How Much Money You Need to Make to Move to Your Dream City

Photo by Jörg Schubert.

Despite a fact that they’re ridiculously expensive, cities like New York, Los Angeles, and San Francisco are also hugely populated and growing. They’re good cities with a lot to offer, sure—but how many should we acquire if we wish to make a move?

The 30 Percent Rule of Thumb

Many personal financial experts advise that housing shouldn’t be some-more than 30 percent of your take-home income (the income we acquire after taxes). They’re not only pulling this commission out of a air. If we spend some-more than 30% of your income on rent, a Department of Housing and Urban Development considers we “rent burdened.” This is a uncomplicated order of thumb, though, since it doesn’t take other simple vital losses into account. As one economist puts it over during Bloomberg, “if your income is $20,000 a year, it will be tough to make ends accommodate if you’re profitable 30 percent of your income on rent.”

Simple as it competence be, a 30 Percent Rule does give we a ubiquitous thought of how many we should acquire to means an unit in any given city, possibly it’s in a U.S. or abroad.

How Much You Need in Five Major U.S. Cities

With this in mind, MEL Magazine crunched some numbers to demeanour during lease contra income in 20 of a biggest cities in a States. They looked during information from a Bureau of Labor Statistics and Zillow to review a meant take-home compensate to a median lease for a 1-bedroom and studio unit in those cities.

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Their formula uncover that many people who live in vital cities are technically lease burdened. You can check out their information here. We’ve crunched a possess numbers to uncover we what we would need to acquire each year to follow a 30 Percent Rule in 5 renouned cities:

New York City

Median lease for 1-bedroom: $2,400
Take-home income needed: $93,000
Median lease for studio: $2,200
Take-home income needed: $88,000

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Los Angeles

Median lease for 1-bedroom: $2,095
Take-home income needed: $83,800
Median lease for studio:$1,725
Take-home income needed: $69,000

Chicago

Median lease for 1-bedroom: $1,495
Take-home income needed: $59,000
Median lease for studio: $1,150
Take-home income needed: $46,000

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San Francisco

Median lease for 1-bedroom: $3,285
Take-home income needed: $131,000
Median lease for studio: $2,424
Take-home income needed: $96,960

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Austin

Median lease for 1-bedroom: $1,110
Take-home income needed: $44,400
Median lease for studio: $937
Take-home income needed: $37,480

At this point, many New Yorkers, Los Angelenos, and San Franciscans will substantially disagree that a numbers are unrealistic. “Pfft we acquire approach reduction than this and conduct to get by,” we competence be thinking.

The Problem With a 30-Percent Rule

There’s law to this—again, a 30 Percent Rule is only a ballpark, so it’s not always what existence looks like. It doesn’t cruise other losses we can cut behind on to means lease in an costly city. It doesn’t cruise anticipating a roommate, either.

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Here’s how personal financial consultant (and New Yorker) Stefanie O’Connell puts it:

After vital in NYC for over 10 years, I’ve come to learn that New York City is as costly as we wish it to be.

Sure, I’d adore if it were cheaper to live in New York City, though by a same token, there are some-more than adequate resources accessible in a Big Apple to revoke expenses, and even cut out whole responsibility categories – bye, bye automobile payments….You won’t find excellent dining or a accoutrements of luxe vital in these numbers, though we competence find that vital in New York City doesn’t cost scarcely as many as ill-informed speculators and a media frenzy would have we believe.

All of this said, MEL’s numbers competence indicate to a incomparable emanate of housing affordability in a United States. Even with some of a cheaper cities on their list, like Houston, Dallas, and Denver, lease still creates adult a vast apportionment of meant income. This suggests that even in reduce cost of vital cities, residents are still lease burdened. To check out a numbers for yourself, conduct to a couple below.

Is it Worth Moving to Your Dream City, Financially? | MEL Magazine

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Posted by on Jun 5 2017. Filed under Gadgets. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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