Where You Can Earn Six Figures and Still Be Broke
Are six-figure earners really financially stable? According to our latest study, not necessarily — in fact, a family of three that earns $100,000 annually may still struggle to make ends meet in 16 of the 100 largest U.S. metros.
Keep reading to learn which metros have six-figure earners struggling the most, and which ones are most affordable. In addition, for anyone barely breaking even after paying for basic expenses, stick around for some tips on saving up and avoiding unnecessary debt.
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Key findings
- In 16 of the 100 largest U.S. metros, monthly spending on the basics is higher than the monthly income for a family of three that earns $100,000 annually. Of the 16 metros, eight are in California.
- In San Jose, Calif., a family of three that earns $100,000 would be $1,493 in the red monthly after spending on the basics — the highest on our list. San Jose takes this spot by having the highest housing (an average of $2,536 a month for a two-bedroom rental) and transportation (an average of $1,448 a month) costs among the 100 metros. Next on the list are San Francisco ($1,163 in the red) and Oxnard, Calif. ($904).
- Jackson, Miss., tops the list for affordability, with a family of three that earns $100,000 annually having $1,394 left over after spending. Mississippi as a state has the lowest child care costs across the U.S. at $772 a month. Meanwhile, the cost of living in the Jackson metro is about 11% cheaper than the national average. Next on the list are Birmingham, Ala. ($1,307 in the black), and Little Rock, Ark. ($1,294).
How did we determine where six-figure earners can still be broke?
We based our calculations on a family of three (two adults and a child) that earns a gross income of $8,333 monthly. To determine in which of the 100 largest metros these consumers could struggle to make ends meet, LendingTree researchers then analyzed several spending categories commonly considered as “basic” needs. That includes:
- Housing: We assumed our family of three is renting a two-bedroom apartment in their area.
- Child care: We assumed the family paid for weekly child care. Calculations are at the state level.
- Transportation: We measured the total cost of local transportation, including car ownership, travel and transit costs.
- Health care: This is the monthly employee contribution amount based on the average annual family premium for employer-based health insurance. Calculations are at the state level.
- Student loans: Based on the most recent data, we assumed a couple is making an average monthly student loan payment of $250. (While payments on federally held student loans have been suspended since the beginning of the coronavirus pandemic, those with private student loans have had to continue payments, so we chose not to set the payment at $0.)
- Food, entertainment and utilities: We assumed our family of three made average national expenditures for someone earning $100,000 to $149,999 annually. We then applied a cost-of-living multiplier based on the metro.
- Taxes: We assumed our family of three files jointly and invests $6,000 yearly into their 401(k). Taxes are measured at the federal level but not state or local.
- Savings: We assumed our family of three put away $500 in savings monthly.
See the methodology for fuller details.
In 16 of the 100 largest U.S. metros, you can earn six figures and still be broke
Breaking the six-figure income barrier doesn’t automatically mean you’re financially free — at least not in 16 of the 100 largest U.S. metros, where monthly spending on the basics is higher than the monthly income for a family of three that earns $100,000 annually.
Metros where basic expenses are higher than the monthly income of a family earning $100,000 annually
| Rank | Metro | Monthly income | Monthly expenditure | Net monthly income |
|---|---|---|---|---|
| 1 | San Jose, CA | $8,333 | $9,826 | -$1,493 |
| 2 | San Francisco, CA | $8,333 | $9,496 | -$1,163 |
| 3 | Oxnard, CA | $8,333 | $9,238 | -$904 |
| 4 | Honolulu, HI | $8,333 | $9,198 | -$865 |
| 5 | San Diego, CA | $8,333 | $9,099 | -$766 |
| 6 | Boston, MA | $8,333 | $9,095 | -$762 |
| 7 | Seattle, WA | $8,333 | $8,995 | -$662 |
| 8 | Los Angeles, CA | $8,333 | $8,989 | -$655 |
| 9 | Washington, DC | $8,333 | $8,866 | -$532 |
| 10 | Bridgeport, CT | $8,333 | $8,653 | -$320 |
| 11 | Riverside, CA | $8,333 | $8,547 | -$214 |
| 12 | Sacramento, CA | $8,333 | $8,531 | -$197 |
| 13 | Denver, CO | $8,333 | $8,507 | -$174 |
| 14 | Poughkeepsie, NY | $8,333 | $8,489 | -$156 |
| 15 | Baltimore, MD | $8,333 | $8,436 | -$102 |
| 16 | Stockton, CA | $8,333 | $8,377 | -$44 |
Sources: U.S. Census Bureau 2021 American Community Survey with one-year estimates, U.S. Census Bureau Household Pulse Survey, Center for Neighborhood Technology Housing and Transportation Affordability Index, Kaiser Family Foundation, Federal Reserve Survey of Household Economics and Decisionmaking (SHED), U.S. Bureau of Labor Statistics 2021 Consumer Expenditure Survey and U.S. Bureau of Economic Analysis data.
