Known for its near-perfect climate and constant excitement, Los Angeles is considered the entertainment capital of the world. In terms of saving money, however, the country's second-largest city ranked as the second-worst according to a recent GOBankingRates study.
When so many people want to live in one place -- 3,884,307 people are packed into just 472 square miles -- the cost of living can go through the roof. Saving money can be all but impossible when you're faced with a high unemployment rate, a 9.0 percent sales tax and housing costs well above the national average.
Challenges to Saving Money in L.A.
If you think Los Angeles residents are earning more money to supplement the city's above-average cost of living, think again. The median annual income in LA is just $46,803, compared with the national average of $53,046.
As if that's not bad enough, the city has an unemployment rate of 9.1 percent, which is significantly higher than the national average of 5.7 percent. Additionally, Los Angeles doesn't exactly have the most robust public transportation system in the country, causing most residents to rely on their cars to get around town instead of saving money by taking a train or bus. Gas prices average $2.46 per gallon, and the city is notorious for its heavy traffic, so most people spend a lot of money at the pump.
It can be difficult for many Los Angeles residents to even think about saving money when they're struggling to make ends meet in this pricey city. When people are living paycheck to paycheck, it can seem nearly impossible to set any extra money aside each month.
Housing Costs in LA Double the National Average
According to ApartmentGuide.com, the national average rent for a studio or one-bedroom apartment is $769 per month. Angelenos, however, pay an average of $1,148 per month for rent. In fact, ApartmentGuide.com noted that $769 per month would only cover a 341.78-sq-ft apartment in the City of Angels.
Anyone thinking about buying a home in Los Angeles better be prepared to save a lot of money for a big down payment. The median house and condo value in Los Angeles is $421,700, which is more than double the national average of $208,500. Consequently, it's not surprising to learn that the city has the highest percentage of renters in the country, according to a report by the Joint Center for Housing Studies at Harvard University.
For many people, the draw to Los Angeles is obvious -- an average of 292 days of sunshine per year, the buzz of the entertainment industry, a vibrant nightlife scene, world-class dining and more -- but those looking to pad their savings account each month might want to look elsewhere for a place to call home.
GOBankingRates' methodology: Cities were ranked according to GOBankingRates' methodology, which scored the 100 largest U.S. cities by population in each of the following: population, sales tax, median house/condo value, median monthly rent, median income, unemployment rate and gas prices. Each criterion was weighted equally, and scores in each category were combined to calculate final rankings. Note: Official rankings were adjusted to accommodate ties -- some numbers might have been skipped in order to reflect a range of 1-100. Sources included the Bureau of Labor Statistics, Zillow, Sale-Tax.com, City-Data.com and GasBuddy.com.
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