Not too long ago, being “rich” in California may have meant flashy cars, sprawling houses with ocean views and maybe a few weekends in Tahoe for good measure. But today, the picture looks pretty different.
U.S. News & World Report reported that while California is a beautiful state with a wealth of opportunities, it comes at a cost. With sky-high housing costs, new waves of tech money and shifting ideas of what really matters, the definition of wealth in the Golden State may not be as simple as it used to be.
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Here’s how the definition of “rich” has shifted in California.
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Rising Costs Push Luxury Far Away From You
According to Angelo Crocco, CPA, CGMA, owner of AC Accounting, in California, the word “rich” is no longer connected to just income but to survival against persistently increasing costs.
“A client of mine used to earn $250,000 and considered himself wealthy, until he moved to Los Angeles. Now, his income barely covers his rent or mortgage, childcare, health coverage and taxes,” he said.
Crocco explained the same would have happened had he moved to San Francisco, as inflation has eroded the value of each dollar, while housing prices in many counties remain at six to 10 times the average income.
Unfortunately, this can push even high earners into a lifestyle that feels middle class.
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Wealth Is Now About Cushion
Part of what really separates “rich” from “comfortable” in California today is flexibility.
If you can cover an unexpected medical bill, take a month off work or fund your kids’ college without debt, you are likely rich, according to Crocco.
“True wealth is measured by how much cushion and control you have, not just the top line of a paycheck. In business terms, we call it free cash flow,” he said.
Practical Path Forward
For residents, moving forward is less about earning more income and more about reducing their exposure to market volatility.
“I recommend my client to pay back debt faster, lock in fixed-rate mortgages, diversify income with side ventures and prioritize savings for emergencies, as these strategies restore them a sense of stability,” Crocco said.
So, in short, for many, “rich” in California no longer relies just on income brackets. Residents should also plan how to insulate themselves from the shocks that cost them their financial footing.
At the same time, it’s also about redefining what financial comfort looks like on a personal level. For some, that might mean scaling back lifestyle expectations in exchange for less stress. For others, it could be finding ways to build community support, share resources or even relocate to more affordable areas while still keeping ties to the state.
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This article originally appeared on GOBankingRates.com: How the Definition of Rich Has Changed in California
