In 2013, I had three job offers in front of me and a decision to make about where to build the rest of my career.
One of them was in the San Francisco Bay Area. I’d spent seven years advising clients in Los Angeles, and I knew moving here would mean a higher cost of living and one of the most competitive housing markets in the country. I took the leap anyway, and over a decade later, I know I chose well.
Many of you have made that same trade-off. You took the role, promotion, or pre-IPO offer, choosing to build a life in Silicon Valley. The energy and career opportunity here is unbeatable, and it requires balancing high earnings against incredible cost pressures.
Still, virtually no one I work with is chasing wealth for its own sake. They want to build a lasting life for their families. That’s why my first question for every new client is simple: What does setting roots mean to you?
For some, it means a home to raise their children. For others, it is deep community ties or building a sustainable career that lasts until retirement.
Living and building wealth in the Bay Area comes with its own set of challenges, and having a clear idea of what you’re working toward makes those decisions a lot easier.
PART ONE: WHAT’S DIFFERENT ABOUT A BAY AREA FINANCIAL LIFE
Four unique factors shape a Bay Area financial life:
- Equity that exists on paper. RSUs and stock options can represent a large share of your net worth long before they represent money you’re able to spend. Whether your company is public changes the planning entirely.
- Costs that absorb a high income. Everyday costs like housing, food, and childcare all run well above the national average in the San Francisco area. You can earn a high income and still have very little discretionary cash each month.
- Compensation that arrives unevenly. A lower base salary paired with large bonuses or equity awards is common in this market. Your annual income may look strong while your month-to-month cash flow feels unpredictable.
- High taxes. California’s top marginal income tax rate is among the highest in the country, added on top of federal rates.
What makes these harder to manage is that none of them stand alone. Cash flow, tax planning, investment management, insurance protection, and estate planning are deeply interconnected. Focusing on just one piece often leaves the bigger picture strategy overlooked.
How Do I Plan Around Equity I Don’t Have Yet?
Say you want to buy a $2.5 million house on the Peninsula, and a meaningful share of your net worth is tied up in company equity. What we do next depends on whether your company is public yet.
– If your company hasn’t gone public yet
You cannot buy a house with RSUs from an early-stage startup that isn’t public. You can only count on that money once it’s received, and until then, it isn’t part of what you have available to you.
What you can do is establish a goal anyway. We can still build a savings plan toward that down payment using the income you do control. And if a liquidity event happens, you reach it much faster than you otherwise would have.
– If your company is public
Now your options are liquid, and the work shifts to sequencing. You can turn shares into cash, so what you need is a clear plan to unwind the position over time while managing the tax liability that comes with it.
If your goal is a house, that means gradually liquidating stock to secure the down payment rather than selling a large block at once and absorbing the tax consequences in a single year. Pacing gives us room to coordinate those sales with your other income, your charitable giving, and the rest of your plan.
Additionally, when a large share of your net worth depends on one company, your household finances and your employer’s performance tend to move together. Reducing that overlap gradually, through a preset selling schedule that continues regardless of where the stock price sits on any given day, is one of the more useful things we can do together.
GO DEEPER: CONCENTRATED EQUITY
What to Do When Too Much Money Is in One Stock: An Executive Decision Guide
How I walk executives through a concentrated position when there’s a deadline attached.
Why Does a High Income in the Bay Area Still Feel Tight?
Because a strong income in this market doesn’t always translate into discretionary cash. Housing is the obvious pressure, and food, healthcare, childcare, and private school all run high here. Once you’ve covered them alongside your mortgage or rent, there often isn’t much room left over.
What I look for first is whether there’s a strategy in place at all.
When someone with a strong income and substantial assets comes to me for the first time, what I usually find is a lack of strategy, or a set of decisions that don’t align with one another. High-income earners are busy, so personal finances tend to fall to the background. Assets end up spreading across accounts that were opened at different times for different reasons and never organized into anything coherent. That’s the part I can take off your plate.
How Do I Plan When My Compensation Arrives Irregularly?
When most of your annual income arrives in a few large sums rather than spread evenly throughout the year, planning around a monthly number gets harder than it sounds.
