Moving

How making $300,000 in San Francisco can nonetheless imply you are residing paycheck-to-paycheck

Editor’s note: This story originally ran in 2019 but has been updated with the numbers for 2021.

With an average home price of $ 300,000 in the U.S., you can achieve the idealized middle class lifestyle on salaries in the six-figure range or above in most parts of the country.

In San Francisco’s $ 2 million fixer-upper country, the income needed to achieve that status is obviously higher. But how much more?

SF-based financial expert Sam Dogen pegged that number at $ 300,000 after surveying dozen of readers on his Financial Samurai blog asking about their income and expenses living in the notoriously high-priced coastal towns.

With her feedback, Dogen has broken down the budget of a couple with one or two children in San Francisco, Seattle, or New York. He found that $ 300,000 is the income necessary to invest in retirement, save up for your child’s education, own a three-bedroom home, take three weeks off a year, and be at a decent age To retire.

“It’s not an extravagant lifestyle,” says Dogen. “It’s a middle class lifestyle, considering that a middle class person can afford a modest home, have at least one car, have a child or two. There are no private jets in this budget. “

Financial samurai personal finance blogger Sam Dogen breaks down the budget for a family of four with a household income of $ 300,000 who live in a coastal city like San Francisco or New York.

Financial samurai / courtesy

Dogen has put together an in-depth post where you can find analysis and explanation of each issue, but here are a few points to keep in mind:

– The $ 29,400 per year childcare cost takes into account a babysitting rate of around $ 20 an hour, the standard rate in a city like San Francisco. Preschool costs easily $ 18,000 to $ 20,000 a year in metropolitan areas.
The mortgage is based on a $ 1.5 million, 1,750-square-foot, three-bedroom, two-bathroom home on a 2,500-square-foot lot.
—The cost of a car is based on a single car that houses a family.
—Entertainment bills include everything from Netflix to tickets to the occasional ball game to meeting, which can easily cost $ 200 in San Francisco when you factor in dinner and babysitting expenses.

Dogen adds that a family on $ 300,000 is still living from paycheck to paycheck, not saving outside of their 401K and 529 plans.

“We’re in this eternal urge in San Francisco, and it’s a city for people who are willing to rush,” he says. “Before, $ 300,000 was a lot of money. At that amount, you will likely have to work long hours and struggle to keep up. “

His recommendation is to make moving out of the region your goal.

“There is a shortage of moving trucks in places like San Francisco because so many people are moving out of this expensive city and other expensive coastal cities,” he writes. “If you live in an expensive metropolitan area, consider moving to cut your cost of living, or at least try to capitalize on the valuation difference by investing in Central America.

“With technology, you won’t have to grind as hard in cities where the average home price is over $ 1 million.”

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