Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.
A household bringing in $100,000 each year might look financially stable on paper. But after factoring in taxes, housing, transportation, and other basic budget line items, a new MagnifyMoney analysis found six-figure families can easily struggle to make ends meet.
In our report, The Best and Worst Cities to Live On Six Figures, we analyzed 381 major metros across the U.S. to see where a family earning $100,000 has the most wiggle room in their budgets.
We based our estimates on a two-earner household with two adults and one child and a gross annual income of $100,000 ($8,333 per month).
Then we created a reasonable budget for monthly expenses and subtracted that total from their after-tax income. We ranked cities from worst (least amount of money left over at the end of each month) to best (the most amount of money left over at the end of each month).
Behind the Budget:
We based most of our budget estimates on publicly available data, but we had to make some assumptions. We assumed one of the household earners carries some student debt, that all families set aside at least 5% in personal savings, and that they enjoy some entertainment throughout the month. That budget includes basic necessities: housing, food, transportation, child care, as well as variable spending on student debt, savings, and entertainment. See our full methodology here.
- In 11 out of 381 metro areas analyzed, households earning six figures would spend more than 90% of their total take-home pay on basic monthly expenses. The average across all 381 metros is 75% of take-home pay spent on monthly expenses.
- In 71 out of 381 metro areas analyzed, households earning six figures are spending more than 75% of their budget on basic monthly expenses.
- Six figures and broke in Washington, D.C.: The worst metro area for a family earning $100,000 includes Washington, D.C. and neighboring cities Arlington and Alexandria, Va. After factoring in monthly expenses, families would be $315 in the red. Stamford, CT, San Jose, CA, San Francisco, CA, and the New York City area round out the 5 worst areas for affordability.
- California is the ultimate budget killer: The Golden State is home to 9 out of the top 20 worst metros for six-figure families, including San Francisco, San Jose, Santa Cruz, San Diego and Napa. However, Los Angeles area six-figure families are able to save about $500 a month more than San Francisco area families, thanks to lower housing costs.
- Tennessee dominates: If you’re looking for bang for your buck, it doesn’t get more affordable than Tennessee. The top three best metros for six-figure households are in Tennessee, and a total of five out of the top 10 best metros on the list are from the Volunteer State.
- Living large in Johnson City, Tenn.: The best metro area for a family earning $100,000 is Johnson City, Tenn., where families only spend 62% of their household budgets on basic expenses. After factoring in monthly expenses, families would have a surplus of over $2,400 each month.
- The South reigns supreme. The Southeast and Southwest tied as the best region for six-figure families, requiring them to use an average of only 70% of their income on basic expenses.
- Steer clear of the coasts. In another tie, the Northeast and West ranked worst among the five regions. On average, six-figure households spend 80% of their earnings in these regions.
- Housing is a budget buster. In 64 out of 381 metros, six-figure households are spending more than one-quarter of their monthly income on housing. In 18 out of 381 metros, six-figure households are spending more than one-third of their budget on housing.
- Child care isn’t cheap. Child care expenses consume 10% or more of household budgets in 42% all metro areas (161 of 381).
The WORST Metros for Six-Figure Households: By the Numbers
1. Washington, D.C./Alexandria/Arlington, VA
It’s shockingly easy for a household earning $100,000 to live beyond their means in this high-cost metro area. To meet the basic costs of these seven expenses, they would spend 5% more than they actually earn after taxes, leaving them $315 in the red. Housing and childcare alone consume a whopping 60% of the household budget of a family living in this metro area.
2. Bridgeport/Stamford/Norwalk, CT
Thanks mostly to lower average child care costs ($959 per month vs. $1,000+ in metros like Washington, D.C., and Boston), families earning $100,000 would be slightly better off — but only slightly. After accounting for expenses, they would still be $139 in the red. Housing has much to do with that. It would consume 43% of the household budget alone.
3. San Jose/Sunnyvale/Santa Clara, CA
It’s a good thing Silicon Valley gigs pay well. A $100,000-earning family in the San Jose/Sunnyvale/Santa Clara metro area would only just manage to make ends meet, according to our findings. They would spend 99% of their total income on basic expenses. Nearly half of their income would go toward housing (46%), more than households in any other metro area analyzed.
4. San Francisco/Oakland/Hayward, CA
Right next door to the no. 3 worst metro on our list, the San Francisco/Oakland/Hayward combo presents another budget-busting challenge for six-figure households. The area gets an edge because it has a slightly more affordable housing situation. A family earning $100,000 would use roughly 43% of their budget on housing. And when all’s said and paid for, families would use 96% of their earnings on basic expenses.
5. New York, NY/Newark/Jersey City, NJ
We land back on the East Coast for the no. 5 worst metro for six-figure households. New Yorkers and the bridge and tunnelers of Newark and Jersey City, N.J., may face exorbitant housing and child care expenses, but they luck out in one key area: transportation. The area ranks the third most affordable for transportation, likely due to the prevalence of public transit. A six-figure household would only use 13% of their budget to get around. That’s nearly half the rate spent on transit in nearby Lexington Park, Md. (23%). Still, cheaper transit options don’t quite make up for the fact that a family earning $100,000 in this area would still have to dedicate a total of 57% of their budget to housing and child care alone. At the end of the month, 96% of their earnings would be dust.
