How To Afford Living In California

For many people, the cost of living in California is too high. But there are still ways to make living in California affordable—here's how.

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Whether you’re looking to hike, surf, ski, or sip world-renowned wine, California pretty much has it all. The downside? 

The cost of actually being there.

For many people, the cost of living in California is simply too high. Housing prices are through the roof, and even basic necessities like food and gas can get pricey.

Recent data shows that the cost of living in California is 1.24 times more expensive than the average cost of living in the United States. California also ranks as the 4th most expensive state in the United States.

Does this mean that you should forget about your California dream? Absolutely not! There are still ways to make living in California affordable—you just have to get creative.

Before moving to California, be honest with yourself

Ask yourself this question: Can you afford the high cost of living? If you’re not sure, sit down and do some research. Start by looking up the cost of living in the city or area you’re interested in. Make a list of your monthly expenses, including rent, groceries, transportation, and entertainment.

Then, research the average salary for your field in California. Can you realistically expect to make enough money to cover all your costs? If you’re unsure, it’s best to set your sights on a less expensive area or wait until you’re in a better financial position.

Also, remember that you do not have to rush into the move. Take your time, do your research, and make sure you’re prepared before making the big decision to relocate.

Housing – the biggest Californian expenditure

There’s no getting around it—housing is expensive in California. The median price for a single-family home in California hit $818,260 in May 2021. And according to a forecast by the California Association of Realtors, the median home price is expected to hit $834,000 this year.

If you want to rent, the situation isn’t much better. The average asking rent for an apartment in California is $1,900, with a vacancy rate of just 3.8%.

Of course, prices vary depending on the city and neighborhood you choose. For example, in April 2022, the median home price in San Francisco was $1.3 million, while the median home price in Los Angeles was $998,000.

These high costs can be attributed to several reasons:

1. The limited availability of housing:

California is home to almost 40 million people, and the population is only expected to grow. With more people moving to California than there are homes available, prices will most likely continue to rise. 

2. The cost of building new homes:

It’s no secret that California is not the easiest place to build. Between the high cost of land, strict environmental regulations, and the need for expensive construction materials, it’s no wonder that new homes in California are so expensive.

A recent report revealed that it costs an average of $405,440 to build a 2000-square-foot house in California. That’s almost double the cost of building the same house in Kansas, which comes at just $207,120.

3. The high demand for housing:

California is a popular destination for people from all over the world. With so many people wanting to live in the state, the demand for housing is high. And as we all know, when demand is high, and supply is low, prices go up.

4. Proposition 13:

Proposition 13 is a California law that limits the amount of property taxes homeowners have to pay. While this may sound like a good thing, it actually drives up the cost of housing.

When homeowners don’t have to pay as much in property taxes, they’re able to bid more for homes, which drives up prices for everyone—especially first-time homebuyers and renters.

5. The high cost of…everything:

It’s not just housing that’s expensive in California—the cost of living is high all around. From groceries and transportation to healthcare and utilities, everything seems to cost a little bit more. For example, the average cost of a gallon of gas in California is $6.37, compared to the national average of $4.95.

Tips to afford living in California

1. Don’t live in big cities

One of the best ways to afford living in California is to live in a less expensive area. When you’re not paying top dollar for your rent or mortgage, you’ll have more money to spend on other things—like exploring all the amazing places California has to offer.

Here are a few of the most affordable places to live in California:

Oceanside—With a population of just over 175,694, Oceanside is the 29th largest city in California. The median home price here is $538,200, and the median rent costs $1,803 per month.

Fullerton—Fullerton is the forty-third largest city in California. It’s located in Orange County and has a population of 136,709. Compared to the rest of the state, Fullerton is relatively affordable, with a median home price of $667,300.

La Quinta—If you’re looking for an affordable place to live in California, look no further than La Quinta. This city of 42,600 is located in Riverside County and has a median home price of $405,200.

Pasadena—Pasadena is another affordable city in Los Angeles County. You can find a variety of homes here, from apartments to single-family homes. The median home price in Pasadena is $822,100.

So, if you’re looking to save money on your living costs, consider moving to a less expensive area. 

2. Consider living with roommates

When you split the cost of rent and utilities with roommates, you’ll be able to afford living in California much more easily. In fact, bunking up with a few friends is one of the best ways to save money on your living expenses.

