The cost of living in the SF Bay Area is up to 53% higher than the average for the US.

18Budget-challenged? In Marin, you may need to cut back on other expenses to finance your cost of housing. 

It’s not your imagination. Every items often do cost more here, and it pays to shop around. Especially if your housing cost is typical, that is, exceeding national cost of living averages by as much as by 50%.

Syndicated newspaper columnists publishing personal finance columns often advise would-be savers to cut back on various categories of purchases, to accumulate money for goals.

What makes interesting reading, to glean useful advice for your own situation, is to discern how  the amounts spent on various monthly budget line items compare to your actual costs here in California, north of San Francisco.

The cost of living index for San Francisco is about 53% higher than the US average.  Oakland is judged to be 45% higher, and Sacramento is estimated to be 12% higher. Higher housing costs explain much of this spread.

For people trying to manage their finances, issues arise when higher costs for one category force elimination of or reduced expenditures in another category. As an example, a recent article in theWall Street Journal focused on budget- challenged estimated local housing cost in North Carolina for a family of 3 to be $1,300.  The rental of a two bedroom apartment in Marin County possibly accommodating a family of three, by comparison, would run $2,500 a month or more.

The 30-something couple discussed in the Journal article were grossing $140K a year but have not been able to save for a house because of their rate of pay down of outstanding student loans. Additionally, the spouses are making healthy deferrals into their 401K plans. The same couple here would have may not be able to afford the higher retirement savings rate, if the couple was also paying for higher rental costs and wished to simultaneously accumulate a house down payment.

If the situation were flipped, the situation can become net positive in a big way for a couple already accustomed to frugal living. That is if a Marin couple relocated from here to North Carolina and already was accommodating higher housing costs, this couple might suddenly feel  liberated in their new state. The transplants would have extra disposable income and could splurge on a some luxuries, for a change.

These disparities in lifestyle spending draw focus to the impact on budgeting. Creating a budget is work, a hard but necessary task to sustain a family for eventual and continuing prosperity. The challenge in creating these financial documents is to learn one’s own spending habits, to discover what costs may be out of whack relative to one’s home town or county, and what changes may be needed to make to bring costs back into line. The alternative is to live paycheck to paycheck with next to nothing in cash reserves or savings, which is a dance with chance, and a dangerous one.

With housing occupying such a big part of many local budgets, other categories of spend effectively may need to be crimped, or foregone. The question is which, and how much to trim or eliminate.

I advise my clients to acquire some perspective on these issues by comparing their own costs against those typical for their cities or states. Anyone interested can check out the various websites publishing cost of living indexes by city and state. Being knowledgeable about cost of living figures may also make folks more effective in negotiating increases in salaries to cover their living cost – or make them more aware of the need to move on to a better paying job.

Following is a listing of the more useful cost of living index websites that I have found, and use, in my financial planning practice:

Getting back to the couple that I described from North Carolina, some of the more obvious areas for the spouses to cut back centered on car payments – $468 monthly, as well as ongoing spending on dining out – $400 monthly.  Additionally, the spouses were spending on monthly vet and grooming bills for the family dog, at the rate of $200 a month. Cutting back on child care costs – $750 monthly – doesn’t seem to be an option for them.  Both spouses work.

These spending rates are not unusual.  Some Marin couples reviewing their monthly costs with me have indicated they are spending $500 or more for pet grooming monthly. The area of pet expense seems like a red flag for anyone to examine. If taking care of Fido means charging this or other expenses on cards at 18 percent yearly interest, the expense is not justifiable or sustainable.

High rates of interest on monthly credit card payments impose an ongoing strain on relationships, not to mention monthly savings.  People who carry a balance should shop around for the lowest interest rate. Many zero interest balance transfer programs can be found at   Getting the balance down may mean resorting to the cookie jar method of budgeting, to bring awareness to the actual costs of the monthly food shopping bill. The cookie jar method entails putting a given sum into the kitchen cookie jar. Food purchases are made from this sum until it is gone.  The discipline is to balance and pace food spending with the amount of money actually still in the jar.

More preferable are the decisions resulting in’ big wins.’ The ‘one and done.’  Accomplishing savings goals requires analysis and foresight. Comparison shopping or lifestyle changes may be in order to ensure that any couple so desiring can put some green into their own accounts before they hand the rest over to the companies whose products and services support their lifestyle.

Deciding upon a percentage or amount to save monthly should derive from the goals that a couple sets. The choices of how long to work and when to retire, for instance, are accompanied by the realities of saving to finance this long term goal.  Returns on investments play a part in determining how much must be accumulated over any specified period of time. Having a reality check discussion with a financial advisor can ensure that anyone, including you, are saving enough for the timeline you have in mind. I am happy to help.

To figure out how to save, click here.

If you find yourself needing guidance about budgets and spending, or appropriate investments to grow your green, give me a call. See my website at for useful self-help spreadsheets.
*Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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