Cost of Living in California
Deciding to make the move to the Golden State, California, is an exciting prospect. However, it’s important to be aware that the cost of living in California varies significantly from city to city. According to a 2020 Cost of Living Index, the average city in California has a 38% higher cost of living compared to the national average. This means it’s crucial to research and compare the cost of living in your current city with your dream California city. In this guide, we’ll break down the expenses you’ll encounter, from housing to healthcare, to help you make an informed decision.
Housing Costs in California
Housing costs in California can be staggering. In March 2020, the median home price was over $600,000, nearly 88% higher than the national median. The average monthly rent for a two-bedroom apartment was almost $1,900, about 55% higher than the national median of $1,200. However, keep in mind that California’s size means there’s a wide range of housing costs. For example, while San Francisco’s housing market may seem daunting, cities like Bakersfield offer more affordable options, nearly 9% less expensive than the average U.S. city.
Handling Housing Costs
Before making any decisions, ensure that your monthly housing payment doesn’t exceed a fourth of your take-home pay. For home buyers, this includes various expenses like principal, interest, property taxes, homeowner’s insurance, and more. Consider using a mortgage calculator to explore different home prices within your budget. If you’re opting for a mortgage, consider a 15-year fixed-rate conventional loan for a faster path to homeownership.
Utilities
Californians tend to pay a bit more for utilities like energy and phone services compared to most U.S. cities. While cities like Bakersfield have cheaper housing, their utility costs are nearly 43% higher than the national average. However, cities like Orange County offer below-average utility costs, around 6% less than the typical U.S. city.
Groceries
The cost of groceries in California ranges from 5-33% higher than the average U.S. city. For instance, Modesto offers some of the least expensive groceries, while Oakland’s grocery stores may lead to higher totals.
Transportation
California has the highest transportation costs in the country, including expenses like car maintenance and gas prices. Even in cities like Modesto, with relatively lower gas prices, they’re still 27% higher than the rest of the U.S. Meanwhile, San Francisco boasts the highest gas prices, a whopping 45% higher.
Health Care
San Francisco tops the list for the highest health care costs in California, a striking 30% higher than the average city in the nation. On the other hand, Stockton ranks as the least expensive among CA cities, only 2% more than the average U.S. city.
Taxes
California’s taxes are among the highest in the country. Income taxes can range up to 13.3% for the highest bracket. The state also holds the highest state-level sales tax rate at 7.25%. When factoring in the average local-level sales tax rate of 1.41%, CA drops to the ninth highest total sales tax rate in the nation.
Miscellaneous Goods and Services
Miscellaneous costs in California can range from below 11% to above 33% of the national average. For instance, Orange County’s costs match most California cities and are about 10% higher than the rest of the country.
Comparing the Cost of Living
Before making the move to California, use a Cost of Living Calculator to determine how the expenses compare to your current city. If California’s cost of living is higher than what you’re comfortable with, consider adjusting your standard of living, negotiating a higher salary, or exploring more affordable neighboring areas.
Conclusion
California’s diverse cities offer a range of living costs. By carefully considering the expenses associated with housing, utilities, groceries, transportation, healthcare, taxes, and miscellaneous goods, you can make an informed decision about whether the Golden State is the right fit for you financially. Good luck on your California adventure!