You’ll not only save money on your housing costs, but if you’re lucky, have built-in friends to explore California with! But hold on—before you start looking for roommates, there are a few things you should keep in mind:

1. Make sure you’re compatible: It’s crucial that you get along with your potential roommates. After all, you’ll be sharing a space with them! So, take the time to get to know them before you move in together.

2. Set some ground rules: Once you’ve found a few potential roommates, sit down and talk about your expectations. Discuss how you’ll split the bills, how often you’ll have guests over, and any other rules you want to set. This will help you avoid any potential conflict down the road.

3. Have a backup plan: There’s always a chance that things won’t work out with your roommates. So, you need to have a backup plan in place. Make sure you know how much rent you can afford on your own, just in case you need to find a new place to live.

Living with roommates is a great way to afford living in California. Just make sure you’re prepared before you take the plunge!

3. Rent, don’t buy—until you make your mind up about later life

Not everyone is ready to commit to a mortgage. And that’s OK! If you’re not sure if you want to stay in California long term, it might be best to rent a home or apartment instead of buying one.

Renting gives you the flexibility to move if you need to—and it’s often cheaper than buying a home, especially in California. The average rent for a one-bedroom apartment in California is $1,698, while the average monthly mortgage payment is $2,421.

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Of course, there are downsides to renting—like not building equity and trying to manage roomates. But, you’ll have a landlord to call any time something goes wrong.

Renting can be an excellent option if you’re not ready to commit to a mortgage. And who knows? You might decide that you love California so much that you want to stay there forever.

4. Get creative with your living situation

What if we told you that you could live in California for free? It sounds crazy, but it’s possible—if you’re willing to get creative with your living situation.

Here are a few different ways to find a rent-free living situation:

House sitting: Do you know someone who’s going out of town? Offer to house sit for them while they’re gone. This way, you can live in their home rent-free (or for a meager cost).

Couch surfing: Couch surfing is a great way to travel on a budget. And, if you’re lucky, you might be able to find a place to stay in California for free. 

WWOOFing: WWOOFing stands for “World Wide Opportunities on Organic Farms.” Basically, you work on an organic farm in exchange for room and board. When you WWOOF, you get to live in a beautiful location—and you don’t have to pay a cent.

Au pair: In exchange for taking care of the kids and helping with the household chores, you’ll get free lodging. And, in some cases, you might even receive a small stipend.

Volunteering: There are tons of volunteer opportunities in California. And in many cases, you can volunteer in exchange for free housing. For example, you might be able to stay in a hostel for free if you help out with cleaning or cooking.

5. Consider not using a personal vehicle

Do you really need a car in California? If you live in a big city, the answer is probably “no.” After all, most cities in California have good public transportation—and you’ll save a ton of money on gas and car insurance if you ditch your ride.

Of course, it isn’t an option for everyone. If you live in a rural area or have a long commute, you might not be able to get by without a car.

But if you can, ditching your ride is worth considering. Not only will you save money, but you’ll also reduce your carbon footprint—win-win.

6. Make friends with people who own property

This one’s a bit of a long shot—but it’s worth considering. If you have friends or family who own property in California, they might let you live there for cheap (or even free).

We know it’s a big ask. But, if you’re close with the person and you’re in a bind, it’s worth considering. You never know—they might say yes!

7. Find comfortable remote work

With today’s technology, it’s easier than ever to work from anywhere in the world. And if you can find a comfortable remote work situation, you can be pickier about where you live and can save a ton of money on living expenses.

It’s not always easy to find a remote job that pays well, and depending what life stage you’re in—toddlers running rampant, for example—it can pose a few challenges. But if you’re living untethered, it can be a great option.. 

8. Live a minimalist lifestyle

If you’re like many, you probably have way more stuff than you actually need. And, in many cases, all that stuff just ends up collecting dust in our homes. If you’re looking to save money, it might be time to offload what you’re not using,  downsize, and live a more minimalist lifestyle.

You don’t have to get rid of everything you own, but if you can declutter your life, chances are you’ll be able to save some extra money—and boost your emotional wellbeing in the process.

How much does California actually cost?

There’s no denying that California is an expensive state. But, how much does it actually cost to live there?

