While the biggest and wealthiest cities in the country generally have the highest cost of living, how far your money will go in some big cities might surprise you.
In fact, a recent study by consumer lending site SmartAsset found that a person needs to earn three times their salary to afford the same lifestyle in New York City as in Houston, Texas.
The study looked at wages, taxes and the cost of living in 76 US cities to see how much a resident with a six-figure salary would need to earn to have $100,000 in purchasing power.
So while you can bring home a six-figure income, where you live can play a huge role in whether you can afford a more luxurious lifestyle or whether you end up living on a paycheck. .
Is it worth considering moving to a lower-cost city to get more bang for your hard-earned money?
Getting That “Six Figure Sensation”
Data from SmartAsset revealed that people living in Honolulu, New York and San Francisco need to bring in more than $300,000 a year to have the same disposable income or live the same lifestyle as someone earning just over $100,000 in other parts of the country.
These metros cost 82% more to live than the national average, and residents earning around $300,000 in these areas face a tax burden of at least 40.5%.
Second only to Honolulu with $312,400, the average New Yorker needs to make $312,000 to “achieve that six-figure sensation,” according to the report. California is home to five of the most expensive cities with Oakland, Los Angeles, Long Beach and San Diego joining San Francisco in SmartAsset’s top 10 list.
Meanwhile, big cities like Miami and Orlando make up for the higher cost of living with the fact that there’s no state income tax.
The cheapest cities
Low taxes and lower cost of living make some big cities remarkably affordable.
According to SmartAsset, Texas is home to many of these better value locations, including San Antonio, El Paso, and Corpus Cristi. A person living in Houston, the largest city in Texas, only needs $125,300 to feel like they’ve “made it”.
The most affordable city on the list is Memphis, Tennessee, where the average worker only needs $117,100 in gross income to achieve the same result. Oklahoma City, Oklahoma and St. Louis, Missouri — home to nearly a million people between them — also made the cut for the top 10 cities where you can make the most of a six-figure salary.
Time to move?
Lower taxes, house prices and the cost of living are some of the main reasons more people are moving to states like Texas, according to a blog post by real estate company RedFin. From 2020 to 2021, Texas was one of the fastest growing US states with 596,000 people moving from other parts of the country.
Whether you’re a young professional with a family or looking for an affordable place to retire, you might also want to consider whether cheaper cities can retain their cost advantages over the long term. A growing population can eventually lead to problems such as housing shortages as well as increases in rent and house prices.
For example, rents in Houston are up nearly 11% from a year ago, as the city’s population has exploded over the past two years to make it the nation’s fifth most populous metropolitan area. If the trend continues, the city’s economic benefits could erode, although it may take years for spending to take up roughly the same share of your budget as the Big Apple.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.