Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
In the face of higher costs of living and interest rates on loans, many Americans are finding it difficult to maintain or improve their lifestyles. Notably, inflation surpassed wage growth between April 2021 and January 2023, a phenomenon that led to tightened budgets and heightened stress for many. Yet even though inflation is now showing signs of slowing, households across the nation are still struggling to reconcile their earnings and expenses, especially in certain parts of the country.
Given these circ*mstances, Forbes Advisor analyzed the best and worst states and cities where families can live comfortably. To do this, we compared the average income of two-earner households with one child to the minimum income needed to cover basic living costs.
Key Takeaways
- While the average dual-income household earns enough to cover basic living expenses in the majority of locations we analyzed, families in some areas have more wiggle room in their budgets than in others.
- In select cities and states, the average dual-income family earns only 20% to 30% more than required for necessities, compared to 50% to 60% more in other locations.
- Families in Hawaii typically earn only 26.05% more than the minimum amount required to cover basic living expenses in a dual-income household with one child.
- Families in Connecticut enjoy the most favorable financial situation, earning 66.37% more than the minimum amount needed to afford basic living expenses, on average.
- Detroit is the only city where average earnings fall short of the income required for covering basic living expenses, with families earning 13.65% less than necessary.
- Seattle ranks as the best city for families earning the median income to survive comfortably, with the average two-earner household earning 119.32% more than the minimum income needed to support two adults and one child.
Top 5 Best States for Families To Live on the Average Salary
1. Connecticut: The Best State Financially for Families
Among all states, Connecticut provides the most optimal conditions for a comfortable lifestyle, with the average two-earner household earning $144,146 a year. This is 66.37% more than the minimum income needed to cover basic living expenses in Connecticut, or $86,643, according to our analysis. Though housing costs in the Constitution State are steep, the median income is easily one of the highest, providing many homes with more than enough to pay for necessities.
2. New Hampshire
New Hampshire is another good place for families to live comfortably and stretch their dollars. To meet basic living expenses in the state, New Hampshire households with two earners must make $82,806 annually. According to our research, the average dual-income household earns $135,599, exceeding the required income for necessary expenses by 63.76%. Not an insignificant perk for families in the Granite State is that there is no state income tax.
3. Maryland
While parts of Maryland can be expensive, the good news for those interested in the Old Line State is that, overall, it requires a comparatively low income to cover living expenses. Families with two working parents and one child need to earn $89,598 to be financially comfortable in Maryland. The average two-earner household brings home $145,993 annually, which is 62.94% more than the amount needed to cover basic costs. And thanks to a robust transit network, Marylanders can easily commute to nearby states and Washington, D.C., for work.
4. New Jersey
Families who call the Garden State home are more likely than residents of other states to earn a high income, making it possible for families to live more comfortably here. The average two-earner household in New Jersey has a combined annual income of $144,559. To pay for basic living expenses, families need at least $90,606 each year. So while New Jersey is one of the costliest states for childcare and housing, the earnings of the average two-adult, one-child household exceed the state’s income requirements by 59.55%, according to our research.
5. Virginia
Rounding out our list of the best states for families to live comfortably on an average salary is Virginia. One of two states bordering Washington, D.C., Virginia is home to many employees of the federal government. The average yearly income for a two-earner household, regardless of occupation, is $135,708. To afford basic living expenses, families need to earn an average of $86,992, meaning households here surpass the necessary income to cover costs by 56%. Compared to Maryland, Virginia has lower housing costs but fairly similar expenses otherwise.
Top 5 Worst States for Families To Live on the Average Salary
1. Hawaii: The Worst State Financially for Families
Although Hawaii is known for beautiful beaches, it isn’t known for being affordable. For families to meet their basic needs in the Aloha State, they need an annual income of at least $99,832. The average dual-income household brings in $125,841 per year—only 26.05% more than the minimum for basic costs, leaving Hawaiians a slim margin to work with. Housing is one of the largest expenses in Hawaii, second only to California. According to our analysis, the average annual housing costs are $21,588 in this state compared to a median of $13,314 for all states.
