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How To Afford a Middle-Class Lifestyle on the West Coast

RyanJLane / Getty Images
RyanJLane / Getty Images

The majority of middle-class households earn around $80,000 a year — though incomes range from $45,000 to $145,000. While these individuals can be found across the country, many live on the West Coast.

Middle-class households earning on the higher end might be able to comfortably afford the West Coast without changing their lifestyle. However, others struggle with the higher cost of living.

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If you’re considered a “middle class” earner and want to maintain your lifestyle on the West Coast, here are some ways to do just that.

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What Is the Middle Class Lifestyle?

Before getting into the different ways to afford a middle-class lifestyle on the West Coast, it’s important to understand what makes up a “middle class lifestyle” in the first place.

The definition of “middle class” has changed over the years. However, these individuals and households have certain characteristics in common.

“The middle class tend to own their own home and carry a mortgage,” said Sylvia N. Guinan, MBA, CDFA and senior vice president of investments at Wells Fargo Advisors. “If they are in a city, rent is a bit more common. For middle class individuals in transition, such as job change or divorce, rent is often an option.”

Along with this, middle class households tend to own their own vehicle and send their children to university. They may need to take on auto or student loans to afford these things, though.

“They tend to have retirement savings, and their home and retirement accounts contain the largest portion of their overall net worth,” continued Guinan. “They tend to have cash flow to take vacations and enjoy dining out.”

In other words, middle class individuals often have a bit more financial security, jobs with room for growth and a more flexible lifestyle.

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Affording the Cost of Living on the West Coast

Many areas along the West Coast are more expensive than what you’d find in other parts of the U.S., especially if you’re comparing the coast to the middle of the country.

“States like California, Oregon and Washington are pricier compared to many other parts of the U.S.,” said Jeff Rose, CFP and founder of Good Financial Cents. “In California, for example, the cost of living is way above the national average. Housing there can cost double what you’d pay elsewhere in the country. So, it’s not the cheapest spot, for sure.”

Besides housing, other things that tend to be pricier on the West Coast include utilities, transportation, groceries, healthcare, childcare, insurance and taxes.

If you’re earning around $80,000 a year, that money won’t go quite as far on the coast. But that doesn’t mean the West Coast is unaffordable.

Here are a few strategies to be able to afford the cost of living in this area without compromising on your quality of life.

Pay Down Debt and Reduce Expenses

Many people in the middle class have what’s considered to be “manageable” debt. However, living on the West Coast can lead to higher expenses and, if you’re not careful, increase your debt load.

To combat this, take a look at your current debts and find ways to reduce your expenses — without sacrificing your quality of life.

Jude Caratao from Debt Mate suggested “downsizing living spaces or adding roommates” and “commuting via public transport over car ownership or payments” as one way to cut down on costs. Along with this, Caratao said to limit your housing expenses to no more than 30% of your total monthly income.

Increase Your Savings and Investments

A key characteristic of people in the middle class is their ability to save or invest some of their money in their future, their children’s education and their retirement. If you haven’t yet moved to the West Coast, now’s a good time to increase your savings and build a greater nest egg.

“Prioritize saving for retirement and emergencies,” suggested Jake Claver, CEO of Syndicately. “Invest wisely in tax-advantaged accounts and diversified portfolios to grow your wealth over time.”

Get Insurance

While most middle class families have at least basic health insurance, you might want to invest in other types of insurance to protect yourself and your family. This could include a life insurance policy, which can be used to safeguard your household in case something happens to the primary income earner.

Another type of insurance option that might cost more money upfront — but that can protect your household from potentially expensive costs later on — is homeowners insurance. Depending on where you live along the West Coast, you might need a more comprehensive plan to protect any property you might buy from environmental or other damages.

Build an Emergency Fund

As part of your savings, it’s also important to have an emergency fund, said John Dorris, the president and CEO of AutoInfu.

“Establish a detailed budget to track income and expenses,” said Dorris. “Emphasize financial planning, including emergency funds, retirement savings and investments, to ensure long-term financial stability.”

With an emergency fund, you can safeguard your household from unexpected expenses. This can be especially beneficial if you’re moving to the West Coast and find yourself facing higher-than-anticipated initial costs.

Have a Financial Plan

If you haven’t already, create a financial plan. This can help you manage your finances better and prepare you for any challenges that come along later.

“While the West Coast presents certain financial challenges for middle-class individuals, strategic planning and lifestyle adjustments can make this dream achievable,” said Katherine Melton of Nexofly. “Diligent budgeting and financial planning are key. This includes prioritizing expenses, saving diligently and investing wisely.”

Take Advantage of Workplace Benefits

Depending on your employer, you might be able to take advantage of certain workplace benefits. Doing so could make it easier for you to afford the higher cost of living on the West Coast.

“To sustain a middle class lifestyle, it’s also important to take advantage of workplace benefits, such as matched 401(k) funds, insurance and transportation benefits,” said Guinan.

Increase Your Income

If you’re making a typical middle class income of around $80,000, you might need to find ways to increase your earnings to accommodate for the higher cost of living on the coast.

“In states along the West Coast, you need a good income to be considered middle class, sometimes even over $150,000,” said Rose.

See if you can get a promotion at work. Or take on a side gig or passive income stream to boost your income.

Implement Smart Money Strategies

All of these could be considered smart money strategies, but there might be other options to consider as well, if you’re trying to maintain a middle class lifestyle on the West Coast.

“People might need smart strategies like getting tax breaks, educational scholarships, guaranteed paid leave and other financial supports,” said Rose. “These can help balance out the high living costs, so you can enjoy what the West Coast has to offer without breaking the bank.”

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This article originally appeared on How To Afford a Middle-Class Lifestyle on the West Coast