One of the most popular articles I’ve ever posted is how 500k a year is needed for a comfortable middle-class lifestyle in Boston. It’s one of the most talked about pieces I’ve ever written, and the discussion gets arguments from all sides of the board. Usually, people back off any defensive positions once I break down what goes into my calculations and reasoning. If you’ve not read that piece, I suggest you click the link above to do so because I’m about to spoil my story. You don’t need to make half a million dollars a year to live a nice middle-class lifestyle in Boston. It’s not simply about how much you make; it’s about what you do with your money, how you go about your family’s financial planning for future generations, and understanding what priorities mean the most to you.
As I’ve discussed the topic of living a comfortable lifestyle in Boston for families, I wanted to take the conversation to the single people, the 20-somethings or even 30-somethings that are not yet at the point of growing their family, or perhaps never intend to have children.
Recently, CNBC published an article about what salary is needed to live comfortably as a single person in 25 major cities across the country. Of course, you guessed it! Boston is number 5 behind Santa Ana, Irvine, San Jose, and New York City. CNBC pulled the data from a study run by SmartAsset, and according to them, a single person living in Boston needs to make just under $125,000 per year to live a comfortable lifestyle following the 50/30/20 (needs/wants/savings) budgeting strategy.
So, is this true? What can be done if you don’t make this type of money and strive to live in Boston? Let’s dive in.
Minimum Salary in Boston – Leveling Up Through Life Phases
Let me say this: “single” will mean/encompass very different ways of living in Boston. A young, recently graduated early 20-something will have vastly different goals, habits, and life tolerances than someone in their early 30s. There are phases of life that young people work through, some faster than others, but it’s inaccurate to blanket all single people as requiring the same things for a comfortable lifestyle.
With the 50/30/20 savings strategy model as an example, I can make my point using two different case studies.
Case 1: A 22-year-old single male recently graduated from BU with a degree in Social Sciences, and the thought of kids is not yet a consideration.
For this example, let’s go with the prototypical young man starting to enjoy the city with some money in his pocket for the first time and get his career underway. At this point in life, even if his first job gives him a starting salary of $47k, he can make it all work without getting into debt or trouble because his needs and lifestyle preferences are minimal. All he needs to do now is invest in his career/job, setting the foundations for growth.
Sure, it would be great for this young guy to have his own studio/1-bedroom in the Back Bay, Southie, or the Seaport, but it’s not in the cards at this point, and he’s more than fine living with four other roommates just like him in Brighton/Allston where his rent will be around 1k per month and not 4k per month. With that decision to have roommates, this young chap can make the 50/30/20 rule work after taxes. He’ll have enough money to cover his needs and even have some cheap beer/going out money and some left over.
The comfortable lifestyle for this young man is different from what the study envisions, but that’s fine; there are only so many opportunities to live this type of lifestyle, and he’s not “skipping the coffee,” so to speak, to live in his parent’s basement and save a few more dollars. If he pays into his 401k plan and doesn’t rack up credit card debt, he can enjoy his lifestyle in Boston without worrying about the future.
A deeper dive into the 50/30/20 rule:
If you make $50,000 a year living in Massachusetts, you will be taxed $10,638. That means your net pay will be $39,363 annually or $3,280 monthly.
50% of Needs = $1,640/month—$1,000 rent, which leaves $640 for necessities like cell phone bills and groceries.
30% Wants = $984 for a gym membership, happy hours, and occasional sports ticket.
20% Savings = $656 – $245 into 401k (6% salary to get a full match), then the remainder into a cash reserve for emergencies and eventually (once six months of expenses are covered) a Roth IRA.
Case 2: A 35-year-old single female managing an interior design center, making $89,000 annually. While kids are not on her mind, her mother keeps asking, and she has yet to make any immediate plans.
In our second example, you can understand that this single woman would not enjoy mountains of pizza boxes, cheap beer, and music blasting at 2 pm. This woman is in a completely different phase of life, but she loves living and working in the city and has no plans to move out. While she’s short of the study’s 125k threshold, there are strategies she can take to stay within the city and live a comfortable lifestyle of her choosing. She may not yet be able to afford a single-unit apartment in a bustling neighborhood. Still, she can afford one in quieter areas like the West End, Southie, Jamaica Pond, Sommerville, or Brookline. She’s not a night owl, so living in a bustling area is not something she desires and works to her advantage. She does not crave much space; a 6/700 sqft apartment is fine.
At this point in her life, she’s ready to purchase a home, and after saving for ten years or so, she has enough money for a downpayment on an apartment or condo in the quieter areas of the city. She sees this as an investment in herself, allowing her to build more equity and continue living the city lifestyle she loves. Also, she’s nearing her next promotion, which would put her closer to the 125k threshold, allowing her to upgrade other areas of her life with time.
The 30% rent rule:
A widely accepted guideline for budgeting rent is the 30% rule. According to this rule, you should allocate no more than 30% of your gross monthly income to rent. This benchmark has existed since 1981, when the government determined that individuals spending more than 30% of their income on housing were considered “cost-burdened.”
By that math, our interior design center manager has $2,225 to spend on housing, leaving her $1,483 for other “needs.”
Based on her anticipated raise, she could eventually buy a place like this in South Boston or, based on her current salary, something more modest like this place in Sommerville.
Minimum Salary in Boston – The Situation is Always Fluid
As a family financial planner in Boston, focusing on Boston wealth strategies for multi-generations, I am constantly reminded that life choices are for every personality, and circumstances will always be changing.
When I discuss different salary thresholds and lifestyles, it’s not to make anyone defensive or uncomfortable because they haven’t met a standard of living; it’s to reinforce the point that even if you don’t meet the calculated financial snapshot of success, there are choices, strategies, and paths you can take to live the comfortable life you want without disregarding the future. All it takes is guidance, optimization, and someone to listen to your needs/goals.
Make sure you are enjoying the ride and making it your own. While I have seen the typical progression: futon with four friends in Brighton for two years, apartment in Southie with a roommate for a few more, studio in Back Bay for a few more, get married, and a 1BR condo downtown for a few more, when kids arrive, head to Brookline; the key is to not go into debt and accumulate some savings along the way.
As my way of helping young kids get off on the right path, I’m offering free financial advice for their first year out of school. If you have a recent grad in your family, please send them my way, and I’d be excited to see how I can help.
These are hypothetical situations based on real-life examples. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing.
