While the country’s largest and wealthiest cities generally have the highest cost of living, how far your money will go in some major cities might surprise you.
In fact, a recent study by consumer finance site SmartAsset found a person needs to earn three times the salary to afford the same lifestyle in New York City as they would in Houston, Texas.
The study looked at salaries, taxes and the cost of living in 76 U.S. cities to see how much a resident with a six-figure salary would have to earn to actually have $100,000 worth of purchasing power.
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So while you may bring home a six-figure income, where you live can play a huge role in whether you're able to afford a more luxe livestyle or you end up stuck living paycheck to paycheck.
Is it worth considering a move to a lower-cost city to get more bang for your hard-earned buck?
Getting that 'six-figure feel'
SmartAsset’s research revealed that people living in Honolulu, New York and San Francisco must bring in over $300,000 annually to have the same disposable income or live the same lifestyle as someone who makes just over $100,000 in other parts of the country.
These metros cost 82% or more to live in than the national average, and residents who make around $300,000 in these regions face high tax burdens.
Second only to Honolulu at $312,400, the average New Yorker needs to make $312,000 to “get that six-figure feel,” according to the report. California is home to five of the most expensive cities, with Oakland, Los Angeles, Long Beach and San Diego joining San Francisco in making the top 10 of SmartAsset's list.
Meanwhile, major cities such as Miami and Orlando offset higher costs of living with the fact residents pay no state income tax.
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The most affordable cities
Low taxes and lower costs of living make some large cities remarkably affordable.
According to SmartAsset, Texas is home to many of these better-value locales, including San Antonio, El Paso and Corpus Cristi. A person living in Houston, Texas' largest city, needs just $125,300 to feel like they “made it” with $100,000 in purchasing power.
The most affordable city on the list is Memphis, Tennessee, where the average worker needs just $117,100 in gross income to get the same result. Oklahoma City, Oklahoma and St. Louis, Missouri — home to almost a million people between them — also made the cut for the top 10 cities where you can get more out of a six-figure salary.
Time to make a move?
Lower taxes, home prices and cost of living are some of the main reasons more people are moving to states like Texas, according to a blog post from real estate firm RedFin. From April 2020 to July 2022, the population of Texas increased by nearly 900,000 people, according to the Census Bureau.
Whether you're a young professional with a family or you're looking for an affordable place to retire, you may also want to consider whether cheaper cities can retain their cost advantages in the long term. A growing population can increase demand for housing, and if supply can't keep up there could potentially be an increase in rent and home prices.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
