Live In The Most Expensive City You Can Afford To Build Wealth

If you want a greater chance of building more wealth than the average person, live in one of the most expensive cities in the world. These cities are expensive for a reason. They contain the most valuable companies, the richest people, the most capital, and the best universities on the planet.

Yes, the competition is cutthroat. But you dramatically increase your luck surface area thanks to the sheer number of opportunities. And if you can’t compete professionally, you can always try to marry someone who is winning in finance or tech. I’m only half joking. Assortative mating is one of the biggest wealth-building forces nobody wants to talk about.

Think of it this way. Living in an expensive city is playing OFFENSE. Your income and equity upside are theoretically unlimited. Living in a cheap city is playing DEFENSE. You can only cut costs so much before you’re eating rice and beans in a paid-off house wondering what happened to your 30s. Nobody ever got rich on defense alone. You need offense to score.

After 10 years of grinding it out professionally (and romantically), you can rest easy knowing you gave it your best shot. If you strike it rich, you’ll have an endless number of relocation options without feeling constrained. Or you can simply keep living in your expensive city without much financial concern.

If you don’t strike it rich, there are plenty of wonderful, more affordable cities waiting for you. The optionality only flows one direction, though. It’s much easier to downshift from San Francisco to Des Moines than the reverse.

My number one piece of career advice for young people is to go where the action is. Get your foot in the door in any reasonable capacity, build a network, and let serendipity do its thing. As many remote workers have discovered, out of sight really does mean out of mind, and out of mind means lost opportunities.

High Home Prices Are A Positive Signal, Not A Scam

The typical three-bedroom, two-bathroom, ~1,800 square foot home in San Francisco costs about $2.2 million. A family of four needs to earn at least $400,000 a year, after putting 20% down, to feel somewhat comfortable affording one. This assumes no parental help, which roughly 30% of first-time homebuyers now receive.

Some think the median price is outrageous. But consider this: if you joined a company like Google in early 2023, your stock is up roughly 4X since then. Meanwhile, the median San Francisco home price rose about 30% over the same period, from $1.7 million to $2.2 million. In other words, for the well-positioned local worker, housing actually got MORE affordable, not less.

Instead of viewing high home prices as a negative cost-of-living signal, view them as a signal of how much financial opportunity exists in the area. Home prices are largely driven by the incomes and wealth of the people living there. These homes are expensive precisely because enough residents earn enough to pay for them. If they didn’t, prices would fall.

So paradoxically, you should get excited about high home prices and buy one yourself, because wealth is sticky and attracts more wealth. Unless the geography or weather is terrible, expensive cities tend to keep getting more expensive.

Sure, you might one day get so wealthy the government tries to impose a special tax on you. Congratulations. At that point you can afford to relocate anywhere and live like royalty.

The World’s Best Entertainment Comes To You

Here’s the part of the expensive-city bargain that frugal people, especially FIRE folks like me, consistently undervalue: the entertainment.

When Team USA played Bosnia and Herzegovina at Levi’s Stadium on July 1 in a win-or-go-home World Cup knockout match, I was 2,400 miles away in Honolulu, having left San Francisco the day before. A single-elimination World Cup match, 30 miles from my house, and I missed it.

To make myself feel better, I told myself I wasn’t willing to pay $1,500 to $2,000 per ticket for middling seats. I certainly wasn’t willing to pay $6,000 to $8,000 for my family of four. I don’t even love soccer that much.

But while lounging on the beach, for free, the truth crept in: I would have gone. I should have gone. The USA won 2-0 and earned its first World Cup knockout-stage victory since 2002, in my backyard, and I watched the highlights on my phone like everybody else in America.

FIRE Can Prohibit You From Spending

Here’s the flawed FIRE logic I fell for: why pay thousands to attend when you can watch it on TV for free? Because ANYBODY can watch it on TV for free. The guy in the middle of nowhere who moved there to save money watches the same broadcast I do. The entire point of paying a premium to live in a world-class city is that the world’s greatest events come to YOU. If you never attend them, you’re paying the expensive-city cover charge and then refusing to enter the club.

Think about the visiting fans. Levi’s Stadium holds about 70,000 people for these matches. Tens of thousands of them paid for flights, hotels, meals, ground transportation, AND tickets. If a fan from Sarajevo can justify $10,000 all-in, surely I could justify an Uber ride and a ticket. Of course I could.

When world-class entertainment comes to your expensive city, you go. It’s the dividend you’re owed for paying more for housing, energy, education, and taxes than almost anyone else on Earth. Skipping the events is like owning a dividend stock and refusing to cash the checks.

Entertainment Examples Of What The Bay Area Alone Has Hosted

Don’t take my word for it. Here’s a sampling of the world-class events that have come to the San Francisco Bay Area, all within a roughly 55-minute drive of my house. Try replicating this list in a low-cost-of-living paradise.

And that’s just the marquee stuff. Every single year there’s Outside Lands, Hardly Strictly Bluegrass (a world-class music festival that is literally free), Fleet Week with the Blue Angels roaring over the bay, various professional tennis tournaments, startup conferences and demo days, and more Michelin stars per capita than almost anywhere in the country.

When I lived in New York City from 1999 to 2001, my favorite city in the world for six months a year, the Yankees won the World Series twice. Going to those games, catching Broadway shows, eating at incredible restaurants, and stumbling into random bars and warehouse parties was a blast. That’s the expensive-city life. Work hard, sure. But you’re never bored.

Offense Builds Wealth, But Freedom Is The Point

At the end of the day, we’re not building wealth for the sake of a bigger number. We’re building wealth to be more free and live a better life. If you play offense in an expensive city, you get both: more income and equity upside than you could ever generate playing defense in a cheap city, AND easy access to the greatest events on Earth.

The tragedy is being wealthy enough to attend and still watching from your couch because the frugality muscle won’t relax. I’ve written before about how the hardest part of FIRE isn’t accumulating money, it’s giving yourself permission to spend it. Missing that World Cup match was my latest reminder.

So here’s my new rule, and I invite you to adopt it: if a once-every-four-years (or rarer) event comes within an hour of your home, you go. No spreadsheet analysis. No “let me check the resale market Wednesday.” You go. The memory dividend compounds far longer than whatever that money would have earned in the S&P 500.

The next World Cup on home soil probably won’t come back for decades. The next Super Bowl at Levi’s? Who knows. But something else spectacular is always coming, because that’s what expensive cities do. They put on a show.

Make sure you’re in the arena, not on the couch.

Readers: Do you live in an expensive city, and do you actually take advantage of the events that come to town? Or have you moved somewhere cheaper and found the trade-off worth it? What’s the best live event you almost skipped to save money?

Wealth-Building Suggestions

Invest In Real Estate Passively: If seven-figure home prices in expensive cities make your eyes water, you can still play offense in real estate without a jumbo mortgage. I’ve invested over $500,000 with Fundrise, which focuses on residential and industrial properties in the heartland, where valuations are lower and yields are higher.

Earn income 100% passively, using my BURL method, while keeping your career capital concentrated in an expensive city, while having more fun. Financial Samurai is an investor in Fundrise, and Fundrise is a long-time sponsor of Financial Samurai.

Build Seven-Figure Wealth: If you want to build enough wealth to afford both the expensive city AND the tickets, pick up a copy of my USA Today bestseller, Millionaire Milestones: Simple Steps to Seven Figures. The sooner you get to seven figures, the sooner you can stop debating whether the good seats are worth it.

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