According to LendingTree chief credit analyst Matt Schulz, it’s understandable that these high earners may be struggling to get by — particularly in high cost of living areas.
Of the 16 metros, eight are in California. While Schulz says salaries in almost all of the big California cities are higher than the rest of the nation, because the cost of living can be outrageously high there too, even six-figure residents are finding themselves struggling financially (more on that below).
Which metros top the list? Look West
It may be the land of tech giants and millionaire entrepreneurs, but for a family of three living in San Jose, Calif., earning $100,000 annually would land them in the red by a whopping $1,493 per month — making it the top metro where six-figure earners may struggle to make ends meet.
The exorbitant costs of housing (averaging at $2,536 per month for a two-bedroom rental) and transportation (averaging at $1,448 per month) are the main culprits. Both of those costs are the highest of any metro on our list.
Coming in second and third place behind San Jose are San Francisco and Oxnard, Calif., with families of three earning $100,000 in the red by $1,163 and $904 per month, respectively. Predictably, housing in San Francisco and Oxnard rank second- and third-highest of any metro analyzed. To break it down:
- Rent for a two-bedroom apartment in San Francisco costs an average of $2,341.
- Rent for a two-bedroom apartment in Oxnard costs an average of $2,023.
Also worth noting: San Francisco has the highest cost multiplier of any metro we analyzed, at 119.832. That means the cost of living (which, in our calculations, doesn’t include housing and transportation) is almost 20% more expensive than the U.S. average. Given that, San Francisco ranks highest for food costs (with a family of three spending an average of $1,058 per month) and entertainment costs (with families spending around $445 on average).
Meanwhile, Oxnard has the second-highest transportation costs of the top 100 metros — six-figure earners there spend an average of $1,377 per month getting around.
Jackson, Miss., is the most affordable metro
Looking to stretch your dollars as far as they can go? You might want to consider Jackson, Miss., which tops the list as the most affordable metro in the U.S. for a family of three earning $100,000 annually. According to our analysis, such a family could have $1,394 in monthly net savings after covering their basic expenses.
This is largely due to the state’s child care costs, the lowest in the country at $772 per month. In general, the cost of living in the Jackson metro is about 11% cheaper than the national average, making it an attractive option for those seeking to maximize their budgets.
According to Schulz, those lower costs largely boil down to the lower-than-average salaries that are offered in-state. “Mississippi has historically been one of the nation’s lowest-income states, but it also has one of the lowest costs of living,” he says. “That means that $100,000 can go a whole lot further in Mississippi than in most other areas.”
Metros where basic expenses are lowest compared to the monthly income of a family earning $100,000 annually
| Rank | Metro | Monthly income | Monthly expenditure | Net monthly income |
|---|---|---|---|---|
| 1 | Jackson, MS | $8,333 | $6,939 | $1,394 |
| 2 | Birmingham, AL | $8,333 | $7,026 | $1,307 |
| 3 | Little Rock, AR | $8,333 | $7,040 | $1,294 |
| 4 | Oklahoma City, OK | $8,333 | $7,044 | $1,289 |
| 5 | Toledo, OH | $8,333 | $7,045 | $1,288 |
| 6 | Dayton, OH | $8,333 | $7,064 | $1,270 |
| 7 | Tulsa, OK | $8,333 | $7,064 | $1,269 |
| 8 | Cleveland, OH | $8,333 | $7,122 | $1,211 |
| 8 | Memphis, TN | $8,333 | $7,122 | $1,211 |
| 10 | Akron, OH | $8,333 | $7,161 | $1,172 |
Sources: U.S. Census Bureau 2021 American Community Survey with one-year estimates, U.S. Census Bureau Household Pulse Survey, Center for Neighborhood Technology Housing and Transportation Affordability Index, Kaiser Family Foundation, Federal Reserve Survey of Household Economics and Decisionmaking (SHED), U.S. Bureau of Labor Statistics 2021 Consumer Expenditure Survey and U.S. Bureau of Economic Analysis data.
