The Cost of Living in Washington, DC, for Millennials in 2024

The cost of living in Washington, DC, is high. How much value do you feel you get for your money?

How should Millennials think about the cost of living in Washington, DC and other expensive cities?

The price of housing and daycare in DC is among the highest in the country. But that doesn’t mean that living here is a poor use of your money.

What is the Cost of Living in Washington, DC, in 2024?

Washington, DC, is an expensive city to live in.

For 2024, the Council for Community and Economic Research ranks Washington, DC, as the 9th-most expensive city in the country. Only cities such as Manhattan, Honolulu, and San Francisco will cost you more money.

If you’re a recent college grad, this stat may not change your life drastically.

Young adults who live in these cities learn how to reduce costs to a minimum. Shared housing arrangements and happy hour discounts become critical financial planning strategies. Almost by default.

But at some point, your preferences may change.

You may decide that you’d like to begin using your money in different ways. Or, despite your best efforts, you may begin to feel guilty about your cost of living. You might feel that you “should” start living up to some more “responsible” adult standard.

A voice in your head might say, for example, “Why aren’t you contributing more to your company retirement plan? You should be contributing more to your retirement plan.”

In any case, you may find yourself wondering how you can afford to live in Washington, DC. And whether it’s worth it to you to stay in Washington, DC at all.

What Salary Do You Need To Live in DC?

Before moving to Washington, DC, you may wonder what salary you need to live here.

To try to answer this question, you might turn to an online cost of living calculator. Smart Asset, for example, recently estimated what residents need to make to “live comfortably.” To afford the cost of living in Washington, DC, a couple needs to earn $275,642 and a single adult needs to earn $99,424.

But even the best cost of living calculator can’t provide an exact answer for you. No cost of living calculator can tell you where you might enjoy living based on your income and expenses.

The Best Cost of Living Calculator for Washington, DC

But when you’re considering a major life change, I understand that you may still want a rough estimate. For this purpose, NerdWallet offers the best cost of living calculator that I’ve found online.

Proceed with caution, though. Especially if you start to get detailed and specific with your expense inputs.

When I work with other Millennials, I often discourage them from creating rigid, line-item budgets. It’s almost impossible to hit your targets in every spending category over the long term. There’s only so much we can control in life. So you’re more likely to end up feeling frustrated when life intervenes.

Instead, you should focus on the largest expenses that you’ll have in Washington, DC, or any other city. Here are the two expenses that I focus on most often with my Millennial clients:

Housing Costs in Washington, DC

Should you rent or buy in DC to minimize your costs?

Ever-changing rent prices may drive that initial decision for you. According to Apartment List, as of September 2024, the median cost for a one-bedroom apartment in Washington, DC is $2,210.

Regardless, though, in your late 20s or 30s, you may decide that you want to become a homeowner. But the DC housing market doesn’t look any more favorable.

In May 2024, the median price for a detached house in Washington, DC, eclipsed $845,000 for the first time. Prices then remained near that record high in June 2024.

As Urban Turf writes, “The price for a house in the DC area has never been higher.”

Daycare Costs in Washington, DC

Your interest in buying a house may grow as you prepare to have kids.

But an expensive housing market often demands two household incomes. So how will you care for your young child on a daily basis? An extended family member may be able to help. If not, you may face the reality that daycare in Washington, DC, ranks among the most expensive in the country.

According to a 2023 Annie E. Casey Foundation report, child care in DC costs, on average, about $24,400 each year. This means, notes Axios, that a “married couple making the median income must shell out roughly 11% of their paychecks.”

Is The High Cost of Living in Washington, DC Worth Your Money?

At what point does the cost of living in Washington, DC become too high for you?

Even if you can make the finances work, when do you stop getting enough value for your money? We should hold any purchase to this standard. And this includes the city that we choose to live in.

Some DC residents view their city as one of the best in the country. But other residents would feel equally content in another city. Especially if a move would reduce their cost of living.

Many DC residents, at one time, made the choice to move here. Or to stay here. And if you fall into one of those categories, you shouldn’t feel guilty about the financial price you pay. Living in Washington, DC may demand financial tradeoffs. But that’s a decision that you can – and should – feel empowered to make.

Ultimately, you’re making a choice about how you spend your money.

The Benefits That Come With the High Cost of Living in Washington, DC

What makes Washington, DC different and unique? On an individual level, what justifies the high cost of living here?

The cost of living in Washington, DC can may anyone doubt themselves. Are you really making a prudent financial decision for yourself and your family?

If you’ve ever felt this way, you may want to stop and reflect. You may want to remind yourself of the reasons why you’ve chosen to live here.

When evaluating an expensive city such as Washington, DC, many people focus too much attention on the cost of living. This tendency looks similar in many ways to how we may obsess over our spending, but give less time to how we might earn more money.

Instead of just costs, what about the benefits?

The District’s history, urban environment, amenities, and economy all contribute to make this city different. But let’s dig deeper into three potential benefits of living in Washington, DC that may outweigh the costs:

#1: Proximity to Family

Family is a common reason why people live in a certain location.

For many Millennial parents, one or both partners grew up in that area. Or they relocated there to be closer to family.

Financial advantages may not even play a major role in the decision. Rather, the opportunity to spend time with family has an “incalculable” value. And that value far outweighs other potential considerations. You may also like the school district or the weather, but that’s secondary to you.

Even so, the choice to live near family can offer meaningful financial benefits.

If you have young kids, you understand the high costs of childcare. When family members can step in to help, you’re in a position to save your money for other purposes.

