increased by 27.28% to $67,060 in 2023.
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On average, you need $68,499 after taxes to live comfortably. The average after-tax income needed for a comfortable lifestyle in the 25 metropolitan areas in our study is up about 20% from a year ago when it was just $57,013.
Five places that demand the highest salaries
1. San Francisco-Oakland-Berkeley, CA
A single person with no children needs $84,026 after taxes to support a comfortable San Francisco-Oakland-Berkeley lifestyle. Using the MIT Cost of Living Calculator, SmartAsset found that an individual spends an average of $42,013 on annual living expenses in the San Francisco area. Someone following the 50/30/20 budget would set aside $25,208 for discretionary spending and $16,805 for saving or paying off debt. Despite remaining the most expensive place in our study, San Francisco-Oakland-Berkeley had the smallest one-year increase in needed after-tax income from a year ago (13.12%).
2. San Diego-Chula Vista-Carlsbad, CA
San Diego-Chula Vista-Carlsbad rose four spots in this year’s ranking after its annual cost of living rose a whopping 21.32%, according to MIT. As a result, a single person must now earn $79,324 after taxes to live comfortably in that part of California. After their basic living costs ($39,662) are covered, a person can spend $23,797 on needs and set aside $15,865 for savings or debt payments.
3. Boston-Cambridge-Newton, MA
The metropolitan area that surrounds Boston and extends into southern New Hampshire requires the third highest salary for a comfortable lifestyle. A single person must earn $78,752 after taxes to cover basic living costs ($39,376) and still spend half of their income on needs and savings/debt. According to the 50/30/20 budget, a person living comfortably would allocate $23,626 for discretionary spending and $15,750 for savings or debt payments.
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’ll need the most after-tax dollars to live comfortably. However, the New York-Newark-Jersey City area demands a take-home pay of $78,524 as the typical cost of living is $39,262 per year. That means a person following the 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 off debt.
5. Seattle-Tacoma-Bellevue, WA
It costs $77,634 in after-tax dollars to live comfortably in the Emerald City and surrounding areas. The cost of living for an individual in Seattle-Tacoma-Bellevue is $38,817. As a result, a single person would allocate 30% of their take-home pay ($23,290) to discretionary spending and the remaining $15,527 to savings or debt payments.
Five places that demand the lowest salaries 1. St. Louis, MO-IL
Living comfortably in the greater St. Louis area means your after-tax income should be $57,446 – the lowest amount in all 25 metro areas. That can cover basic living expenses ($28,723) with enough left over to spend 30% on your wants ($17,234) and another 20% on savings or debt payments ($11,489).
2. Detroit-Warren-Dearborn, MI
A single person must earn $58,358 after taxes to live comfortably in the Detroit-Warren-Dearborn metro area. With basic living expenses rising to $29,179 per year, a person following the 50/30/20 budget would be left with $17,507 for discretionary spending and $11,672 for saving or paying off debt. While living comfortably in the Detroit area requires the second-lowest take-home pay in our study, that figure is 24.39% higher than a year ago.
3. San Antonio-New Braunfels, TX
To live comfortably in the San Antonio-New Braunfels metro area of ​​Texas, a single person must earn $59,270 after taxes. Typical living costs in this part of the Lone Star State are $29,635 per year, meaning that a person living comfortably would have $17,781 for discretionary spending and another $11,854 for 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 a single person would need to take home at least $61,678 each year to live comfortably in the greater Philadelphia area, which spans four states. This would allow them to spend 30% of their after-tax income on needs ($18,503) and leave 20% for savings or paying off debt ($12,336).
5. Charlotte-Concord-Gastonia, NC-SC
A single 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, meaning that a person adhering to the 50/30/20 budget would allocate $18,633 to their discretionary spending and either save the remaining $12,422 or would use to pay off debt.
Tips for budgeting during inflation
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Be realistic with your budget. Use SmartAsset’s budget calculator to build a spending plan, but don’t be afraid to make adjustments if necessary. “It’s important to stick to a spending plan, but give yourself some flexibility and grace. A plan that’s too restrictive can be quickly abandoned,” says Snider. “So if buying yourself a daily latte is the only thing you enjoy every morning, make room for it in your budget and consider where else you can cut back.”
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Talk to an expert. A financial advisor can help you create a budget, create a financial plan, and invest your assets to weather periods of high inflation. SmartAsset’s free tool pairs you with up to three vetted financial advisors serving your area, and you can interview your advisor matches 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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