The great state of California is a place of dreams and fantasies. Many consider this vast West Coast hub of activity as a leisurely playground. Residents along the coastline can enjoy the sunshine, experience spectacular live music, and support a range of (often highly competitive) professional sports teams. Living in California is perceived as a way to unlock a uniquely laid-back lifestyle that’s highly rewarding, offering a rich blend of relaxation and fun.
However, financial considerations are crucial when contemplating any lifestyle in California. While the 31st state has a cost of living approximately 45% higher than the national average, its financial landscape is as diverse as its climate and topography. Urban dwellers in places like Beverly Hills or San Francisco will naturally find their spending power reduced compared to less expensive rural areas (such as Bakersfield or Eureka). This is an important factor to consider, but statewide data provides a great starting point for understanding what it means to be in the “upper class” among Californians. Here’s the threshold for a high-end income for those residing in “The Golden State.”
Around $200,000 is the price of entry
In California, an upper-class salary is notably higher than the national average (around $170,000). To be considered among the top earners in the state, a household income of $192,668 or more is required. It’s important to note that many high-paying jobs providing such income figures are found in the medical field, requiring a lengthy course of study and significant effort to build a resume as a student, resident, and early-career practitioner.
Alternatively, household income often involves more than one contributor. Many blue-collar jobs offer six-figure salaries, and a partnership with two well-paying careers can easily lead to an upper-class income. The average salary in the U.S. is about $67,000, so two earners would need to make approximately 44% more than the average to reach this goal—interestingly, almost identical to the cost of living adjustment California experiences above the national average.
This might not get you very far in San Francisco, one of the country’s most expensive cities
While the California average serves as a useful benchmark for understanding high earning in the state, there’s much more to consider and a deeper exploration is needed. For those contemplating a job offer or a move to experience the California lifestyle, location is critical. Depending on where you settle, your purchasing power may be extensive with a salary in this range, or surprisingly limited. Earners around the $200,000 mark may find it challenging to manage daily needs in San Francisco, one of America’s most expensive urban centers.
The median house price in the city is $1.3 million, with rent averaging just under $3,500 per month across all property types. A typical joint filer earning a household income at the threshold will pay approximately $40,000 in income tax (for 2024), leaving a net monthly figure of around $11,700. This means an average rental property will consume 30% of your budget, and even a slight upgrade could lead to financial strain. A 30% figure serves as a general guideline and should be the maximum for housing expenses. For those with significant credit card debt, expensive student loans, or medical bills, housing costs should be even lower. Unfortunately, housing is just the beginning, as San Francisco residents can expect to pay nearly 50% higher rates for utilities and 22% more than the national average on groceries.
‘Upper-class’ status requires more than a big salary, too
Exploring California’s unique market reveals another aspect of upper-class lifestyles that may not be immediately apparent. A $200,000 salary may seem substantial, and many across the country could enjoy a more comfortable lifestyle with that income. However, salary is just one side of the equation. How you use your earnings determines the life you lead. Those who waste their salaries on trivial spending or accumulate debt while pursuing extravagant experiences are found at all income levels. High earners and those with lower incomes can both experience limited financial mobility due to their financial decisions and unforeseen circumstances beyond their control.
A high income serves as a gateway to upper-class living, but once you start earning this kind of money, the onus is on you. Upper-class incomes provide greater flexibility in paying off debts, investing in the future, and funding current experiences. However, to fully benefit from these monetary advantages, you’ll need to manage your finances carefully and responsibly. A mortgage or rent payment that consumes too much of your income, or revolving credit card debt that diminishes the impact of monthly salary checks, can significantly reduce the value of even the highest earnings.
