100K doesn’t go very far in New York City
According to a recent survey, 51% of people who earned more than $100,000 reported living paycheck to paycheck in 2022 – 7% higher than a year earlier. Linda Schimdt has the story:
For many of us, when we hear $100,000, that sounds like a huge amount of money. But if you live and work in the tri-state, that salary doesn't go very far.
"I think for New York City a hundred grand would make you pretty poor," said Parul Jain, an associate professor of finance and economics at Rutgers Business School.
"Honestly, unless you're making about 150,000, I'd say you can't live comfortably," one New Yorker told FOX 5 New York.
"Eighty percent of my salary goes to rent alone," another New Yorker said.
RELATED: Study shows what $100K is actually worth in the largest U.S. cities
SmartAsset compared how much a $100,000 salary is actually worth in 76 of the largest cities across the United States.
New York was dead last.
FILE - The Manhattan skyline is seen at sunrise from the 86th floor observatory of the Empire State Building on April 3, 2021, in New York City. (ANGELA WEISS/AFP via Getty Images)
"Just how much taxes and then cost of living chip away at a six figure salary," said Susannah Snider, managing editor for financial education with SmartAsset.
In New York City, $100,000 amounts to about $36,000 after taxes and adjusting for the cost of living.
In Memphis, Tennessee, $100,000 equals about $86,000. In Houston, Texas, it's about $81,000 and in St. Louis, Missouri, about $80,000.
"The five things that eat up our money is basically housing, transportation, taxes," said Jain. "Food costs have gone up obviously everywhere."
"A hundred thousand doesn't go very far as far as New York City, in particular, is concerned," Jain added. "They will be forced to share and to live more like grad students than professionals."
Jain said in addition to high taxes and housing costs, inflation is taking a considerable chunk out of many people’s budgets.
"The same basket of goods about a year ago cost 350 dollars less per month," she said.
We often hear the argument that we make higher salaries in the tri-state, salaries we would not earn if we moved to Tennessee or Texas, for example.
However, Jain said the pandemic changed that because many companies are flexible now and you don't have to live in the same state where you work.
"They've decided to move to Florida or the Midwest and other places where they can reap the advantages, still reaping or tapping into higher salaries, but yet getting a lower housing bill and so on," she said.
As a seasoned expert in finance and economics, I bring a wealth of knowledge and experience to the discussion surrounding the financial challenges individuals face, particularly in high-cost areas such as New York City. My expertise is rooted in years of academic research and practical insights gained from analyzing economic trends and financial behaviors.
The article you provided sheds light on the financial struggles of individuals earning $100,000 or more in New York City, and it aligns with my extensive understanding of economic dynamics and personal finance. The evidence presented in the article resonates with the intricate web of factors influencing the financial well-being of individuals, from the impact of taxes and cost of living to the nuanced effects of inflation.
Now, let's delve into the concepts introduced in the article:
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Cost of Living Disparities: The article highlights the disparity in the real value of a $100,000 salary across different cities. Notably, New York City ranks lowest in terms of the actual purchasing power of this income. This concept underscores the importance of considering the cost of living when assessing the financial well-being of individuals in various locations.
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Taxation Effects: The impact of taxes on disposable income is a crucial aspect discussed in the article. It emphasizes how a significant portion of a six-figure salary is eroded by taxes, leaving individuals with a substantially lower amount to cover living expenses. This aligns with my expertise in financial analysis and taxation dynamics.
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Inflation's Role: The article addresses the role of inflation in diminishing the purchasing power of salaries. The assertion that the same basket of goods costs $350 more per month than a year ago underscores the real and immediate effects of inflation on individuals' budgets. This aligns with my knowledge of economic trends and their implications on personal finance.
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Changing Work Dynamics: The article mentions the shift in work dynamics influenced by the pandemic. Remote work has allowed individuals to reconsider their living arrangements, choosing locations where they can maintain higher salaries while enjoying a lower cost of living. This concept aligns with my understanding of the evolving economic landscape and its impact on individual choices.
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Financial Strain and Lifestyle Adjustments: The personal testimonies in the article highlight the financial strain experienced by individuals in high-cost areas. Comments such as "Eighty percent of my salary goes to rent alone" underscore the challenges individuals face in maintaining a comfortable lifestyle with a six-figure income in certain cities.
In conclusion, the evidence presented in the article harmonizes with my in-depth knowledge of finance, economics, and the intricate interplay of factors shaping individuals' financial realities. The concepts discussed underscore the complexities individuals navigate in high-cost urban environments, reflecting the broader economic challenges faced by many in today's dynamic landscape.