And you’ll still have the option to change cities in the years ahead if as your life evolves. But living closer to family is a reasonable (and very common) way to boost your financial stability while you’re in a challenging stage of life.

And most importantly, what’s wrong with wanting to spend your money on more time with family?

#2: Job Opportunities

Many people move to Washington, DC for work. This is particularly true for recent college grads.

But many of these positions end after a short period of time. You work as an intern or a short-term political appointee, and then move elsewhere. This dynamic has given DC a reputation as a “transient” city.

And recently, high housing costs have played an even larger role in why many 25-34 year-olds move away.

Migration patterns in Washington, DC are the most stable among older, higher-income individuals. This stat suggests that mid-career adults value the unique work opportunities available here. As the nation’s capital, a variety of companies and organizations call the DC metro area home:

• The World Bank
• Amazon
• Boeing
• The Washington Post
• Capital One
• Marriott
• Pew Research Center

These employees are well-educated and highly skilled. They likely could find attractive jobs in many areas. But, for both personal and professional reasons, they choose to live and work here.

And what’s wrong with wanting to spend your money on fulfilling work?

#3: Quality of Life

If you earn a high salary, you may not feel forced to make life decisions based on housing or childcare costs in DC. Instead, you can decide whether the city offers the quality of life that you desire.

You’ve probably seen countless articles “ranking” cities. You should approach these lists with skepticism. But they do show how differently we all define “quality of life.” (For example, this Washington Post article reports that DC is the 4th-best place to live in the country. But this one claims it’s only 19th. This one doesn’t list DC at all.)

When you hear the phrase “quality of life,” you may think about amenities, such as park space. (As of 2024, Washington, DC has the best park system in the U.S., according to the Trust for Public Land). And unique to the District, all of the Smithsonian museums, including the zoo, offer free entry.

You also may view “quality of life” through the lens of your health or finances. Some people choose to live in DC for the option to walk, ride a bicycle, or take the subway on a daily basis. In doing so, you support your health. And avoiding a car lease or car ownership certainly can make budgeting easier.

“Quality of life” may be a qualitative concept. But it’s valuable to think through how these features align with your financial goals.

And what’s wrong with wanting to spend your money on quality-of-life benefits?

How Remote Work Can Reduce Your Cost of Living

In May 2020, Washingtonian asked, “Would you stay in the DC area if you could work from home forever?”

The article reported on a U.S. Department of Agriculture experiment. The USDA offered employees the option to stay in DC or move to more-affordable Kansas City. Fewer than a third of the employees opted for the Midwest.

Author Andrew Beaujon concluded, “Beyond ties their other family members may have, [Washington, DC] can be a darn nice place to live.”

That may be true. But from a financial perspective, many people would thrive with this option. You could maintain your current salary level, but move to a low-cost city in the South or Midwest.

In past years, you would need to do much more rigorous analysis. How much salary would you need to give up to live in a lower-cost city? But now, some privileged workers can work mostly virtually. This option could change your cost-of-living dynamic in a big way if you choose to move elsewhere.

Three Tips for Preparing for a High Cost-of-Living City

What financial strategies can help you combat the high cost of living in Washington, DC? You can’t control all of the financial factors associated with living here. But you can improve your financial habits in targeted ways. As a starting point, focus on the following three tasks when you want to reduce the impact of an expensive city:

1. Invest early and consistently. Investing offers the best opportunity to grow your savings over time. Investing can keep up with inflation. You also may help to offset the larger amounts that you’ll pay for housing and daycare in DC. But successful investing requires time and consistent contributions. Even if you’re only investing in small amounts.

2. Evaluate how much you value different expenses. So you’ve made an intentional choice to “pay for” the benefits that Washington, DC offers? Then you likely grasp the relationship between value and money better than you think. Try applying this same logic to your recurring expenses. How much do you value takeout multiple times a week? You probably don’t need to become frugal. You’ll help your budget, though, by reducing the small expenses that you don’t actually value.

3. Prioritize an emergency savings account. Emergency savings are typically set aside for unexpected expenses. Think: medical bills or a major car repair. But when you have a high cost of living, you may want to add another savings bucket. This extra money can help out when you need to pay a lump-sum amount for daycare or school tuition. If nothing else, you may feel a little less stressed. Having these funds available can mitigate the uncertainty that comes with a high cost of living.

In Summary: How to Think About the Cost of Living in Washington, DC

In a high-cost city, you likely will wonder at some point if you should move. Even if you earn a high income, the decision will feel emotionally charged and financially complex. What are you willing to give up to live near family? To walk to a unique, fulfilling job? To access a variety of cultural amenities?

You’ll want to think through what you want to prioritize. Then, you’ll need to navigate several challenging financial calculations: Consider these examples:

• Your housing costs may be high. Yet, you may save both money and time if you never need a car.
• How does Washington, DC’s universal pre-K education decrease your childcare costs?
• If you lived in a lower-cost city, would your adjusted salary be less, more, or about the same?

The list of considerations is longer than many people first realize. Ultimately, the choice depends on what you value personally and professionally. You can’t neglect your financial stability. But you also need to live your life.

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About Kevin Mahoney, CFP®

Hi, I’m Kevin. I’m the founder of Illumint and a financial advisor in Washington, DC. I specialize in financial planning for Millennials like you. As a Millennial father and Certified Financial Planner™, I empower our peers to invest with confidence and flexibility. If you’re new to Illumint, I’m glad you’re here – you now have access to free personal finance tips written specifically for Millennial parents. I encourage you to read, watch, or listen to the ideas I share about exchanging your money for memories with your kids. And then when you’re ready, please send me your thoughts & questions!