Economy & Jobs

Is Living in California Worth the Cost?

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The Golden State can seem like a Golden Ticket for people in search of sun, sand, culture, and chill vibes. After all, California has a little something for everyone. San Francisco is world-renowned for its Silicon Valley startup scene and cultural history. Los Angeles boasts nearly 300 sunny days per year and offers the irresistible pull of Hollywood. Geographically, the state is surrounded by mountain ranges, illustrious beaches, enchanting forests, and awe-inspiring deserts.

You know what they say: If something seems too good to be true, it probably is. Living in California comes at a steep cost. Here’s what you should know before packing up and moving there.

It’s Not All Sunshine

USA Today ranks California as one of the most expensive states in which to live, and it’s no wonder. According to the Tax Foundation, California charges the highest income tax rates in the country, topping out at 13.3 percent. Yikes. If you’re thinking about moving, remember that income taxes can eat up a large chunk of your paycheck. While you may earn a larger income to help compensate for the state’s high cost of living, you’ll still owe hefty taxes.

Sperling’s BestPlaces estimates that moving from Las Vegas to Los Angeles comes with a cost-of-living increase of 64 percent. This is largely due to housing, which is 197 percent more expensive in the City of Angels than in the City of Lights. A March 2015 report from California’s Legislative Analyst’s Office states that a home in California, on average, costs two and a half times more than the national average.

If you’re not ready to buy, remember California has sky-high rents. The Huffington Post highlights data from real estate site Zumper showing that San Francisco is the most expensive city in the U.S. in terms of rent. Los Angeles and San Diego also make the top 10.

The state’s job market isn’t the greatest, either. California has one of the highest unemployment rates in the country: 6.3 percent as of April 2015, according to the Bureau of Labor Statistics. For context, that places it at number 41 overall.

Unless you’re living under a rock, you’ve heard about California’s drought. It’s pretty serious—Gov. Jerry Brown declared a State of Emergency in January. While the government is taking steps to remedy the situation, it may have impending economic repercussions.

Want to Make It Happen Regardless?

If you still want to move to the Golden State after all that, here are some tips to make living in California easier on your wallet:

  • Legally lower your tax liability. Consider contributing to a traditional Individual Retirement Account (IRA), which will help fund your retirement while lowering your current tax liability. You could also contribute to a health savings account (HSA) for an extra tax bonus. HSA contributions are tax deductible, and withdrawals are tax free when used for qualified medical expenses.
  • Move with a job lined up or an emergency fund. You don’t want to get stuck without a job in such an expensive state, but if you do, make sure you have sufficient savings to get by on until you find work. Financial planning site LearnVest recommends having enough money to cover expenses for six to nine months.
  • Comparison shop, and consider getting a roommate. California is a diverse state with even more diverse cities. Explore various neighborhoods before settling and think about splitting your housing costs with a roommate. You may be able to save hundreds of dollars every month.
  • Cut expenses. You probably know how to eliminate some common budget busters already, but one more example is using to find out where gas prices are cheapest.

Living in California comes at a great cost, but it might be worth it for some. If you’re thinking about moving there, prepare yourself ahead of time so you can focus on having fun in the sun.

Melanie Lockert is a freelance writer and passionate debt fighter who writes at She is currently climbing out of $81,000 in student loan debt and is often dreaming of her next adventure. Her work has appeared in the Globe and Mail, Rockstar Finance, GoGirl Finance and more. She has her M.A. in Performance Studies from NYU, loves karaoke, is obssessed with the Wizard of Oz, and is a ceviche connoisseur.