Monthly Budget Comparison – Big City $10,000 vs. Small Town $4,000

I have two family friends. One lives in the DC Metro Area (Bethesda, MD) and the other lives in Appleton, Wisconsin.

Classic Big Town vs. Small Town. I met them over Thanksgiving and we got talking about the cost of living and how it varies so much across America. Both are married with kids and are relatively savvy with their money.

So I thought it would be interesting to compare their side-by-side average monthly living costs. The figures below are estimates only and based on data my friends (separately) provided me, so not a detailed scientific analysis by any means.

But the numbers do demonstrate the disparity between living costs in big town and small town America.

Interestingly enough though, thanks to the higher income in bigger metro’s the disparity in savings is far less. Which at the end of the day matters much more in my opinion. Lets dive deeper into the numbers.

Budget Comparison living in a big city versus small town

Like the DC metro area, housing and associated mortgage payments are often the biggest expense in most “big town” household budgets.

Food is also more expensive in these areas, particularly with the urban trend toward organic produce (think Whole Foods) which is normally one to two times more expensive than regular produce.

Lunches are also more likely to be bought and the cost of a meal in urban areas is nearly twice that in rural areas. I have seen this first-hand.

The cost of child care is also much higher in metro areas due to the higher wages service jobs command. The $1,000 monthly difference in day care costs alone necessitates a two income family in most urban areas, which continues to spur the demand for even more child care.

A vicious cycle as the demand for quality child care outstrips supply. For families in big cities like New York and San Francisco the annual cost of child care can exceed the cost of college!

But the fact that the cost of living is higher in big town America is not really surprising. What people forget is the other side of the equation. How much more you can make in bigger metro areas due to the significantly larger and better compensated job markets.

Both my friends are in managerial positions and their wives work part-time. Yet how much they take home (after deductions, taxes etc) is quite different.

This is where things even out and what (from a financial sense at least) justifies the cost of living in bigger cities. But on the flip side if either family were to see a big cut in their income due to a job loss or other unfortunate event, the big city family would feel the pinch a lot more due to their higher cost of living.

Ideally you would want to earn a big city wage while living in small town America, which post-pandemic is becoming more of a reality as remote working has become more widespread.

I know a few people who are getting paid NY and CA wages, while living in the mid-west. So they get to enjoy this perfect balance. And boy do they save a lot!

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1 thought on “Monthly Budget Comparison – Big City $10,000 vs. Small Town $4,000”

  1. I am in complete agreement. It’s like you wrote down my story. I have been debating this with my wife and my friend about the same things.

    Thank you for laying this out so nicely.


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