11 Reasons Why Is California So Expensive (Cost Of Living)

11 Reasons Why Is California So Expensive (Cost Of Living)

Last updated on September 22nd, 2023 at 01:24 pm

A coastal state with beautiful beaches, incredible old-growth forests, and hundreds of acres of scenic wine country, California is often thought of as an ideal place to live.

However, California has a very high cost of living compared to other U.S. states, and the gorgeous scenery and California’s entertainment industry are a large part of the cause.

Here are 11 reasons why California is so expensive with the cost of living examples.

  1. Housing
  2. Food
  3. Transportation
  4. Healthcare
  5. Taxes
  6. Childcare
  7. Education
  8. Entertainment
  9. Personal care clothing
  10. Internet and phone
  11. Miscellaneous expenses

map of california

Cost of Living in California

California is consistently one of the top three most expensive states to live in the country.

Grocery, housing, transportation, and utilities are all more expensive than the national average, and the average cost of living per year for one person in California is about $46,640.

Comparatively, the national average cost of living for one person per year is $39,000.

The cost of living in California does fluctuate from place to place within the state. Smaller or more rural areas are often a bit less expensive, while popular areas or cities are much more expensive.

1. Housing

Housing is the largest expense anyone thinking of moving to California will face.

In the United States, a one-bedroom apartment costs about $1,000 per month, but in California, it costs almost $1,600 on average.

A three-bedroom apartment in California usually costs about $2,640, while the national average is about $1,680.

The median price for a home in California is $684,800, and the national average is almost $400,000 less than that.

Utilities are also much more expensive in California. Most people will spend about $375 per month on things like heating, electricity, water, and trash. The national average for utility costs is about $290 per month.

Surprisingly, property taxes in California are lower than the national average. California charges 0.71% of the property’s value. Some other states, such as Texas, charge almost twice as much.

apartment rentals buildings

2. Food

Eating out can be a little more expensive in California than in other states.

A meal in a mid-range restaurant is usually around $65 for two people, but a meal at an inexpensive restaurant only costs about $15 per person.

Fast food prices are relatively average, and most people can purchase a meal at a fast food restaurant for about $8.

Buying groceries and making meals at home can help California residents save money.

For example, a gallon of milk costs about $2.70, and a loaf of bread usually costs less than $1, which is one of the least expensive bread prices in the country.

A dozen eggs, however, can cost more than $7 on average. In total, California residents should expect to spend an average of about $3,470 per year on food.

3. Transportation

What a monthly car payment will total will depend on a number of factors, including what type of car you want to purchase, what the loan rate and terms are, and how much money you put down.

However, most people who purchase a new car in California will have a monthly car payment of about $570. If you purchase a used car, the average monthly payment is about $360.

Most people in California will spend an average of $2,290 per year on car insurance, which is actually less than the national average.

Fuel, however, is much more expensive in California than in many other states. As of January 2023, the average cost for a gallon of gas was $4.53.

car loan application approval

4. Healthcare

On average, monthly health insurance in California costs about $487 per person. This is only about $10 more than the national average for healthcare coverage.

However, if you want a more comprehensive plan, you can expect to spend a great deal more. Many people who want or need a plan that covers more things will pay between $500 and $1,000 per month.

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You may also be able to find inexpensive plans that average around $130.

Healthcare costs are expensive in California because there are, compared to the size of the state and its major cities, fewer competing hospitals.

The number of hospitals and medical groups in California actually decreases each year.

Because hospitals and groups do not need to compete with each other for patients, they can charge higher prices.

This cost is then passed on to patients through their insurance plans.

5. Taxes

California’s taxes are decided by income brackets. The more money you make in a year, the more you will owe in state taxes.

For example, if you earned $10,099 or less, you’ll only owe 1% of your taxable income.

These brackets range from 1% to 12.3%. If you earned $10,100 to $23,942, you’ll own 2%, if you earned between $23,943 and $37,788, you’ll owe 4%, and so on.

Each tax bracket over the first 1% will also need to pay a flat fee. People in the 2% bracket, for example, will pay $100.99 plus their 2% tax rate.

holding an income tax chalkboard sign

6. Childcare

In California, most families spend between $850 and $1,800 per month on childcare, if the child is under the age of 5.

For children who are between six and 12 years old, childcare is usually between $483 and $1,270 per month.

7. Education

All elementary, middle, and high school students who are residents of California can attend these schools for free.

However, if you want to send your child to a private school, you can expect to spend about $16,000 per year on tuition.

In California, the average private elementary or middle school costs about $15,270 per year, and the average private high school costs about $20,900 per year.

If students want to attend college in California, how much they spend will depend on the type of degree they wish to pursue and whether they attend a public or private school.

A public school averages about $3,210 per year, while a private college or university costs about $27,200.

University of California, Los Angeles
University of California, Los Angeles

8. Entertainment

The cost of entertainment varies in California depending on the type of entertainment and the location.

Going to the movies, for example, costs about $12, which is average for the nation.

Tickets for theme parks can be somewhat higher than average, but tickets for museums are about on par with what you might pay in the rest of the country.

If you want to purchase a gym membership, you’ll probably spend about $65, with higher prices in more populated areas.

Renting a tennis or pickleball court for an hour, however, usually costs less than $10.

9. Personal Care and Clothing

In California, personal care costs are average, but clothing costs can be expensive, particularly in areas like Los Angeles or San Francisco.

A tube of toothpaste usually costs around $2, while four rolls of toilet paper usually cost $5 or less. A bottle of shampoo is usually $8 or less.

A pair of jeans can cost around $55, and a dress or sweater averages about $40. If you want to purchase a pair of nice dress shoes, you should expect to pay around $150.

10. Internet and Phone

One month of internet usually costs about $50 in California. Cell phone plans, however, are usually only a few dollars more than the national average. Most people can expect to pay about $109 per month.

man holding a cell phone

11. Miscellaneous Expenses

If you want to add a cable TV plan to your internet service, you can expect your bill to jump up to about $118 per month.

You may also want to install an alarm and security system on your home, and this usually costs about $100 per month.

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