California ranks third among states with the highest cost of living.
It sits only behind Hawaii and the District of Columbia in terms of expense.
The annual cost of living in California is $46,636 a year with housing and utilities costs rising to $9,542 a year.
Considering the high cost of living, you may wonder how people live in California.
Here are 10 ways people live in California despite its high cost of living.
How Do People Afford To Live In California? (10 Ways)
1. Stay Away From Large Cities
One of the biggest ways that people afford to live in California is by staying away from the large cities.
California has some pretty famous cities.
Los Angeles, San Diego, San Francisco, and Sacramento are just some of the biggest ones.
You can expect that, because the cities are so large and have huge populations, they’re also quite expensive.
Los Angeles, in particular, has the movie industry and celebrities, which also inflates its price.
To afford to live in California, you need to stay away from the big cities.
The housing market alone in the cities makes living difficult.
You may even want to avoid living in the suburbs around the big cities.
Their cost of living is also going to be higher since they’re influenced by the large cities close to them.
The good thing about California is that it’s a large state.
There are plenty of other towns and small cities that are a bit more affordable and far from the major cities.
One such town is Bakersfield.
The median home price in Bakersfield is $345,000, which gives you an idea of the affordability of the town.
If you want to live in one of the big cities, then you should consider Sacramento.
The average median home price there is $455,000.
They also have 30,000 employers in the city alone, so it’s a bit easier to find a job there.
You can live in California by avoiding the big cities and settling in one of the small towns far from them instead.
2. Rent Instead Of Buy
Another thing you can do to bring down costs is rent an apartment or home rather than buy it.
That’s simply because housing prices are extremely high.
In San Francisco alone, the average median home price is over $1 million.
Even if you manage to get a loan for that amount, you’ll likely have a hard time paying it back.
Your mortgage is going to be extremely high whether you signed on for a 10, 15, or 30-year mortgage.
The problem can become even worse if you have a variable rate.
While it might mean that sometimes your mortgage might be low, it also means that it may also increase unexpectedly.
To avoid the high price of mortgages, you should rent an apartment or home instead.
There are a few benefits of renting that you can’t quite get with buying a house.
For one, you don’t have to worry about saving up for future repairs.
The cost of replacing the roof or plumbing isn’t going to fall on you.
Those major repairs can make your monthly budget even tighter if you lived in a house.
Rent also tends to be cheaper than mortgage payments, depending on the price of the house.
The median monthly mortgage cost is $2,357.
Obviously, the more expensive the house, the higher the mortgage cost.
The median gross rent is $1,614.
If you want the cheapest option, then you’ll want to consider renting a studio apartment.
The median rent for a studio is $1,248.
If you have a family, then the median rent for a four-bedroom apartment is $1,852.
Clearly, renting is cheaper than owning a home.
3. Roommates
One of the best ways that Californians can live in the state is by taking on a roommate or two.
While it’s difficult for adults to give up some of their freedoms by taking on a roommate, it makes financial sense in California.
By using the rental prices listed above as an example, if you had three other roommates in a four-bedroom apartment, your rent would become $463.
That’s far more affordable than paying that on your own.
The median rent for a two-bedroom apartment in California is $1,655.
Splitting that with another person makes your monthly rent $827.50.
While this is higher than a four-bedroom apartment, it still makes living in the apartment more affordable.
Another idea you may be able to try with the right people is to buy a house and have everyone pay rent who stays in it.
You can section the house off for each individual.
This does come with some risk, however.
It’s a lot harder to leave a mortgage than it is an apartment if people decide to move out of the home.
It’s also important that you choose the right people to be your roommates.
While having your friends live with you may seem like a great idea, if you don’t share similar lifestyles, then it could cause some friction.
For example, if you’re someone who stays up late at night and they’re someone who wakes up early, then there may be moments when your two schedules conflict.
This also goes for those who prefer quiet homes while others prefer socializing and partying.
Choosing the right roommates can make living in California more affordable.