2. Nevada
Another state with a high cost of living, Nevada is the second-worst state for making ends meet with an average salary. Two-earner homes in Nevada bring in a median of $105,161 annually, which is below average for all states. And according to our calculations, Nevadan families need an income of $83,093 a year to pay for necessities, which is above average for all states. This only leaves families in the Silver State with a 26.56% surplus for discretionary spending and saving.
3. Florida
Vacation destination and snowbird haven, Florida is densely populated despite being costlier than most states. The average two-earner household in this Sun Belt state earns an annual income of $104,935. While this is enough for a dual-income family in Florida to afford the $82,702 minimum required for basic expenses, average families only exceed this threshold by 26.88%. This leaves little left over for amusem*nt park tickets and sunscreen.
4. Idaho
While Idaho offers affordable childcare and below-average taxes, it wouldn’t seem to be ideal for high-paying employment opportunities. Families living in Idaho need a minimum of $77,652 to pay for housing, food and basic bills. Even though this is less than in many other states, typical earnings are lower too. The average two-income household brings in $98,606 per year, just 26.98% more than the median income needed for living expenses.
5. West Virginia
West Virginia is another state that’s less friendly to families with average earnings. Households with two working adults and one child need to earn an annual income of $77,633 to afford basic living expenses, according to our analysis. The typical two-earner household in West Virginia, by comparison, brings in just $99,629 per year, indicating they earn just 28.33% more than they need to pay for their basic living expenses. This doesn’t give families much to work with at the end of the month, making it challenging for many to live comfortably and have financial freedom.
br>
Top 5 Best Cities for Families To Live on the Average Salary
1. Seattle, Washington: The Best City for Families With an Average Salary
With several large tech companies and corporations headquartered in Seattle, there are many high-paying career opportunities in this overcast big city. To cover living expenses, families in Seattle with two earners and one child need to earn $95,810 annually. A typical family in Seattle earns $216,551, which means they exceed their living costs by an impressive 126.02%. This makes Seattle the best big city for families to get by making the average salary.
2. Washington, D.C.
Our nation’s capital offers a variety of jobs and free access to numerous public spaces. The average two-earner household brings in $216,685, according to Census data and our analysis. To afford basic living expenses, families in Washington, D.C., with two working adults and one child need to earn $98,801 annually. This surpasses the amount needed to cover basic living expenses by 119.32%, giving families substantial wiggle room in their budgets.
3. San Francisco, California
While San Fransico is known for being expensive, many San Franciscans enjoy sizable salaries. The annual dual-earner household income in San Francisco is $239,919, the highest of any U.S. city analyzed. To meet their basic needs, families need an income of $113,737, meaning the average income surpasses the required income by 110.94%. Families must leave plenty of room in their budgets for housing and annual taxes to survive in this city.
4. Atlanta, Georgia
Compared to other cities we analyzed, Atlanta is one of the best for a family to live comfortably, thanks in part to lower housing costs. Two-earner households with a child in Atlanta have to earn $83,373 per year to meet their basic living expenses. The average dual-earner income of $167,673 exceeds this minimum threshold by 101.11%, leaving many families with plenty of spending room after basic expenses have been paid. Housing costs around $16,992 per year in this big city, according to Census data and our analysis, which is below average for cities studied.
5. Austin, Texas
Austin is a popular choice for families because of its low cost of living relative to other major cities—and the fact that the state of Texas doesn’t have an income tax doesn’t hurt. To cover living expenses, families with a child in Austin need to earn $86,175. These same households bring in an annual income of $153,960 on average, surpassing the minimum requirement by 78.66%. This gives residents more opportunities to enjoy the rich culture Austin is famous for.
Top 5 Worst Cities for Families To Live on the Average Salary
1. Detroit, Michigan: The Worst City Financially for Families
With low median incomes and high costs for childcare, taxes and more, Detroit is one the worst cities for families trying to get by on an average salary. To afford basic living expenses in Detroit, families with two earners and a child need to earn $88,881 annually. However, the average family only earns $76,753, or 13.65% less than the income required to cover expenses. Detroit is the only big city we analyzed where the average dual-income household earns less than they need. Many families require supplemental income or financial support to get by.
2. Milwaukee, Wisconsin
While Milwaukee has relatively low home prices and rental rates, the high cost of childcare is just one factor that makes it hard for families to live comfortably. Two-earner households in Milwaukee make an average of $87,258 per year. To cover basic living expenses, families need to earn $85,427 after taxes. This leaves households with a slim surplus of 2.14%, making it challenging to live comfortably and save for the future.
