11 February 2008 One Comment Print This Post  Email This Post

Do you wonder how in the world can some people live their whole lives on a rural farm in this day and age? They probably feel that the idea of an expensive high rise condominium in a big loud city is absurd. It all depends on who you talk to, as we all have different desires and goals in life. As I contemplated leaving San Francisco, the city I was born and raised in, I realized that most people never think of what lifestyle they actually want for the long term and how that affects finances incredibly. Net worth is no longer a measure of success or standard of life in this country. Realistically, being a millionaire in Manhattan means you are comfortable, but not nearly rich or wealthy. But being a millionaire in Las Vegas you can likely have a beautiful house, a nice car, fancy things and financial freedom. To truly understand how much you need to save or invest for the future, you must clearly understand what kind of lifestyle you want to live and where to find that lifestyle.

The City Life

photo by autumn leaf

City life is fun and adventurous. There is always something to do, somewhere to go. It’s lively and exciting. The city of San Francisco attracts many outsiders seeking the city life. Beautiful high rise condos sell for $700K+ and decent homes also start around that price. You get a great selection of restaurants, entertainment and amenities like public transportation. However, the city lifestyle is perhaps the most expensive. Most major metropolitan areas are what I consider overpriced, from an economics perspective taking into account salary levels and median income, not to mention the size and condition of the old homes. Oddly enough many people go to big cities for the jobs, not knowing that the higher income is offset by the higher costs of living. A lot of people settle for renting small apartments in Manhattan or gathering two or three families to live in one home in San Francisco. For most young people starting out in life, it’s a luxury to live the city lifestyle. You pay for all the benefits and you’ll have to save more for retirement and make more money just to survive.

The Burbs

photo by Hanoian

Suburb lifestyle is a complete 180. Most suburbs are quiet rather than loud, with no high rises in sight. Suburbs usually have great schools and is more family oriented in general. Housing is much cheaper yet jobs are not as abundant. When visiting suburbs in California and Texas, I noticed that the people I encounter is more laid back and relaxed. Service at restaurants are also better. I can only conclude that it is more stressful to live in a big city. However, in the suburbs you’ll likely get fewer restaurants, diversity, amenities and unique features. It’ll be somewhat boring for younger people. If you don’t mind that, then you’ll have an easier time as living costs are generally much lower and you don’t have to save as much to retire.

Compromising

I’ve noticed that a lot of people want the city life in their younger years but end up retiring in a suburb as they get older. Some move to big cities with plans to return to the their smaller hometowns later. Thats a great life course. It allows you to experience the city life while you’re young as well as the peace and quiet when you get older. You’ll be financially stable during the later years. The only trade off here is you’ll be paying more and saving/investing less during those younger big city years.

What my girlfriend and I decided to do was to find a nice suburb with easy access to a major metropolitan city. We wanted the best of both worlds. We decided on Sugar Land, TX, a gorgeous affluent suburb with easy 10 minute access to Houston, without the $500K+ home prices of the Houston inner-loop. It boasts great schools, a surprisingly diverse population, and a safe and clean environment. Over the past few years it has experienced over 30% job growth rates while San Francisco had a negative 7%. By living there we would be able to save and invest much more of our income while increasing our standard of living and maintaining the amenities of the big city. To us, it makes perfect sense and cents. The opportunity costs of staying in San Francisco is in the multi-millions over the course of our lives. We just weren’t up to paying that much to stay in the city we have grown to love, so we compromised.

Rule Nothing Out

The point I’m trying to get at is to never be afraid to try new things, even if it means packing up and trying new place to live. I read somewhere that most people die within 15 miles of where they were born. Thats nuts, we only live once! I think what happens is that we get used to our childhood environment and never even consider other choices. Those choices can greatly affect your finances and quality of life. When you plan for your future, take into account the lifestyle you want throughout the course of your life. Factor that into the plan and you’ll have a much clearer picture of where your finances need to be at when you get older.