4. Get Rid Of Your Car
Los Angeles has some of the worst traffic in the country.
The other cities also have terrible traffic congestion.
Because of that, many prefer to use public transport or hire a private cab.
Getting rid of your car is a great way to make living in California more affordable.
While having a car can help make things more convenient, you don’t really need one in today’s world of Uber and public transport.
Unless you’re living in an extremely rural area, the chances are good that you’re going to have some way to get around with ease.
Cars add a lot of expense to your monthly budget.
If you leased a car, then you probably have a lease that costs you around $100 to $300 every month.
You also have insurance costs on top of that.
Insurance can easily add anywhere from $80 to $200 to your budget, depending on what type of insurance you have.
Then there’s also the price of gas to consider.
It’s hard to budget for gas since it’s always changing.
Unfortunately, California consistently has some of the highest gas prices in the country.
With the national average hanging around $4.07, California has an incredibly average high price at $5.72.
There are a few reasons California’s gas prices tend to be on the high side.
For one, California charges higher taxes on gas.
They also have higher standards for fuel.
In an effort to make it more environmentally friendly, they require refineries to make cleaner fuel.
Not many refineries produce clean gasoline to California’s standards outside of the state, itself.
Whenever there’s a shortage, California is often hit the hardest since they rely on its own refineries, which are small in number.
Finally, California also has a huge number of cars in its state.
Due to the large populations residing there, the demand for gas is considerably high.
All of this results in high gas prices.
By not using a car and taking public transport or riding a bike, you can easily save some money and make living in California more affordable.
5. Saving On Utilities
Utility costs are another major expense that those in California have to deal with.
Some utilities are inevitable.
If you have a home or apartment, then you’re probably going to pay for utilities like electricity and water.
The average monthly cost of electricity in California is $117.
The average monthly cost of water in California is $77.
Water is sometimes a problem in the state.
When a drought occurs, the cost of water increases.
That’s because the demand is the same but the supply starts to dwindle.
To curb demand, water providers will increase the price.
If you have gas in your home or apartment, then the average monthly price for that service is $63.
Like water, gas prices can fluctuate dramatically depending on demand and supply.
If there isn’t a lot of gas to go around, then the price can increase substantially.
Finally, the next big price is cable and internet.
The average monthly cost of cable and internet is $118.
Altogether, you’re looking at around $300 for utilities.
That doesn’t include other bills like your phone service or insurance costs.
To make living in California more affordable, many people try to cut their utilities as much as possible.
That might mean that they invest in solar or other renewable sources of power to get off the grid.
While they’ll have to pay back any loans they took out to install solar panels, eventually, they’ll pay them off and avoid electric bills entirely.
That’s a good $100 they’re saving each month.
Others might choose to cut the cord and rely on streaming with their internet instead.
The Internet on its own tends to be cheaper than a cable and internet bundle.
That said, if you want the best internet, then you’re usually still looking at prices of $100 or more.
However, by trimming your cable and choosing only one or two streaming services, you can find plenty of entertainment and save some money, too.
When it comes to water and gas, the best that you can do is ration yourself.
By not using water as much when there’s the most demand for it, you can shave off some dollars and make living in California a bit more affordable.
6. Work From Home
If possible, another way to make living in California possible is to work from home.
There are a lot of expenses involved with working outside of your home.
If you have a car, then you have gas and car expenses to pay.
You may even need to pay for parking.
If you don’t have a car, then you usually pay for some sort of bus pass or have to pay an Uber driver or similar taxi driver.
Once you’re at work, you may spend some money on lunch at a restaurant or fast-food chain.
Before you know it, you’ve already spent a good amount of money during the week solely around work.
When you work at home, you’re able to remove a lot of these expenses.
You no longer need a car to drive to work.
You can cut down on expenses like parking passes, bus passes, or Uber costs.
You’re also able to eat at home.
This enables you to buy your own groceries or even grow your own food if you have an interest in urban gardening.
