Yahoo Finance How To Afford a Middle-Class Lifestyle on the East Coast
The American middle class isn’t what it used to be. Today, the majority of middle-class households earn an average of $80,000 a year, according to an H&R Block study.
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While this is higher than it was before the pandemic, it’s still not quite enough to keep up with the rising cost of living that’s so prevalent across the country.
That’s why, if you’re thinking about living on the East Coast but want to maintain your current middle-class lifestyle, you might need to do so with a bit of financial planning and discipline. Otherwise, you could end up facing a much higher cost of living than you’re used to — and potentially other financial problems down the road.
What Constitutes the Middle Class?
Roughly 50% of all Americans are considered middle class in today’s society. Over the past several decades, the middle class has shrunk as more people now fall into either the lower- or upper-class tier.
Along with this, the definition of “middle class” has changed over the years. Despite this, there are certain characteristics that people in this tier tend to share.
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“The middle-class lifestyle is typically defined by home ownership, a reliable vehicle, health insurance, savings for retirement and the ability to afford occasional luxuries like vacations,” said Shannon Feick, co-owner and co-founder at ASAP Properties, LLC. “Education for children, if applicable, is also a priority.”
Individuals in the middle class often have to take on loans to afford certain things, like a home or a vehicle. They may also rely on credit cards for certain, more extravagant purchases.
Affording Life on the East Coast
The cost of living on both the West and East coasts tends to be higher than what you’d find in the middle states.
“Generally, both the East Coast and West Coast can be pricier than other parts of the country, like middle America,” Feick said. “This is especially true in urban centers like New York City or Boston. Factors driving these costs include higher demand for housing, the concentration of high-paying industries, and a higher cost of living.”
Jeremy Resmer, the CEO at Value Land Buyers, added that many East Coast cities are heavily populated. “[This] means there’s a lot of competition for things, and that can make prices go up.”
That doesn’t mean every state on the East Coast is equal in terms of expense, though. Some cities are actually relatively affordable.
“Both the East and West Coast have cities that are reasonably priced to live — think Jacksonville, Florida, and Portland, Oregon — as well as cities that are extremely expensive — think NYC and San Diego,” said Sylvia N. Guinan, MBA, CDFA and senior vice president of investments at Wells Fargo Advisors. “The most expensive cities on both coasts typically have higher taxes, housing, insurance — and really, everything from groceries, child care, college tuition, utilities to transportation costs cost more.”
Whether you choose to live in a less expensive city or you’re set on a place like New York City, there are several ways to ensure you can afford to live there without sacrificing your current lifestyle.
Pay Off Debt
Experian found that the average adult consumer has $103,358 in debt, excluding mortgages. If you’ve got auto loans, student loans, credit cards or other types of debts, you might want to consider paying those off before moving to the East Coast.
Paying off your debts can free up more cash each month for other expenses. It also can save you money when it comes to interest payments. And it can give you some much-needed peace of mind as you plan your next big move.
Maximize Your Income
The average middle-class millennial works two jobs, according to H&R Block. If you have extra time and energy in your week, you might want to take on another source of income to give your finances a boost and improve your financial security.
Feick suggested pursuing “career advancement opportunities, side hustles or gig work to boost your income.”
Save and Invest Wisely
Another way to build financial security and make sure you can afford the potentially more expensive costs on the East Coast is to start building a nest egg. This means saving more money for both emergencies and planned future expenses.
“Put money aside for emergencies, retirement and future plans,” Resmer said. “Consider investing your money in ways that help it grow.”
Having a financial cushion can help mitigate potential costs later on. Investing strategically, meanwhile, can help you prepare for things like retirement, your child’s education, vacations and other long-term goals.
Have a Plan and Spend Mindfully
“In my opinion, maintaining a middle-class lifestyle is all about finding a balance between enjoying what the East Coast has to offer and being mindful of your budget,” said Joshua Martin, owner at Atticus Home Buyers. “With some smart choices and a little creativity, you can make it work.”
One way to do this is to consult with your partner, if you have one, about your finances and goals. Another option is to create a realistic budget and a financial plan that allows you to maintain your current lifestyle without going overboard.
“Create a plan that shows how much money you have and where it needs to go,” Resmer said. “Stick to your plan to keep your finances in order.”
Choose Affordable Housing
Housing is a major expense and one that can set you back on the East Coast if you’re not careful. That’s why it’s important to take some time and consider your options before choosing exactly where you want to live.
“In cities like Baltimore, Maryland, you can find charming row houses that offer great value for your money,” Martin said. “Another option is to consider living in the suburbs, where housing tends to be more affordable than in the city centers.”
Keep an eye out for places that are affordable but not located that far from where you work. Of course, in some cities where public transportation is convenient and highly accessible, you might not need to worry too much about the commute.
“Many East Coast cities have good public transportation systems,” Resmer said. “Using buses and trains can save you money compared to owning a car.”
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This article originally appeared on GOBankingRates.com: How To Afford a Middle-Class Lifestyle on the East Coast
