I first moved to Washington, D.C. for college. This vibrant, historic city felt different and exciting to me almost immediately. Like many college students, though, I limited much of my undergraduate time to on-campus life. But I loved my experiences out in the District. I regularly jogged on the National Mall. Concerts at the 9:30 Club and occasional dinners at neighborhood restaurants also bring back great memories.
I moved away after graduation. But D.C. — and the friends, quality of life, and job opportunities I had left behind — drew me back less than a year later. That decision, though, also reintroduced me to the city’s high cost of living. Washington, D.C. is the fourth-most expensive city in the country. Only New York City, Honolulu, and San Francisco cost more. As a result, young adults who live here quickly learn how to minimize certain costs. Shared housing arrangements and happy hour discounts are a part of life.
But at some point, our preferences may change. Or the nagging feeling that we should live up to some “adult” standard makes such sacrifices feel extreme if other options exist. In other cases, a long-term partner may not share your interest in a thrifty or financially tight lifestyle. For others, preparing for kids may mean that the life choices they made throughout their 20s do not work as well anymore.
Even just earning more money over time can reshape your perspective. After all, your early career status may have driven your decision to live in an expensive, but strong employment market. As you gain career stability and managerial responsibilities, you may find new options available to you. At what point does a city’s cost of living become too high? At what point do you reconsider how much the cost of living in Washington, D.C. is worth to you?
Family is a major reason why people live in a certain location. For many Millennial households, one or both partners either grew up in that area or moved there to be closer to family. And financial benefits or drawbacks often don’t drive the decision. Rather, the opportunity to see family on a regular basis has an “incalculable” value that far outweighs other potential considerations. Familiarity, whether with a school district, sports teams, or the weather, only further supports this perspective.
Even so, the decision to live near family can have meaningful financial implications. Some young adults may conclude that the strong, stable job market they moved to after college — including Washington, D.C. — is too expensive to comfortably afford housing and raise a family. As local media outlet WAMU reports, “In Washington, D.C. the estimated child care cost for an infant in a family child care home and a preschooler in a child care center is $35,394.” In this context, relocating to gain family support represents a prudent, proactive financial decision. The move doesn’t need to be permanent. But it’s a common, reasonable way to maintain financial stability while pursuing different personal goals at this stage in life
Washington, D.C. has a reputation as a “transient” city. The federal government remains the largest source of jobs in the D.C. metro area. And with many short-term political appointee and internship positions, some workers move elsewhere once they complete their work. In recent years, though, high housing costs also have played a central role in why many 25-34 year-olds move away. (Migration patterns in Washington, D.C., are much more stable among older, higher-income individuals.)
Even with a high cost of living, the District continues to attract workers from different industries due to the city’s strong, stable job market. There are ample jobs and career tracks here that pay enough in wages and benefits to offset the higher living expenses. At some point, the most important question for many young adults becomes: how similar of a salary can I earn in a lower-cost city? Some young adults attended college in D.C. or moved here for an entry-level job after graduation. They may live here long enough to establish themselves as rising professionals in their field. Then they accept a leadership position in a new city. Others find that they enjoy the city and would like to call it ‘home’ for the long-term. With a high enough salary, they might find that their overall financial situation isn’t too different than what they can achieve elsewhere.
As with many life considerations, the COVID-19 pandemic may reframe how people make major life decisions, particularly related to employment and money. Many people would jump at a chance to maintain their current salary level, but move to a low-cost city in the South or Midwest. Even so, the pull of a vibrant major city can be strong. In May, Washingtonian asked, “Would you stay in the DC area if you could work from home forever?” In thinking through the question, the article noted a recent U.S. Department of Agriculture experiment. When the USDA offered employees the option to stay in D.C. or move to more-affordable Kansas City, fewer than a third of USDA workers opted for the Midwest. Author Andrew Beaujon concluded, “Beyond ties their other family members may have, this can be a darn nice place to live.”
The vast majority of people in this country need to make location decisions based on cost of living and/or job opportunities. A privileged few would have strong job stability no matter where they live. And their wages are high enough that they don’t need to worry much about housing or child care expenses. In these circumstances, their perceived quality of life may dictate where they decide to live.
The many different articles that “rank” cities are a testament to the fact that everyone evaluates “quality of life” differently. (This Washington Post article reports that D.C. is the 4th-best place to live in the country. But this one claims it’s only 19th, while this one doesn’t list D.C. at all.) When people hear “quality of life,” their thoughts often gravitate toward amenities, such as park space (D.C. ranks second, according to the Trust for Public Land). In the District specifically, I often hear visitors marvel that all of the Smithsonian museums, including the zoo, offer free entry.
A city’s quality of life can impact key aspects of your life, including your health and personal finances. One reason that some people choose to live here is the option to walk, ride a bicycle, or take the subway to their everyday destinations. This can be an enjoyable way to commute, but it’s also likely to improve your health more than driving constantly. And having the option to not buy or lease a car can make budgeting easier. “Quality of life” may be a mostly qualitative concept, but it’s valuable to identify the aspects of this consideration that can align with your financial goals.
In high-cost cities, many people essentially are forced to relocate to become or remain financially stable. For those with high enough incomes, the decision to stay or move can become highly personal and financially complex. To start, what are you willing to give up to live near family, walk to work, or access a variety of cultural and natural amenities?
But the financial calculations can prove challenging even once you understand your priorities. Your housing costs may be high, but how much money and time do you save if you never need to use a car? How does D.C.’s universal pre-K education for three and four-year-olds offset what you would pay for childcare elsewhere? If you lived in a different city, would your cost-of-living-adjusted salary be less, more, or about the same? The list of potential considerations is longer than many people first realize. Ultimately, the choice depends on your personal and professional goals. Washington, D.C., can offer both short and long-term opportunities that will make living here the right choice — at least for now
Kevin Mahoney, CFP® is the founder & CEO of Illumint, a Washington, D.C.-based company that offers financial planning for Millennials. He specializes in navigating the new financial decisions that arise during our late 20s and 30s, such as repaying student loans, buying a house, & investing savings. Kevin also works with employers and brands on a variety of Millennial personal finance events and projects, including speaking engagements, financial wellness programs, and sponsored campaigns.
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