6. California/Lexington Park, MD
High earners in California/Lexington Park, Md., will spend a fair chunk of their earnings on transportation — 23% of their take-home pay. After housing, transportation is the most expensive line item in their budget. Still, they benefit from relatively low housing expenses compared to the other metros in the bottom 10, which gives households here a boost. Higher taxes also leave them with less take-home pay
7. Kahului/Wailuku/Lahaina, HI
Thanks to one of the highest income tax rates in the U.S., high-earning households in Hawaii start off with less take-home pay than their counterparts across the country. A married couple earning $100,000 and filing taxes jointly would get hit with an 8.25% state income tax rate.
Both higher housing costs and transportation expenses make this region in Hawaii, located on the island of Maui, one of the worst places for six-figure households. At the end of each month, they have just $292 left in the household budget. The majority of their take-home pay will go toward housing (38%) and transportation (18%).
8. Honolulu, HI
A family earning $100,000 in Honolulu would fare slightly better than their neighbors on Maui, thanks to lower transportation costs. At the end of each month, they have $302 left in the household budget, versus $292 for households in the Kahului-Wailuku-Lahaina area.
9. Boston-Cambridge-Newton, MA-NH
Relative to their take-home pay, Boston families earning $100,000 spend well over half their household budget on housing and child care — 36% and 17%, respectively.
10. Santa Cruz/Watsonville, CA
Santa Cruz-Watsonville, CA rounds out our rankings. A household earning $100,000 would scrape by at the end of the month with just $329 left.
The BEST Metros for Six-Figure Households: By the Numbers
1. Johnson City, TN
The Southeast is by far the best region to move to if you want to stretch your six-figure income, and Tennessee should be top of your list. Four out of the top 10 best places to earn six figures belong to Tennessee metros.
2. Morristown, TN
A six-figure family living in Morristown, TN would have just over $2,500 left in the bank after paying for essentials and a bit of entertainment. That’s plenty of cash to build up an emergency fund.
3. Cleveland, TN
Tennessee continues to dominate the list, with Cleveland, TN coming in third place among the most affordable places for six-figure households. Families spend just 63% of their post-tax monthly income on essentials, savings and entertainment.
4. Hattiesburg, MS
Hattiesburg, MS takes the no. 4 spot, where a six-figure family can afford to cover essential expenses, plus savings and entertainment with just 64% of their post-tax income.
5. McAllen-Edinburg-Mission, TX
A family earning $100,000 per year in McAllen, TX would have more than enough to meet their basic needs and then some. Only 14% of their income is spent on transportation ($955 per month) and just 16% goes toward housing ($1,086 per month).
6. Jackson, TN
We’re back to the Volunteer state at No. 6 with Jackson, TN.
7. Chattanooga, TN-GA
Right on the border of Tennessee and Georgia, Chattanooga proves to be a great location of a family bringing in $100,000 per year. Relatively low housing, child care and transportation costs leave plenty of breathing room in the budget.
8. Lafayette-West Lafayette, IN
The midwest makes its first and only showing in the top 10 affordable places list with Lafayette, IN. Just under two-thirds (65%) of a family’s monthly post-tax income would be used on budget essentials like housing, food, child care and transportation.
9. Jackson, MS
We’re back to Mississippi at No. 9 with Jackson, MS making a strong showing among the most affordable places for a six-figure family.
10. Brownsville-Harlingen, TX
Texas rounds out the top 10 affordable places for $100,000 households, with the Brownsville-Harlingen area nabbing the last spot. Families would have over $2,300 left in the bank at month’s end based on our estimates.
A Tale of Two Cities
In the graphic below, see how different life is for a family earning $100,000 in Washington, D.C. vs. Johnson City, TN.
Click a region to jump to the rankings:
We based our findings on the projected disposable income for a family of three — two adults and one child age 4 years old. We assume the total household gross income is $100,000.
We estimated post-tax income for each metro area.
Based on metro-level estimates from U.S. Census Current Population Survey
Economic Policy Institute — State level child care costs in the U.S.
Official USDA Food Plans: Cost of Food at Home at Four Levels, U.S. Average, April 2017
Based on a moderate plan for a family of three: One male (age 19 to 50 years), one female (age 19 to 50 years), and child (age 4 to 5 years). Adjustment factor of 5% added.
Based on metro-level data compiled by the U.S. Dept. of Transportation
U.S. Dept. of Housing and Urban Development “Location Affordability Portal”
Student debt payment
State Level Household Debt Statistics 2003-2016, Federal Reserve Bank of New York.
The Student Loan Debt Balance per Capita is distributed equally over 10 years with an interest rate of 4.66%.
We assumed all households would spend 5% of their income on entertainment, per the Bureau of Labor Statistics Consumer Expenditures Survey (CE)
We assumed all households would set aside 5% for personal savings, based on averages from the St. Louis Federal Reserve Bank, personal savings rate.
Data analysis by Priyanka Sarkar, Arpi Shah and Mandi Woodruff.