How to Live in San Francisco on <$20K A Year
I recently came across Elizabeth Yin’s blog post pointing to growing examples of people living very happily and comfortably on small salaries and describing how she lived in Tokyo on less than $30K/year.
I’ve had a similar experience here in San Francisco, where I’ve lived on <$20K/year in the 3 years I’ve been here. I feel very strongly that you don’t need a high income to live wherever you want, and Elizabeth’s post inspired me to finally write about it on here.
I’ve done this the right way and the wrong way, so I thought I’d share both of my experiences. Read along and see whether you can guess why one was better than the other.
The Wrong Way: 2010-2011
When I first moved to San Francisco in 2010, I came for a fellowship that paid a small stipend for the 9 month duration. I anticipated that I wouldn’t have much money and let that get to my head.
Wanting to manage my stipend in the most efficient way possible, I created spreadsheets like this:
And micromanaged every spending category to the dollar to make sure I didn’t waste anything.
My pennypinching ways earned the affectionate superlative from my peers at the end of the fellowship: “Most Likely To Remind Us How Poor We All Are”.
TOTAL SPENT: $1500/month, or $18K/year
The Right Way: 2012-2013
I left a stable job and salary in April 2012 and worked off of contracts while bootstrapping Feast until we received our 500 investment in April 2013. I had enough saved up in the bank that I knew I had some leeway to figure things out as I went. I didn’t keep a budget at all this time around because, without a steady income, I figured it was as simple as “the less I spend, the better”. Instead, I internalized these two questions before purchasing anything:
- Do I really need this?
- By purchasing this now, what can’t I purchase later?
Simple gut-checking that translated into conscious spending.
I left all my savings in my ING account and transferred it into a checking account at a separate bank as needed. This also limited my spending - I had a certain amount I couldn’t drop below each month, but otherwise, I was free to spend my money however I wanted.
During this time, I also moved to Hayes Valley (a nice neighborhood in San Francisco) and spent a month working remotely from an island off the coast of Belize.
The view from my front porch.
TOTAL SPENT: $1500/month, or $18K/year
The Psychology of Being Poor
A friend told me about a friend of his who worked at a retail job she hated out of college. She drank Starbucks every day, however, because, as she put it, "It was the one time of day that I felt the same as all the business execs standing in line. It didn’t matter who I was, we were all waiting for the same latte."
In my 2010-2011 situation, I got on food stamps for several months towards the end of my fellowship. And it changed my life. Not because I could finally afford to eat - I cooked every night with about $65/month of groceries - but because I could afford to splurge on groceries that I couldn’t previously afford.
This sounds fucked up to anyone who hasn’t ever been on food stamps. But the relief that came with being able to pick up some chevre or a loaf of nice bread from the farmer’s market made my day-to-day life tolerable, even enjoyable. Even if I couldn’t afford to eat out, I could at least make a really nice meal at home.
Here’s the biggest secret about managing money when you don’t have a lot of it: it’s not about managing your dollars, it’s about managing your stress. If you get stressed out about money, you lash out by spending erratically.
Poor people are told they shouldn’t be spending their money on anything that isn’t absolutely necessary. Having at least one luxury in your life when you don’t have money IS necessary to keep you from spending money on stupid things. Find your “great equalizer” - a discretionary expense that you’ll enjoy immensely and don’t feel guilty about spending money on. That could be an apartment in a good location, a weekly CSA box, or a daily latte.
Surprisingly, even when you’re not able to partake in all the other things your friends can afford to spend on, you won’t feel the stress of money as acutely. It tempers your bitterness against other people’s lifestyles, which is anathema to your wallet.
You’re Not Limiting Yourself, You’re Just Choosing Wisely
Instead of saying “I can’t afford to do that! I don’t have money”, think “I only spend my money on the things I really care about.”
In my 2012-2013 situation, I took the approach of not worrying about money at all. It was arguably a more stressful situation because I wasn’t receiving a steady paycheck and had no idea where my next source of income would come from. But I trusted that I would figure it out, and that the best way to honor my financial sacrifice was to spend each day working hard and fast toward my goals.
It’s astounding that I spent the same amount of money in both 2010-2011 and 2012-2013, because in the second situation, I still would go to events with friends, go out to bars, go out to dinner.
Let me say that again. I still would go to events with friends (but only those I was personally really excited about attending), go out to bars (but only have one drink), go out to dinner (and scan the menu for the cheapest item).
Not having money doesn’t mean you have to deny yourself the joy of hanging out with friends and living the good life. Did it really diminish the quality of your night chatting at a cozy bar to have one drink instead of three?
It’s about making smart tradeoffs, and if you do it right, you barely notice that you don’t have money and you start to wonder what other people manage to blow all their money on. These habits stick with you for life.
In between those two situations I described, I had a steady job with a good paycheck. It turns out I only needed about $2000/month to be truly happy (that includes $1000/month rent), and I saved the rest. Those savings are what gave me the freedom to leave without having another job lined up, which then gave me the luxury of being able to work on Feast when the opportunity arose.
Why Is This All Important?
I can’t tell you how many times I’ve heard someone say to me, “I wish I could live in San Francisco, but it’s just too expensive!” Or “How can you afford to travel so much? I wish I could afford that.”
These excuses are bullshit. If you care enough to do something, get creative. Make your mental default a zero-dollar day. Get into the mindset of only spending your money on stuff you REALLY value, and you’ll realize how much is needlessly tugging at your wallet without actually making you happier.
Understanding that money - like “the economy” - doesn’t singlehandedly determine the outcome of your life will allow you do so many more things. Like move to the city of your dreams. Or quit your job without worrying about where your next paycheck comes from. Or spend a month living on a tropical island.
Or start a company.