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Family of 3 in a big city: How far does 100K in income go?

By Lee Cleveland - May 14, 2023

Earning a six-figure income has traditionally been associated with financial stability and success in the United States. However, a recent study by Lending Tree highlights the challenges faced by families with a yearly income of $100,000, particularly in California.

The study examined the purchasing power of $100,000 for a family of three in 100 of the largest U.S. metros and revealed that in 16 cities, even six-figure earners may struggle to meet their monthly expenses. Notably, eight of these cities were in California, with San Jose being the most expensive city to live in for families earning $100,000 per year.

The Financial Strain on Six-Figure Earners in California: Lending Tree’s study unveils the harsh reality for families earning $100,000 in several California cities. Despite their relatively high income, these families may find it challenging to cover their monthly expenses due to the state’s high cost of living. For instance, in San Jose, the average monthly expenses exceed $9,000, primarily driven by steep housing and transportation costs.

The table below illustrates the financial struggle experienced by families in California’s major cities:

CityMonthly IncomeMonthly ExpensesMoney Leftover
San Jose$8,333$9,826-$1,493
San Francisco$8,333$9,496-$1,163
San Diego$8,333$9,099-$766
Los Angeles$8,333$8,989-$655
(Source: Lending Tree)

Notably, the above figures do not account for taxes, which were not included in the study’s analysis.

Categorizing Basic Monthly Expenses: To determine the rankings, Lending Tree researchers considered various government data sets to understand the purchasing power of $100,000 and calculate the average amount a family of three would spend on basic monthly expenses. These expenses were categorized as follows:

  1. Housing
  2. Childcare
  3. Transportation
  4. Health Care
  5. Student loans
  6. Food, entertainment, utilities
  7. Taxes
  8. Savings

The Impact of High Costs in California: The findings of this study align with previous research conducted by Redfin on rental markets. According to an April study, median rents in San Jose, San Francisco, Los Angeles, and San Diego exceeded $3,000 per month. These high housing costs contribute significantly to the financial strain experienced by families, even with six-figure incomes.

Bright Spots for Six-Figure Earners: While the study reveals the financial challenges faced by many high earners, it also identifies cities where a $100,000 income is sufficient to cover monthly expenses. For example, in Fresno and Bakersfield, residents earning $100,000 can meet their monthly obligations and still have a few hundred dollars left over.

Places where a six-figure income would cover monthly expenses:

CityMonthly IncomeMonthly ExpensesMoney left over
New York, New York$8,333$8,327$6
Philadelphia, Pennsylvania$8,333$8,324$10
Las Vegas, Nevada$8,333$,8314$19
Providence, Rhode Island$8,333$8,307$26
Austin, Texas$8,333$8,279$55
Minneapolis, Minnesota$8,333$8,222$111
Dallas, Texas$8,333$8,215$118

Moreover, the study highlights Jackson, Mississippi, as the most favorable city for high earners. With monthly expenses totaling approximately $6,939, individuals in Jackson would have approximately $1,400 left over before taxes kick in.

Conclusion: The Lending Tree study sheds light on the financial struggles faced by families with a six-figure income in California.

Despite earning $100,000 per year, families in several California cities find it difficult to meet their monthly expenses due to the high cost of living, particularly in housing and transportation.

The study serves as a reminder that a six-figure income does not guarantee financial comfort for a family of three or more in certain locations.

As the cost of living continues to rise and inflation takes its toll, families across the country, especially in California, are grappling with the challenge of making ends meet. While cities like San Jose and San Francisco top the list of the most expensive places for six-figure earners, it is important to recognize that the struggle extends beyond these urban centers.

Efforts to address the housing crisis, improve affordability, and create policies that alleviate the burden on families with moderate to high incomes are essential. The goal should be to ensure that individuals and families can thrive and find financial stability, regardless of their income level.

In conclusion, the Lending Tree study highlights the financial strain faced by families earning six-figure incomes in California. While $100,000 may seem like a significant amount, the high cost of living, particularly in housing and transportation, makes it challenging for families to meet their monthly expenses. Addressing these affordability issues and finding innovative solutions is crucial to creating a more equitable and sustainable future for all residents in California and beyond.