It's no surprise that San Francisco is among the most expensive cities to live in the U.S., but according to a new study, it ranks first among the 25 largest cities in the country for requiring the highest salary to live comfortably.
The study, conducted by financial technology company SmartAsset, indicates that a single person without children needs $84,026 after taxes to maintain a comfortable lifestyle in the San Francisco-Oakland-Berkeley area in the state of California.
Following the general budgeting rule of 50 percent of income is spent on needs, 30 percent on wants and 20 percent goes toward savings or debt repayment, and using the Massachusetts Institute of Technology (MIT) Cost of Living Calculator, SmartAsset found that the average person spends $42,013 on annual living expenses in the San Francisco area.
However, the analysis also found that despite remaining the most expensive location in the study, San Francisco-Oakland-Berkeley had the smallest year-over-year increase in after-tax revenue needed from a year ago at just 13.12 percent.
“A budget is the foundation of many people’s financial plans. And it’s especially essential to understand and track your spending when the cost of everyday items is rising,” said Susannah Snider, certified financial planner and managing editor of financial education at SmartAsset.
The executive also highlighted that being able to stick to a 50/30/20 budget means that you have enough to fund short- and long-term goals, while paying essential living expenses.
SmartAsset used the most recent data from the MIT Living Wage Calculator to collect 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 aggregating the average cost of housing, food, transportation, health care, and other expenses within each metropolitan area.
Notably, three other California areas also made the list. San Diego-Chula Vista-Carlsbad ranked second with an annual salary requirement of $79,324, while Los Angeles-Long Beach-Anaheim ranked sixth with $76,710, and Riverside-San Bernardino-Ontario with $67,060 per person per year.
As a result, income demand in the Southern California metropolitan area rose nearly 30 percent. None of the 25 places in the study had a sharper annual increase in the after-tax income needed to live comfortably than Riverside-San Bernardino-Ontario, the company said.
He also explained that a year ago, $52,686 was required for a comfortable lifestyle. Since then, that number has skyrocketed by 27.28 percent to $67,060 in 2023.
The St. Louis metropolitan area is the most affordable place for the second year in a row, requiring $57,446 after taxes to live comfortably.
On average, it takes $68,499 after-tax earnings to live comfortably across the country, so the average after-tax income needed for a comfortable lifestyle in the 25 metropolitan areas studied is up about 20 percent from 2022, when it was just $57,013.
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