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The Financial Burden of City Living

Anna Cadwallader
Ingram Publishing

Ingram Publishing


Cities are cultural epicenters loaded with temptations to splurge on entertainment, shop, and enjoy fine dining, all within walking distance, which makes them enticing places to call home.

However, it’s an expensive price to pay to have so many life-enriching opportunities right at your fingertips. Cities are home to some of the most expensive commodities, like $20 cocktails and apartment rent that is approximately half of your monthly income. Here are a few other ways city living can take a toll on your finances.

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The Numbers

You need to make $12.75 per hour to actually afford to live in New York City, which is almost double the current minimum wage of $7.25, according to the Living Wage Project. Boston has similar numbers with a minimum wage rate of $8 per hour and a need of $12.65. The cost of living city to city varies, cccording to CNN Money’s cost of living calculator. If you live in Albany and make $50,000, for example, a comparable salary in Manhattan would be $98,292. The higher cost is attributed to the following percentage increases:

  • Groceries – 40 percent more
  • Housing – 253 percent more
  • Utilities – 37 percent more
  • Transportation – 19 percent more
  • Health Care – 21 percent more

Still expensive, but less of a shock, if you live in Springfield, Ill., and make $50,000, a comparable salary in Chicago would be $65,096. To highlight how expensive Manhattan is, if you make $50,000 in Chicago, a comparable salary in Manhattan is $95,379. Manhattan’s standard of living is more than double the national average, according to the first quarter 2013 findings of the Cost of Living Index.


After living in a city with exorbitant rent, it’s jaw-dropping to see what the same amount of money could buy you elsewhere. New York City monthly rent is, on average, $2,801, according to a study conducted in 2009 by the Center for an Urban Future. That’s 53 percent more than San Francisco, the second most expensive city in the United States.

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Although these more expensive cities generally offer higher salaries, the difference is not enough to offset the excessively higher cost of living. We can attribute high demand and low supply to the soaring real estate prices in major cities. For example, in numbers, this means housing Manhattan’s 1.6 million inhabitants in a mere 23.7 square miles.


A perk of major cities is the potential option of efficient and inexpensive public transportation. However, if you decide to own a car in a city, parking is very expensive and priced in some garages at more than $600 a month.

Taxes and Insurance

Location, location, location also applies to certain tax and insurance rates. Income tax rates vary by state. For example, a single person earning $50,000 in New York would pay approximately $2,500 in state income tax, whereas the same person in Texas would pay no state income tax.

Plus, city income tax rates tend to have a direct correlation with the size of the city. So the larger the city, the more you pay — New York, Philadelphia and Los Angeles have some of the highest city income tax rates in the nation. Similarly, auto insurance rates are generally more expensive in urban areas because of the greater likelihood of an accident occurring in congested and traffic-ridden streets. And a city’s crime rate is factored into auto insurance premiums because of higher incidents of theft and vandalism.

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Your Child’s Education

If you’re unhappy with your city’s public school system, your other option is a pricey private school. Top private schools can have a price tag of up to $40,000 a year, almost double one year of in-state tuition at a public university.

Your Own Temptations

The expensive cost of living can also be fueled by your own temptations. It’s possible that in a city you feel more pressure to look chic and trendy — especially with glitzy window displays flanking almost every city block — which might cause you to overspend on the latest fashion crazes.

It also doesn’t help that cities have endless culinary options, all of which can be delivered right to your own home. If you’re on the go, it can be tempting to stop frequently for a quick coffee or snack with cafés and markets on every block. Cities also provide abundant nightlife, but the expenses of a night out on the town can add up faster than you may think. With cover charges, lots of drinks that cost double-digits, and cab rides, a city night out can quickly exceed a couple hundred dollars.

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