Here’s a breakdown of some of the significant costs associated with living in California:

1. Housing:

Here’s the truth: not everyone can afford to buy a home, and even if you can, you might not want to. After all, owning a home comes with a lot of responsibility—and you’ll have to deal with things like repairs and maintenance. As of April 2022, the median home price in San Fransisco costs $1.3 million. And in some areas, it’s even higher.

Renting is often a more affordable option—but even then, prices can be high. The average rent price in California is $1,698—but prices vary widely depending on the area. In San Francisco, for example, the average rent price is $3,230.

2. Transportation:

If you live in California, you’ll also need to factor in the cost of transportation. After all, you’ll need to get around and, in some cases, public transportation won’t be an option. The average cost of gasoline in California is $6.37 per gallon—depending on where you live, a long commute can be a gas-tank killer. .

The cost of gasoline isn’t the only transportation-related expense you’ll have to deal with. You’ll also need to factor in the cost of car insurance,and, in some cases, parking.

All things considered, transportation can be a significant expense. But if you’re strategic, you can find ways to cut down on costs and save money. For example, you might carpool with friends or take advantage of public transportation.

3. Food:

Food is another necessary expense; unfortunately, it’s not always cheap. Food in California can average anywhere from $233 to $266 per month—but, again, this number will vary depending on your lifestyle and eating habits.

To save money on food, there are a few things you can do:

Cook at home more often: Eating out can be expensive, but cooking at home can help you save money. Also, it’s usually healthier to cook your own food.

Meal plan: When you plan your meals, you save money by buying only the ingredients you need. And, you’re less likely to waste food.

Shop at the right time: The cost of food can fluctuate depending on the time of year. For example, tomatoes, eggplant, and watermelon are usually cheaper in summer. So, if you plan your meals around seasonal produce, you can save money.

Buy in bulk: Buying in bulk can help you save money on pantry staples—and it’s usually more convenient.

4. Healthcare:

You know the popular saying—health is wealth. In California, this saying couldn’t be more true. The average cost of healthcare in California is $487 per month. But, if you don’t have health insurance, you may have to pay even more.

If you have a chronic illness, chances are that you’ll spend even more on healthcare. Fortunately, there are a few things you can do to save on health care costs.

Look for free or low-cost clinics: There are several free or low-cost clinics in California. These clinics provide basic medical care—and, in some cases, prescription medication.

Take advantage of health insurance: If you have health insurance, use it! Your health insurance can help you save money on doctor’s visits, prescriptions, and more.

Ask for discounts: Don’t be afraid to ask your doctor for a discount. If you’re lucky, you might be able to get a lower rate—or your doctor might offer payment plans.

Use generic medications: Generic medications are usually cheaper than brand-name drugs. So, if you’re prescribed medication, ask your doctor if there’s a generic option available.

5. Personal expenses:

Personal expenses are, well, personal. They vary from person to person, so it’s hard to determine precisely how much you should expect to spend. But, in general, personal expenses can include things like:

  • Clothes
  • Entertainment
  • Hobbies
  • Gym memberships
  • Subscriptions
  • Gifts
  • Vacations

Basically, anything that’s not a necessity can be considered a personal expense.

To get an idea of how much you should plan for personal expenses, take a look at your spending habits over the past few months. How much did you spend on non-essentials? Once you have a general idea of the amount, you can plan accordingly.

Here are a few tips to help you save money on personal expenses:

Create a spending plan: When you know how much money you have to spend, it’s easier to stick to it. So, sit down and create a spending plan for your personal expenses.

Set limits: It’s easy to overspend when you’re not paying attention. So, set spending limits for yourself. For example, you could limit yourself to $50 per week on personal expenses. Once you’ve reached your limit, you’ll have to wait until next week to spend again.

Do without: There’s no rule that says you need to have the latest and greatest of everything. If you can live without something, don’t spend money on it.

California is expensive to live in—there’s no doubt about that. But, with a bit of creativity and planning, you can make it work.

When you’re ready to start tracking your money and how it affects your emotions, download the Stackin’ app as the perfect companion on your journey to financial wellness!

Sam Garrison

Sam Garrison

Sam Garrison is the President and co-founder of Stackin, a financial wellness company. Before Stackin, Sam built and launched new ventures at BCG Digital Ventures, the venture and incubation arm of The Boston Consulting Group, where he also supported the executive team as strategic program lead. As a lifelong millennial, Sam has tried to solve most of his problems through technology instead of waiting in line at a drab office.