The financial burden
America’s world-class cities are saturated by the wealthy, many of whom resist the development needed to provide more affordable housing. Despite the city’s ultra-liberal reputation, San Francisco’s wealthy homeowners have opposed new housing development time and time again.
As a result, the average home there is worth more than $1.27 million, according to Zillow, while the U.S. Census Bureau reports the median household income is $126,187. And those home prices are down 13% year over year.
“It ends up pricing out more and more people — not just people in the middle, but even people with higher incomes and college degrees,” Jed Kolko, under secretary for economic affairs at the U.S. Department of Commerce and a former Upshot contributor, told the New York Times.
On top of this, the rise of remote work has made it possible for many Americans to secure high wages without the outrageous living costs and limited space. They can get better value for their buck elsewhere, though some companies have cracked down on the practice.
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Learn MoreFinding big bargains in small places
Though Americans with degrees still settle in superstar cities from other parts of the country, plenty more are leaving for cheaper regions (often with no income taxes, like Florida and Texas) — even if they can afford the pricey areas.
The Upshot reports some working-age college graduates have been steadily turning to more affordable metros — think Phoenix and Austin, Texas — over the past decade.
Mid-sized cities (250,000 to 1 million) like Tucson, Arizona and Tulsa, Oklahoma — along with locales with less than 250,000 residents, including Sioux Falls, South Dakota — have recently welcomed population upticks as well.
Many of these smaller locations feature the amenities you’d typically find in larger metros, like hip downtown areas, vibrant restaurant scenes and recreational perks. And Austin’s music scene rivals or surpasses that of cities three times its size.
Making ends meet no matter where you live
But let’s face it, nothing quite compares to a view of the Pacific Ocean or the food scene in Chicago. If you’re not ready to give up on your dream home in a big city, you can stretch your income with sensible cost cutting. Here are some tips to get you started.
Budget, budget, budget your expenses. One trap of big-city living is the never-ending temptation to eat out. Restaurant costs make for an obvious place to get your spending under control. Take that spare cash and tuck it into emergency savings and while you’re at it or pad your nest egg.
Make extra cash on the side. If your primary income isn’t enough to make ends meet, consider generating passive income in your spare time. You could put your gently-used clothes and electronics on reselling platforms like eBay. Rent out your parking space or an extra room through Airbnb; big cities often host events that attract visitors worldwide (i.e., Chicago’s Lollapalooza) or make for attractive vacation destinations.
Build your savings. Sadly, many Americans live paycheck to paycheck, without any emergency funding or saved cash to fund a big-ticket purchase. It’s important to have rainy day funds — just ask Suze Orman — especially for things like a major medical bill or unexpected job loss. The good news is that high-yield savings accounts now come with interest rates of 4% or higher, compared to traditional big-bank accounts that in some cases net a nearly non-existent 0.01%.
Invest with your spare change. Investing in the stock market doesn’t mean sacrificing a good chunk of your paycheck. These days, investing apps offer a painless way to save and invest. Some will even round up your purchases to the nearest dollar to invest your spare change. Start now and you may find that you can turn spare change into positive financial change.
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