How Much Money Do You Need to Make to Move to the City of Your Dreams
Despite being incredibly expensive, cities like New York, Los Angeles, and San Francisco are also very densely populated and growing. Sure, these are great cities with a lot to offer, but how much should you make if you want to take it a step further ?
http://lifehacker.com/what-you-should-know-before-moving-from-a-small-town-to-1690425578
The 30 percent rule
Many personal finance experts suggest that housing should not account for more than 30 percent of your home income (money you earn after taxes). They don’t just pull that percentage out of thin air. If you spend more than 30% of your income on rent, the Department of Housing and Urban Development considers you ” burdened with rent.” However, this is a simplified rule of thumb because it does not take into account other basic living expenses. As one economist at Bloomberg put it , “If your income is $ 20,000 a year, you’ll have a hard time making ends meet if you pay 30 percent of your rental income.”
As simple as it is, the 30 percent rule does give you a general idea of how much you must earn to afford an apartment in any particular city, whether in the US or overseas.
How much do you need in five major US cities
With this in mind, MEL Magazine has put together some numbers to compare rents to income in the 20 largest cities in the United States. They looked at data from the Bureau of Labor Statistics and Zillow to compare the average wage earned with the average rent for a one-room apartment and studio apartment in those cities.
Their results show that most people living in major cities are technically saddled with rent. You can see their details here .
Using median MEL prices, we analyzed our own numbers to show you how much you would need to earn each year to follow the 30 percent rule in five popular cities:
New York
Average rent for a studio: $ 2,400 Required wages at home: $ 93,000 Average rent for a studio: $ 2,200 Required wages at home: $ 88,000
Los Angeles
Average rent for a studio apartment: $ 2095, required salary at home: $ 83,800, average rent for a studio: $ 1725, required salary at home: $ 69,000.
Chicago
Average rent for a studio apartment: $ 1,495, required salary at home: $ 59,000, average rent for a studio: $ 1150, required salary at home: $ 46,000.
San Francisco
Average rent for a one-room apartment: $ 3,285, required salary at home: $ 131,000, average rent for a studio: $ 2,424, required salary at home: $ 96,960.
Austin
Average rent for a studio apartment: $ 1,110. Required wages at home: $ 44,400. Average studio rent: $ 937 Required wages at home: $ 37,480.
At this point, many New Yorkers, Los Angeles and San Francisco residents are likely to argue that the numbers are unrealistic. “Pfft, I make a lot less than that and I manage to survive,” you might think.
The problem with the 30 percent rule
There is truth in this – again, the 30 percent rule is just a rough idea, so this is not always how reality looks. This does not include other costs that can be cut to afford rent in an expensive city. This does not consider finding a roommate either.
Here’s how personal finance expert (and New Yorker) Stephanie O’Connell puts it :
After living in New York for over ten years, I learned that New York is as expensive as you want it to be.
Of course, I would like it to be cheaper to live in New York, but besides, the Big Apple has more than enough resources to cut costs and even eliminate entire categories of expenses – for now, bye, car payments … you won’t find fine dining or the trappings of luxury living, but you may find that living in New York is less expensive than the ill-informed speculators and the frenzy of the media. you believe.
All of this suggests that the MEL numbers may indicate a broader housing affordability problem in the United States. Even with some of the cheaper cities on their list, such as Houston, Dallas and Denver, rentals still make up a significant portion of average income. This suggests that even in cities with lower cost of living, residents are still saddled with rent. For the numbers, follow the link below.
Is it financially worth moving to your dream city? | MEL Magazine