Where You Can Earn Six Figures and Still Be Broke

Written by MAGGIE DAVIS

Edited by NAOMI BARR and XIOMARA MARTINEZ-WHITE

Lending Tree, April 24th, 2023

…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.

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).

(Honolulu is fourth--$865 in the red)

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.

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