If you want to get rich you need to go where the highest paying jobs are. The highest paying jobs come from the fastest growing, economically strongest companies.
Getting rich, like dating, is a numbers game. If you’re in a room with 80 millionaires and 20 non-millionaires, you’ve got a better chance at meeting a millionaire than if you were in a room where the ratio was reversed.
According to a Deutsche Bank study of over 50 cities in the world, San Francisco is the #1 city to make money. Since 2018, average salaries in San Francisco have risen by 31% and by 88% since 2014.
Damn, since I live in San Francisco, I really should have kept working instead of retiring in 2012. I could have been so rich! Alas, there’s always the next life to fix my current mistakes.
With company giants, such as Facebook, Google, Apple, Uber, and Salesforce, all paying healthy six-figure salaries on average, it should come to no surprise that San Francisco is #1.
In 2019, people in San Francisco can expect to be paid an average of $6,526 per month or $78,312 a year. Put two of these people together and you’ve got a healthy $156,624 a year in combined income. If you want to make over $20,000 a month, consider being a public transit janitor or a city government employee.
New York residents, on the other hand, make 29% less than San Francisco residents at only $4,612 a month. However, comparing New York to San Francisco is a little misleading given NYC has a 10X larger population. Comparing San Francisco to Manhattan is more apples-to-apples.
Let’s take a look at the rest of the cities on the top 10 highest paying cities list. See if you can guess which other cities are on the list before proceeding.
The 10 Highest Paying Cities
- San Francisco, U.S.
Monthly salary: $6,526 - Zurich, Switzerland
Monthly salary: $5,896 - New York, U.S.
Monthly salary: $4,612 - Boston, U.S.
Monthly salary: $4,288 - Chicago, U.S.
Monthly salary: $4,062 - Sydney, Australia
Monthly salary: $3,599 - Oslo, Norway
Monthly salary: $3,246 - Copenhagen, Denmark
Monthly salary: $3,190 - Melbourne, Australia
Monthly salary: $3,181 - London, U.K.
Monthly salary: $2,956
The biggest surprise on this list is Chicago at #5. With terrible weather for half the year, bad local government, high state income and property taxes, and one of the highest murder rates in the country, I would have thought Chicago would be outside the top 25 for sure.
But there is a huge silver lining for Chicago residents: great value.
The median property price in Chicago is only $226,400 compared to ~$1.7 million in San Francisco. Yet pay in San Francisco at $6,526 is only 50% higher than pay in Chicago. If you can withstand all the negatives of Chicago, Chicago is a great place to make your fortune.
It’s no surprise London is on the top 10 list. But I am surprised London is 10th and not higher. According to the Deutsche Bank study, income for London residents was 13% lower partially due to the ongoing Brexit debacle.
I’ve been to London several times, and each time I go I’m amazed by how much more expensive London is than San Francisco and New York City.
Cities With The Highest Monthly Rent
- Hong Kong
Monthly rent for average 2-bedroom apartment: $3,685 - San Francisco, U.S.
Monthly rent for average 2-bedroom apartment: $3,631 - New York, U.S.
Monthly rent for average 2-bedroom apartment: $2,909 - Zurich, Switzerland
Monthly rent for average 2-bedroom apartment: $2,538 - Paris, France
Monthly rent for average 2-bedroom apartment: $2,455
Everybody likes to complain that San Francisco rent is too damn high. But people who complain forget the other side of the equation: income.
The worst combination is when residents live in a city with high rent and low income. Hong Kong fits this bill perfectly. The social unrest there is becoming untenable.
I’ve been to Hong Kong over 20 times for work and it is congested, hot, and polluted. Average earnings for Hong Kong residents came in under $2,500 according to the Deutsche Bank analysis, but rent costs were $3,685.
Think about this for a bit. The average rent for a two-bedroom apartment is 47.4% higher than the average salary in Hong Kong. How is it even possible to live and start a family?
The only solution is to live with your parents or live in a one-bedroom or studio apartment. Certainly don’t have kids.
Below is an example of a “nano-apartment” measured at 128 square feet. The average cost of an apartment is roughly $3,000/sqft. Therefore, expect to pay over $300,000 for this apartment below. You’re basically in a capsule!
The second poorest value city is Paris, given it is in the top 5 highest rent cities in the world but not in the top 10 highest paying cities in the world. Paris didn’t feel nearly as expensive as London when I visited several times.
Cities With The Highest Disposable Incomes
Deutsche Bank calculates disposable income as income left over after paying rent. The highest disposable income list is what matters most. At the end of the day, it’s what you keep and not what you earn.
- San Francisco, U.S.
Disposable income after rent: $4,710 - Zurich, Switzerland
Disposable income after rent: $4,626 - Chicago, U.S.
Disposable income after rent: $3,298 - Boston, U.S.
Disposable income after rent: $3,188 - New York City, U.S.
Disposable income after rent: $3,157 - Sydney, Australia
Disposable income after rent: $2,615 - Melbourne, Australia
Disposable income after rent: $2,485 - Oslo, Norway
Disposable income after rent: $2,342 - Copenhagen, Denmark
Disposable income after rent: $2,285 - Wellington, New Zealand
Disposable income after rent: $2,075
The analysis assumed two working people were sharing a two-bedroom apartment, and calculated disposable income by working out the difference between average monthly earnings and half the cost of renting a two-bedroom apartment.
