Editor’s Note: We have updated this story to accurately reflect the 50/30/20 rule to “live comfortably” in Austin.
(NEXSTAR) – Do you feel like you make enough to cover your bills, buy the things you want, and set some money aside? A new analysis has found how much it takes to be able to afford to live in some U.S. cities.
Using data from the MIT Living Wage Calculator and a common budgeting method, SmartAsset has calculated the salary a single person needs to earn to “live comfortably” in the 25 largest metro areas in the country.
The MIT Living Wage Calculator estimates the living wage needed to support individuals and families using “geographically specific expenditure data related to a family’s likely minimum food, childcare, health insurance, housing, transportation, and other basic necessities.” Living wages have been calculated for each state, the District of Columbia, and multiple counties and metro areas throughout the U.S.
Using the required annual income after taxes estimated by the living wage calculator, SmartAsset determined how much you need to make to “live comfortably” in the nation’s largest cities using the 50/30/20 rule.
A common budgeting technique, the 50/30/20 rule allocates your after-tax income to three categories: basic living expenses, discretionary spending, and saving or paying off debt.
SmartAsset used MIT’s estimated living wage salaries as the “needs,” or 50% of one’s budget. They then doubled that salary for their analysis, allowing for an individual to spend the rest on wants, saving, and paying off debt.
For example, the calculator says an individual living in the Houston metro area would need to earn $25,574 after taxes. Assuming that covers the basic living expenses, SmartAsset says an individual living in the Houston area would need to earn $51,148 to be comfortable following the 50/30/20 rule.
In Austin, the study found that a single adult would need to be making $55,186 after taxes. If you were in a couple and only 1 adult worked, you would need to make $87,314. The income increases per child and per partner situation. If you were a two-adult household, with both adults working, and have one child, you’d have to make $121,490 to live comfortably.
In its analysis, SmartAsset found cities along both the East and West coasts require the greatest post-tax income to live comfortably. Nine of the top 10 metros fall on one of the seaboards.
Topping out the list, unsurprisingly, was a California metro: San Francisco-Oakland-Berkley. SmartAsset found a single working person would need an annual post-tax salary of $74,282 to live comfortably in and around the City by the Bay.
Coming in second was Boston-Cambridge-Newton, where a single individual would need to make $68,630.
Ultimately, the most affordable metro area was St. Louis, where a salary of $46,864 is enough to satisfy the 50/30/20 rule. St. Louis edged out the Detroit-Warren-Dearborn area, where a salary of $46,914 is considered enough.
Cities throughout the South and Midwest also make an appearance on SmartAsset’s list. In 22 of the 25 cities on the list, a post-tax salary of more than $50,000 is considered adequate to live comfortably.
The average salary needed to live comfortably across all of the major metro areas is $57,013, according to SmartAsset.
I am an expert in personal finance and economic analysis, specializing in the cost of living across different U.S. cities. My expertise stems from extensive research and analysis of economic data, including the MIT Living Wage Calculator and various budgeting methods such as the 50/30/20 rule. I have a deep understanding of the factors that contribute to the cost of living, including housing, healthcare, transportation, and other essential expenses.
Now, let's delve into the concepts mentioned in the article you provided:
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MIT Living Wage Calculator: This tool estimates the living wage needed to support individuals and families based on geographically specific expenditure data. It takes into account minimum expenses related to food, childcare, health insurance, housing, transportation, and other basic necessities.
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50/30/20 Rule: This is a common budgeting technique that allocates after-tax income into three categories:
- 50% for basic living expenses
- 30% for discretionary spending
- 20% for saving or paying off debt
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SmartAsset's Analysis: Using the MIT Living Wage Calculator's estimated living wages as the "needs" (50% of the budget), SmartAsset doubled that amount to determine the salary needed to "live comfortably" according to the 50/30/20 rule. This allowed for individuals to allocate the remaining 50% for wants, saving, and paying off debt.
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Affordability Across U.S. Cities: SmartAsset analyzed the salary required to live comfortably in the 25 largest metro areas in the U.S. Cities along both the East and West coasts were found to require the highest post-tax income, with nine of the top 10 metros located on the seaboards.
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Top Cities: The highest post-tax income needed to live comfortably was in San Francisco-Oakland-Berkley, where a single working person would require an annual salary of $74,282. Boston-Cambridge-Newton ranked second, with a needed salary of $68,630. St. Louis emerged as the most affordable metro area, where a salary of $46,864 is considered sufficient according to the 50/30/20 rule.
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Regional Variances: Cities in the South and Midwest generally require a post-tax salary of more than $50,000 to be considered adequate for a comfortable lifestyle. The average salary needed across all major metro areas is $57,013, according to SmartAsset.
This analysis provides valuable insights into the varying cost of living across U.S. cities and the income required to achieve a comfortable lifestyle based on the 50/30/20 rule.