Working from home can also help you save a bit of money on your taxes.
You can deduct a bit more in expenses since you’re using part of your home as a home office.
Since you have a bigger number of expenses to take out, you have to pay less in taxes.
That means that you either get a bigger refund, or if you’re self-employed, you can save a little money on how many taxes you actually pay.
Working from home can make living in California a bit more affordable.
7. Taking On A Second Job
When the cost of living becomes too high, most workers have no choice but to take on a second job.
One common group of workers that are always trying to make ends meet is teachers.
In California, 1 in 5 teachers works a second job.
This is something that many other workers in California also have to do to afford the high cost of living in the state.
Thanks to the hustle culture, many second jobs are either work-from-home or some form of self-employment.
This allows them to set their own hours, which also allows them to fit those extended hours around their full-time schedule.
Others choose to take on a part-time job, which gives them a limited number of hours that they work on top of their full-time jobs.
For some people living in the state, taking on a second job is the only choice that they have.
When you have to pay a certain amount of money each month to bills, and your single job isn’t enough to pay those bills, all you can do is get a second job to increase the amount of money that you bring home each month.
To make living in California affordable, some people end up taking on a second job.
8. Delaying Children
An unfortunate route that some Californians have decided to take to make the state more affordable is delaying children.
The estimated cost of raising a child in 2022 is $272,049.
That is a substantial amount of money for people just barely getting by.
That also doesn’t include the cost of college.
With tuition prices only increasing, most children eventually rely on their parents for help affording school.
There are a lot of expenses involved in raising a child.
You have doctor visits, clothes, food, and the inevitable birthday and Christmas gifts.
As children grow, they’re unable to wear the same clothes or shoes for long either.
When they attend school, parents then have to start buying school supplies.
These can get expensive if the kids become interested in activities like sports or band.
Once they start driving, then parents usually have to get them their own car or at least share their car with them.
Then there’s the price of smartphones.
Almost every child has one, and they’ve become essential for keeping in contact with children outside of the home.
There are several expenses involved with raising a child, and for some Californians, those costs are too much for their budget at the moment.
To ensure they’re able to afford to live in the state, they have to delay when they have a child.
9. Staying Fit
California has a reputation for being a sunny state.
It has minimal rain and boasts beautiful beaches and warm temperatures year-round.
Because of this, its residents can engage in outdoor activities year-round.
This helps them stay fit, which is another way that they can afford to live in California.
To avoid health problems in life, maintaining a good weight and staying fit are necessary.
Taking walks, working out at the gym, or even going for a swim are all ideal.
Because of California’s ideal weather, it’s easier for people to get outside and maintain a good level of fitness.
That’s important since the average healthcare cost of a person living in California is $7,638 a year.
That amount changes based on a person’s needs and age.
Some might have chronic pain or conditions that impact their ability to stay fit, for example.
However, to avoid having to see the doctor less, take medications, or undergo surgeries, many Californians save on health care costs by staying fit.
California’s great weather enables them to do that.
10. Sticking With Free Entertainment
There’s no question that California has a lot to offer and do.
It even has its own Disney theme park.
However, attending some of these attractions can cost a lot of money.
Even eating food in a tourist-heavy area can be more expensive.
To make living in California affordable, locals eat outside of tourist areas and choose free or cheap entertainment venues instead.
One example is the beach.
Because the state sits along the Pacific Ocean, there’s no shortage of beachfront.
There are tons of public beaches that cost nothing to attend.
Some even have free parking.
Californians can get a lot of entertainment at the beach.
Sometimes they have free concerts.
Other times, they can just relax on the sand or learn how to surf.
By keeping entertainment costs low, Californians can afford to live in the state.
Conclusion
California is one of the most expensive states to live in.
If you’re not a celebrity, then living there can be hard, but it isn’t impossible.
By renting with roommates, delaying children, and keeping entertainment costs low, it’s possible to live below your means and make California affordable.
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