The second- and third-ranking affordable metros on the list are Birmingham, Ala. ($1,307 in the black), and Little Rock, Ark. ($1,294). It’s worth noting that the cost multiplier in both metros is low, at 9% and 8% cheaper than the U.S. average, respectively. That’s directly tied to the lower-than-national-average incomes residents earn in each state: In Alabama, the median income is $54,943, while the median income in Arkansas is just $52,123.
Like in Jackson, Miss., Birmingham also has notably low child care costs — at an average of $866, it ranks fourth-lowest on the list.
Meanwhile, Little Rock has low housing costs. With rent for a two-bedroom apartment costing an average of $863, it ranks in the top 10 of the metros with the most affordable housing.
Full rankings
Expert tips on saving cash in a high cost of living metro
Regardless of whether you’re earning six figures or not, living in a large metro area — especially one with a high cost of living — can be challenging. For those trying to make ends meet, Schulz offers the following advice:
- Credit card rewards can be a great way to extend your budget. “That 2% cash back may not seem like much, but when you’re on a tight budget, every little bit matters,” he says. “Your income doesn’t play a role in whether you can actually get a credit card, but it does help determine just how much credit you can get when you do get one. That means that you have the potential to earn more rewards, plus you can use that card as a de facto emergency fund if need be.”
- Revisit your budget. “The more money you make, the more challenging it can be to track. That’s a good problem to have, but it’s still a problem,” he says. “The truth is that you can’t make a meaningful plan to attack debt or grow savings unless you know exactly how much is coming in and out of your household each month. It’s not going to be fun, but getting super-granular for a few weeks — which means tracking everything you spend — can be eye-opening. You’re likely spending more on certain things than you realize, and once you notice that, you can start to be more mindful and conscious of what you’re buying. That can make a real difference.”
- Don’t pass up free money. “Sounds silly, right?” he says. “Who passes up free money? Lots of people do. For one, many high-income earners may be eligible for a 401(k) match from their employer up to a certain amount each year, yet they don’t max it out. That’s free money that’s being left on the table that could otherwise help relieve any pressure they may be feeling about their savings. If you let your employer do more of the savings work, you may end up with some extra money that can then be put to more immediate needs.”
Methodology
LendingTree researchers analyzed various sources to determine the metros where you can earn six figures and still be broke.
We started with the 100 largest metros in the U.S., basing our calculations on a family of three (two adults and a child) that earns a gross income of $8,333 monthly.
We refer to our spending categories in this study as “the basics,” though we realize that can differ by family, metro and other factors. The spending categories we included were:
- Housing: We assumed our family of three is renting a two-bedroom apartment. Calculations are at the metro level. (U.S. Census Bureau 2021 American Community Survey with one-year estimates)
- Child care: We assumed the family paid for weekly child care. Calculations are at the state level. (Week 51 of the U.S. Census Bureau Household Pulse Survey, conducted Nov. 2 to 14, 2022)
- Transportation: This metric measures the total cost of transportation, including car ownership, travel and transit costs. Calculations are at the metro level. (Center for Neighborhood Technology Housing and Transportation Affordability Index, 2020)
- Health care: This is the monthly employee contribution amount based on the average annual family premium for employer-based health insurance. Calculations are at the state level. (Kaiser Family Foundation, 2021)
- Student loans: We assumed the couple is making a monthly student loan payment of $250. While payments on federally held student loans have been suspended since the beginning of the coronavirus pandemic, those with private student loans have had to continue payments, so we chose not to set the payment to $0. We set $250 across the U.S. based on a May 2020 report — the latest available — that highlighted the typical monthly payment is between $200 and $299. (Federal Reserve Survey of Household Economics and Decisionmaking, or SHED)
- Food, entertainment and utilities: We assumed our family of three made average national expenditures for someone earning $100,000 to $149,999 annually. We applied a cost-of-living multiplier based on the metro. (U.S. Bureau of Labor Statistics 2021 Consumer Expenditure Survey, U.S. Bureau of Economic Analysis)
- Taxes: We assumed our family of three files jointly and invests $6,000 yearly into their 401(k). In this scenario, our family owes $7,761 in federal taxes and $7,650 in payroll taxes. Taxes are measured at the federal level but not state or local.
- Savings: We assumed our family of three put away $500 in savings monthly.
To estimate the net savings or debt accrued, we estimated the monthly cost of each of the categories above. We then subtracted that figure from the $8,333 monthly income of a household earning $100,000. Finally, we ranked the metros from highest to lowest based on where those expenditures were the highest.