San Francisco comes out on top with disposable income after rent at $4,710, which is a whopping 100% more than Oslo, Copenhagen, and Wellington, and 49% more than New Yorkers were expected to have leftover.
Being #1 on the disposable income list is the reason why I believe San Francisco is also the cheapest international city in the world. Prices tend to converge among international cities. Therefore, I’m also a long-term bull on San Francisco real estate.
Make Your Money, Then Move
If you want to get rich, you should probably come to a city like San Francisco. Yes, the cost of living is high, but you will get paid accordingly.
It’s not like Hong Kong or Vancouver, where you have to pay crazy high real estate prices, yet get paid way below what a commensurate income level should be to support such high real estate prices.
Like every city, each has its problems. San Francisco has a traffic problem, a homeless problem, and a cost of living problem for those who do not make the average wage.
But overall, if you are a capitalist, San Francisco is clearly the #1 city for opportunity. Further, San Francisco is diverse, accepting, and has comfortable weather all year. I’ve lived here since 2001 and give the city a thumbs up for fortune hunters.
If you don’t want to come to San Francisco, that’s fine. Go to New York, the best city in America for six months of the year. If neither of these cities appeal to you, make your money in one of the other highest paying cities in the world. As you do, save aggressively, invest wisely, and leave once you’ve had enough.
We’re planning on relocating to Honolulu once our boy is eligible for kindergarten. The average wage in Honolulu is much lower, but it doesn’t matter because we’re not working day jobs anymore.
Americans don’t know how truly great our living arrangements really are until we live abroad. Let’s appreciate all that our magnificent country has to offer!
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Related posts:
Housing Expense Guideline For Reaching Financial Independence
The Best Area To Buy Property In San Francisco
The People Who Make Over $1 Million A Year
Readers, if people want to get rich, why wouldn’t they relocate to one of the highest paying cities in the world? How is your city for money-making opportunities?
Better yet: Move to San Francisco, get a $$ job, then negotiate to work remotely and move to someplace like Salt Lake City for the geographic arbitrage!
I also cannot understand why a place that has all the technological powerhouses are so bad at telecommuting/remote working. You would think it would be an easy case study to drop costs massively by using remote workers across the US/world. Guess it’s just better to work face-to-face despite the technological advances.
wish to SanFran tech corporates would let more remote working happen considering they’re tech companies.. wonder why they’re so keen to have face-to-face workers, rather than outsourcing globally to reduce wages?
This is exactly what is happening. And you are seeing firms like Google and Uber spend a lot of money expanding outside of the San Francisco Bay area. This is why I am bullish on the heartland of America.
When It takes almost $350,000 to buy the median home price in San Francisco, you know affordability is an issue. Company employee costs are rising out of control and that’s not good for business.
https://www.financialsamurai.com/focus-on-investment-trends-why-im-investing-in-the-heartland-of-america/
We bought a house in Lafayette CA in December 2012. Sold it July 2015. Moved to my Kansas hometown and became a one-income family with a toddler and baby on the way. Baby began sleeping more and breastfeeding less, as babies do, so when he was 18 months old I returned to work, negotiating my SF salary (which my partner kept, too), and a 4-day work week. I miss the Bay Area sometimes, but we have so much financial freedom. We have family close by. We can donate money to charitable causes, take simple or extravagant vacations, and visit SF whenever we want.
Hi Sam,
I am an avid reader of your blogs. I just want to say I am a young man who recently graduated and I’m living in Chicago. I have always thought Chicago delivered great value for the price of housing, and it was great to see you say that as well. Although I love the big city feel of NY, I plan on living in Chicago long-term, as NYC housing is just ridiculous. However I am in the field of finance, and sometimes I worry I won’t have the same opportunities as my peers because I’m not living in the financial capital of the world. Did you ever think about this when leaving NYC after only a short amount of time? By the way, thanks for another great post!
Thanks for another great post.
Good question. Not in the first five years after I left New York City to come to San Francisco. But after my fifth year, I began wondering how I could get promoted to managing director when I was in a satellite office. I would have to move to New York City, London, or Hong Kong to continue to ascend.
I could’ve gone to another firm in New York City for a really strong two-year guarantee. But I decided not to. And then ultimately after 13 years, I decided to retire.
It seems like most of the stats here are averages. I’d be curious if the overarching argument holds if inequality is taken into the mix. E.g., I could see SF’s average pulled up significantly by the fact that it has one of the highest billionaires-per-capita on Earth.
Also, I’d argue the cost of living in SF eats up a significant portion of whatever you earn. A super burrito at the hipster taqueria on my street was $10 after taxes and tip in 2010, and today it’s over $18. It’s one example, but it’s part of a pattern I’ve noticed.
My read on the situation is that “support-the-wealthy job” salaries (anyone who supports the top earners… many of these jobs are within tech companies, like accountants or PR reps, but some are outside, like barbers and burrito-makers) are just barely able to generate a healthy standard of living. Non-tech businesses who can’t support Bay Area wage inflation are leaving.
So, my personal hypothesis is that the Bay Area is a great place to have wealth, or attract VC wealth, but maybe not the best place to generate it, unless you have a very narrow category of skills. I wonder if the wage inflation (24 year olds with nominal coding skills making $150k/yr to move pixels) is actually a bubble that may deflate as tech agglomeration halts in the Bay Area (due to remote work or other tech hubs cannibalizing).