Living comfortably in North Texas will cost you a lot more in 2023 than it did last year.
The Dallas-Fort Worth metroplex is a growing hotspot for people wishing to relocate to Texas. But with soaring interest rates, rising housing costs, and 8% average inflation in 2022, residents now say the after-tax income they need to live conformably in DFW is nearly $65,000 per year, about $11,000 more than a year earlier, according to a recent study by fintech firm SmartAsset.
To ascertain this new after-tax value, researchers at SmartAsset used the most up-to-date MIT Living Wage Calculator to obtain cost-of-living data for individuals with no children in each of the 25 largest American metro areas.
Researchers then used the 50/30/20 rule to define a comfortable lifestyle. The budget strategy works by allocating 50% of after-tax income to living expenses, 30% to discretionary spending, and 20% to debt payments or savings.
Dallas-Fort Worth-Arlington, which came in at No.17 on the list, requires an after-tax income of $64,742 based on these calculations. Based on the 50/30/20 rule, a person would need to allocate $32,371 of his salary to his living expenses, $19,423 for discretionary spending, and $12,948 toward debt payments and savings installments, according to the study’s methodology.
Given that the standard cost of living rises each year with inflation, Susannah Snider, a certified financial planner and managing editor of financial education for SmartAsset, teaches that a healthy budget is essential to maintaining a comfortable lifestyle.
“A budget is the bedrock of many people’s financial plans. And it’s especially essential to understand and track your spending when the cost of everyday items is rising,” Snider said in the press release for the study. “Being able to stick to a 50/30/20 budget means you have enough to fund short- and long-term goals while paying for essential living expenses.”
The average after-tax salary needed to live comfortably across the 25 metro areas rose from $57,013 in 2022 to $68,500 in 2023, a 20% increase from the year before, according to the study.
The least expensive metro in the study was St. Louis, which required an approximate after-tax income of $57,446 per year to maintain a comfortable lifestyle. On the opposite end of the cost spectrum was the San Francisco Bay Area, which required more than $84,000 per year to maintain a comfortable lifestyle.
Houston-The Woodlands-Sugar Land, the third Texas metro to make the list, came in at No.20, requiring an after-tax income of $62,260 annually. This accounts for $31,130 for needs, $18,678 for wants, and $12,452 for savings or debt.
Elsewhere in Texas, the San Antonio-New Braunfels metro, No.23 on the list, was among the metros that required the lowest salaries. On average, a single person living in the San Antonio-New Braunfels metro must earn approximately $59,270 after taxes to live comfortably.
This would result in a 50/30/20 breakdown of $29,635 per year for living expenses, $17,781 for discretionary spending, and $11,854 toward savings and debt. The full list of the 25 metros can be found here.
