It's hard to feel financially stable when the cost of living is constantly draining out of your account. Budget, While salaries increased by 5.1% between December 2021 and December 2022, the salary increase could not keep up with inflation, which averaged 8% in 2022.
After all, 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 that in mind, SmartAsset has begun uncovering the after-tax income needed to live comfortably now in the country's 25 largest metropolitan areas.
To determine how much money is needed to live comfortably in the largest metropolitan areas, we used 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 expenses (needs), 30% to discretionary spending (wants) and 20% to savings or debt payments.
“A budget is the cornerstone of many people's financial plans. And it's especially essential to understand and track your spending when the costs of everyday items are on the rise,” says a certified financial planner and financial education at SmartAsset says Susanna Snyder, managing editor of
“Sticking to a 50/30/20 budget means you have enough to fund short and long-term goals while paying for essential living expenses.”
data and methodology
SmartAsset Most Recently Used MIT Living Wage Calculator Data to gather the basic cost of living for a person without children in each metro area. The data covers the cost of living in each city through 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 metro area.
We assumed that MIT's cost of living for each metro area would meet needs (i.e. 50% of one's budget) and then calculated the total take-home pay which allows individuals to put an additional 30% and 20% into savings or loans. enables spending. Payment.
This is SmartAsset's second study on 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 cheapest. The St. Louis metro area is the cheapest place to live for the second year in a row, requiring $57,446 after taxes to live comfortably. On the other hand, the San Francisco Bay Area once again requires the highest take-home pay – more than $84,000 – to maintain a comfortable lifestyle.
Income seeking increased nearly 30% in this Southern California metro area. None of the 25 locations in our study had a faster 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. In 2023, this number increases by 27.28% to $67,060.
You need an average of $68,499 after taxes to live comfortably. The after-tax income needed for a comfortable lifestyle in the 25 metro areas in our study increased nearly 20% from a year ago, when it was just $57,013.
Five positions that require the highest salaries
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 individual spends an average of $42,013 on annual living expenses in the San Francisco area. A person following a 50/30/20 budget would set aside $25,208 for discretionary spending and $16,805 for savings or debt payments. Despite being the most expensive places to live in our study, San Francisco-Oakland-Berkeley had the lowest one-year increase in required after-tax income from the year before (13.12%).
2. San Diego-Chula Vista-Carlsbad, CA
San Diego-Chula Vista-Carlsbad jumped four spots in this year's rankings after a massive 21.32% increase in annual cost of living, according to MIT. As a result, a single person would now have to earn $79,324 after taxes to live comfortably in that part of California. After covering their basic living expenses ($39,662), a person wants $23,797 and can 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 take-home pay to maintain 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 earnings to wants and savings/debts. Following a 50/30/20 budget, a person living comfortably would allocate $23,626 to discretionary spending and $15,750 to 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 the place where you need the most tax dollars to live comfortably. However, the New York-Newark-Jersey City area demands a take-home salary of $78,524, with a typical living expense of $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
It takes $77,634 in post-tax dollars to live comfortably in the Emerald City and its surrounding areas. The total cost of living for one person in Seattle-Tacoma-Bellevue is $38,817. As a result, an individual would allocate 30% of their take-home pay ($23,290) for discretionary spending and the remaining $15,527 for savings or debt payments.
Five positions that require the lowest salary 1. St. Louis, MO-IL
To live comfortably in the greater St. Louis area means your after-tax income must be $57,446 – the least amount among all 25 metro areas. This can cover basic living expenses ($28,723), with enough left over to dedicate 30% to your wants ($17,234) and 20% to savings or debt payments ($11,489).
2. Detroit-Warren-Dearborn, MI
A person needs to earn $58,358 after taxes to live comfortably in the Detroit-Warren-Dearborn metro area. With basic living expenses up to $29,179 per year, a person following a 50/30/20 budget would have $17,507 left over for discretionary spending and $11,672 for savings or debt payments. The Detroit area requires the second lowest take-home pay in our study to live comfortably, a figure 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, a person must earn $59,270 after taxes. Typical living expenses in this part of the Lone Star State range up to $29,635 per year, meaning a person living comfortably would have $17,781 for discretionary spending and $11,854 to put toward their 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 person in the greater Philadelphia area, spanning four states, would need to take home at least $61,678 each year to live comfortably. Doing so would allow them to spend 30% of their after-tax income on necessities ($18,503) and have the remaining 20% for savings or debt payments ($12,336).
5. Charlotte-Concord-Gastonia, NC-SC
A single person in the Charlotte-Concord-Gastonia metro area in the Carolinas can live comfortably for $62,110. Average living expenses in the Charlotte area add up to $31,055 per year, meaning a person following a 50/30/20 budget would allocate $18,633 to their discretionary spending and either save the remaining $12,422 or pay down debt. Will use it for
Tips for Budgeting During Inflation
Be realistic with your budget. Use SmartAsset budget calculator Plan for spending, but don't be afraid to make changes as needed. “It's important to stick to a spending plan, but give yourself some flexibility and grace. A plan that's overly restrictive can be quickly abandoned,” says Snyder. “So, if buying yourself a daily latte is something that brings you joy every morning, make room in your budget for it and consider where else you can cut back.”
Talk to an expert. A financial advisor Can help you create a budget, create a financial plan and invest your assets during periods of high inflation season. SmartAsset's Free Tool Matches you with three vetted financial advisors serving your area, and you can interview your advisor matches for free to decide which is right for you. If you are ready to find an advisor who can help you achieve your financial goals, get started now,
Photo credit: © iStock.com/Evrymmnt
Post Salaries Needed to Live Comfortably in the 25 Largest Metro Areas – 2023 Edition first appeared SmartAsset Blog,