A few years ago, I wrote about how I lived on $30k per year in the San Fransisco bay area with a 65% savings rate. I’ve experienced some lifestyle inflation since then, and after closely tracking my monthly spending over the course of 2023, my spending has crept up to a whopping $39,000 per year.
With its exorbitant living costs, the SF bay area is the poster child for Very High Cost of Living (VHCOL) areas. For example, in Santa Clara county where I live, a $96,000 annual salary is classified as “low income” for a single-person household.
I see lots of content across the internet about how living in the SF bay area is so crushingly expensive, and I wanted to use my situation to show that by spending with intent, a small budget can go pretty far even in one of the most expensive metro areas in the USA. In fact, as rents have crept up across other major metros in the USA, I believe that now more than ever the SF bay area has one of the most favorable deltas of income to cost of living for young professionals without kids.
Let’s start off by taking a look at my expenses over 2023.
Over 2023, I closely tracked my spending on a monthly basis using my Google Sheets monthly personal budget template. I hooked up all of my financial accounts in my Empower (formerly Personal Capital) dashboard, used the Cash Flow tab to view an aggregation of all my transactions, and then manually entered them into my budget template so that they are categorized correctly.
Overall, I spent a total of $38,701 in 2023, with the breakdown by category shown below.
Although my largest line item by far is rent + utilities at $1,400 per month, this is still well below the market rate for my area, and it has the biggest impact on keeping my spending low. My unconventional setup is a converted studio apartment above my landlord’s garage in Mountain View near the Google HQ.
It has everything I need as a 20-something male: my own entrance, restroom, and a small kitchenette with fridge, sink, induction stove, microwave, etc. It’s a short bike ride to my office for work. Yeah, I won’t stay here forever, but for this phase of my life it gets the job done. It’s simple, close to my work, and allows me to save and invest aggressively for the future.
My food spending was under $350 per month on average. How so low? I’m very fortunate that my work provides free lunch (a common benefit offered by tech companies in the area) and I can also get free dinner if I stay past 7pm, which I do most days. This means that once the weekend rolls around, I’m happy to cook at home. On top of that, my girlfriend and I do most of our grocery shopping at Grocery Outlet, Costco, and Trader Joe’s, and don’t eat at restaurants all that often.
I also have an Amex Gold card which, as part of its $250 annual fee, includes a $10 monthly Uber Eats credit and $10 Grubhub credit that I typically use to pickup food at fast-casual spots like Chipotle.
I gave up alcohol about a year and a half ago, and cutting this out has both boosted my health and put more money back in my pocket. I’ve since replaced drinking with billiards as a social activity, which has been a lot of fun.
Travel and a new car
In April of 2023, I bought a gently used Honda CR-V in cash for about $24,000 to replace my aging 2007 Honda Accord. This is the only expense that I did not include in my 2023 spending breakdown. Perhaps in 2024 I’ll estimate the depreciation and amortize it as a monthly expense. Anyways, as I covered in my 2023 year in review, buying a new vehicle enabled me to do a lot of road trips in 2023! In fact, in the 10 months that I’ve owned my CR-V, I’ve logged over 18,000 (mostly highway) miles on it.
Here are some highlights of my travel destinations in 2023:
- Grand Canyon (2x)
- Las Vegas (2x)
- Tucson, AZ
- Lake Tahoe (2x)
- Yosemite (2x)
- Bryce Canyon, Utah
- Flew out to Colorado
- Mt Whitney in the East Sierra
- San Gorgonio peak in Los Angeles
- Flew out to Wisconsin
- Flew out to Florida
Living on the west coast enables tons of amazing road trip options, which are usually lower cost than flying somewhere and renting a vehicle.
A few big / unnecessary expenses
I had a few unlucky surprise expenses over 2023 (which are accounted for in my total spending number) including:
- Flat tire: $310
- Windshield replacement: $500
- ER visit: $3,000. I ended up being fine. I was able to put this on a zero interest rate payment plan over 18 months.
In addition, I bought a used mountain bike for $800, which I’ve been having a ton of fun riding lately.
My Income and savings rate
As a senior mechanical designer engineer, my base salary in 2023 was $159,000. I do also earn RSUs and an annual bonus on top of this, but I’ll leave them out for the sake of calculating my savings rate. Using the Smart Asset income tax calculator, my after-tax income is $114,000 given a maxed out 401k contribution of $22,500. Including my employer 401k match of $6,000 brings my total annual income to $120,000. Now when we input my $120,000 income and $39,000 expenses into my savings rate calculator, we can see that my savings rate in 2023 was about 67%. Not bad! Even if I was starting with zero net worth, this savings rate would put me on track to reach financial independence in about 10 years.
To wrap up, I spent under $40,000 over the course of 2023 living in Mountain View, CA while still doing a lot of domestic travel and covering some big unexpected expenses. I recognize that having kids will change my budget in the future quite a bit, and I won’t be in this “living in a studio” phase of life forever. But whether you’re single or have a family, I believe that focusing your spending on things that make you happy and healthy while cutting out the rest is a simple formula for long-term happiness and wealth building.
Are you living on a budget in a VHCOL area? Leave a comment below, I’d love to hear about your situation!