3. Cleveland, Ohio
While Cleveland is located in the comparatively affordable state of Ohio, the city isn’t the most comfortable place to raise a family. According to our research, three-person families in Cleveland need to earn an annual income of $81,133. With the average dual-income household bringing in $83,508, families only earn 2.93% more than the minimum needed to cover their annual expenses. A single unplanned expense could make it difficult for families to stay afloat.
4. El Paso, Texas
El Paso has much lower housing and childcare costs than other major cities we analyzed, but families may struggle to make a comfortable living in this city with low average incomes. Dual-income families in El Paso earn an average of $76,992 annually, according to Census data. Our analysis shows that the necessary income to cover basic living expenses for two working adults and one child is $71,598. Two-earner households only exceed this requirement by 7.53%, which could mean tight budgets in this populous border city.
5. Fresno, California
Located about halfway between Los Angeles and San Francisco, Fresno ties up our list of the worst cities for families to live comfortably. Housing plays a key role in driving up the cost of living in Fresno, as is the case in many cities in California. Families in Fresno make an average of $95,342 a year. To cover basic living expenses, the average household needs $85,149 after taxes. This leaves homes with 11.97% extra after paying for their basic needs. While this is better than other cities we analyzed, it’s well below the average percent difference of 41.25%.
Find The Best High-Yield Savings Accounts Of 2024
Learn More
Tips for Stretching Your Income
If you find yourself living in any number of high-cost cities and states across the country, or you simply have trouble making ends meet, here are some tips for making your money go further.
- Strategize your grocery shopping. Create an inventory of items you frequently consume and purchase these from wholesale stores. Purchasing food in larger quantities is often more economical and can help you reduce trips to the grocery store—and impulse purchases.
- Create a spending account. Give yourself an allowance by setting up a spending account that’s separate from your main checking account. Transfer enough into this account to cover bills and everyday expenses, with a little extra for discretionary spending. Once you’ve spent your allowance, wait until next month to replenish it.
- Look for deals on recurring expenses. Monthly subscriptions can eat away at your income. To minimize these expenses, shop around for and bundle your insurance, choose annual rather than monthly subscriptions and cancel any services you don’t use.
How To Create a Budget
A personalized monthly budget can help you better understand where your earnings go and help you find opportunities to cut back. Follow these tips to create a budget that works for you.
- Calculate your income. Look at all of your streams of income, including your day job and any side hustles you have, and total everything. Build a budget around this amount.
- Analyze your expenses. Review your bank and credit card statements to see how much you spend each month. Include recurring expenses and bills, savings and debt payments and “extra” spending. Do this by hand, in a spreadsheet or with a budgeting app.
- Categorize your spending. For a budget to work, your spending can’t exceed your earnings. Break your purchases and payments down into categories, and look for areas where you can spend less.
- Set financial goals. It can be hard to stick to a budget when you don’t have a “why” motivating you. Whether you want to pay off debt or save for a down payment, set financial goals to work toward. This will guide your budget and help you move forward.
- Create a budget that aligns with your goals. After you’ve reviewed your cash flow, expenses, spending and goals, create a budget. Don’t forget to leave room for savings, debt repayment, emergencies and fun alongside your regular expenses.
Methodology
To evaluate the most and least favorable states and cities for families, Forbes Advisor conducted a comprehensive analysis. We utilized data from the MIT Living Wage Project and the U.S. government and performed our own calculations.
We focused on the Living Wage Project's estimates for a family consisting of two working adults and one child. However, we made an adjustment to the published housing cost estimates. Since the MIT Living Wage Project considers only renter-related costs in their housing metric, we substituted that figure with the U.S. Census Bureau's median monthly housing cost metric.
The U.S. Census Bureau's American Communities Survey provided the median monthly housing costs. This metric combines select monthly homeowner costs and the average gross rent. To maintain consistency, we annualized all monthly figures throughout our study.
To determine the "required income" for each state and city, we adjusted anticipated expenditures. By using the median income from two-earner households, as per Census data, we ensured alignment with MIT's methodology. The final ranking was established based on the percentage of median income required for essential expenses.
