Six figures may no longer be the magic number that it once was when it comes to making a good living, as in one out of every four American cities, $100,000 a year doesn’t even suffice to cover the basic expenses for a family of three, according to a recent analysis.
Personal finance site LendingTree measured average monthly expenses in the 100 largest metropolitan areas in the United States, and found that in 25 of them, a combined income of $100,000 still leaves a new family with a baby broke at the end of the day.
Or worse: in the red.
Living expenses were found to be the highest in San José in California, at more than $126,000 a year. In other words, a $100,000 income—or $8,333 a month—would leave a family of three in San José $2,207 short in trying to cover their basic expenses each month.
In San Francisco, that figure would be $1,804 a month, while in Boston it comes to $1,613.
Of course, the analysis also revealed the most affordable metropolitan areas in the nation.
With a combined income of $100,000, a family of 3 would have $1,770 left over monthly after expenses in McAllen in the southernmost part of Texas. Next in line are Little Rock in Arkansas, with $1,604 left over each month, and El Paso, also in Texas, with $1,554.
To calculate the “basic expenses” for the hypothetical family of three, LendingTree combined the average rent of a two-bedroom apartment, plus the cost of city-center-based infant day care, car ownership plus additional travel and transit costs, health insurance, food, entertainment, and utilities. Also included in the calculation are state and federal taxes, payroll taxes, and 401(k) contributions, though no debt payments were factored into the “basic expenses.”
Most Expensive Cities
Here are the top ten U.S. cities and their monthly expenses that exceed a $100,000 income:1 San Jose, Calif.: $10,540
2 San Francisco: $10,137
3 Boston: $9,946
4 Honolulu: $9,824
5 Oxnard, Calif.: $9,805
6 Washington: $9,767
7 Los Angeles: $9,587
8 San Diego: $9,581
9 Seattle: $9,376
Most Affordable Cities
Here are the top ten most affordable cities in the United States, and how much a family of three has left after covering the basics:1 McAllen, Texas: $1,770
2 Little Rock, Ark.: $1,608
3 El Paso, Texas: $1,554
4 Jackson, Miss.: $1,550
5 Toledo, Ohio: $1,501
6 Dayton, Ohio: $1,431
7 Cleveland, Ohio: $1,393
8 Columbia, S.C.: $1,359
9 Akron, Ohio: $1,351
10 Greenville, S.C.: $1,341
Optimize Your Finances
A better-paying job isn’t always available, and moving to a more affordable area may not always be realistic. To manage your cost of living, LendingTree offers a few suggestions.First, lower your interest rates—and especially on high-interest debt like credit-card debt. You can do this with a zero percent balance transfer credit card or a low-interest debt consolidation loan. Or simply call your card issuer and ask for a lower interest rate on your card.
Secondly, keep close track of your accomplishments at work and document them every other week or so, especially when you’ve made extra sacrifices. When it’s time to talk about a raise, you’ll be your own best reference.
Consider signing longer rental leases if you’re happy where you live. The stability it offers your landlord may land you a slightly lower rent, and will likely mitigate future rent increases.
Lastly, build some emergency savings in case you find yourself in a situation where you urgently need money. This doesn’t need to be an extra expense: for example, you might consider redirecting some of your 401 (k) expenses to a high-yield savings account instead.