To counter this, we help you map when your income is expected to arrive, size a cash reserve to bridge the stretches in between, and coordinate your withholding and estimated payments so a large bonus or vesting event doesn’t become a surprise in April.
The part I care most about is timing. When we know what’s happening in your life and what to expect, we can plan far more effectively. If you want to buy a home or gift money to your children, I want to know several years in advance so we can sequence it in a tax-efficient way rather than reacting after the fact. Coordinating directly with your CPA is a large part of how that happens.
GO DEEPER: COORDINATED TAX PLANNING
Why Your Financial Advisor and CPA Should Be Talking
What becomes possible when your advisor and your CPA are planning from the same set of numbers.
How Do California Taxes Impact a High Income?
California’s top marginal income tax rate is among the highest in the country, and it applies on top of federal rates that already climb steeply at high income levels. Add the net investment income tax, and the combined burden on your last dollar earned can be substantial.
What surprises people more than the rate is the timing. When your income arrives from several sources (a base salary, a bonus, vesting equity, and investment gains), withholding rarely keeps pace with what you owe in April.
That’s the part we can manage together. We review your withholding through the year rather than at the end of it, coordinate estimated payments for income beyond your W-2, and look for the opportunities a high tax rate opens up, such as donating appreciated stock instead of cash, grouping charitable contributions into a single year, and timing equity sales around the rest of your income.
GO DEEPER: TAX PRESSURE ON HIGH EARNERS
5 Hidden “Tax Traps” for High Income Earners
The withholding shortfalls and missed opportunities we see most often in high-income households.
Those four pressures don’t stay abstract for long. Sooner or later, they show up as a decision you have to make.
PART TWO: THE DECISIONS THESE PRESSURES SHAPE
Should I Buy a Home in the Bay Area, or Keep Renting?
It’s one of the more common questions I get from clients, and the answer usually becomes clearer once we work through the numbers together.
- We start with the upfront costs (down payment, renovation, and furnishing). These are the numbers people tend to underestimate. If you don’t have the funds yet, then the planning question becomes how can you save toward the goal and on what timeline.
- Next, we evaluate the monthly costs of owning, including principal and interest, property taxes, insurance, and maintenance. We can add those together and compare the total against what you’d pay in rent.
In the beginning, owning a home will generally cost more each month than renting. The decision in front of you is whether that premium is something you want to pay in exchange for having a place of your own, building equity, and participating in the property’s appreciation and growth over time.
– How long do you plan to stay?
This is where setting roots becomes practical. If you’re planning to be here longer than five years, buying deserves a close look, because you have enough time ahead of you for ownership to work in your favor.
If you’ve just moved here, I’d recommend waiting at least a year. Give yourself time to see whether you plan to stay long-term, which neighborhoods you prefer, and whether you want to commit to this career path over the long haul. A year of renting costs far less than buying in the wrong place.
GO DEEPER: PROPERTY DECISIONS
Is Now the Right Time to Buy a Second Home?
Three client stories on timing, family priorities, and knowing when a property isn’t the right fit.
Should I Leave California for a Lower-Tax State?
For clients with substantial W-2 income or investment gains, the difference between staying here and moving to a state with no income tax can look significant on paper. That comparison lands on my desk regularly, usually when retirement is on the horizon or when a new job opportunity is pulling someone out of the area.
What I’ve observed is that people rarely leave California over taxes alone. There’s usually a tie somewhere else, like family, a place they grew up, adult children and grandchildren, or a specific opportunity. When someone raises the idea for purely financial reasons, we talk it through and model it against a range of what-ifs, and most clients then decide to stay.
We take the question seriously either way, and use modeling tools to help you find a clear path forward.
GO DEEPER: LEAVING CALIFORNIA
Should You Leave California for a No-Income-Tax State?
How we model home sale timing, the residency requirements, and the long-run tax picture.
What Happens When I’m Ready to Leave My Company?
Almost every Bay Area career has an exit in it somewhere, whether that’s a planned retirement, a move to something new, or a decision made for you. Planning for these moments ahead of time allows you to meet them from a position of steadiness rather than urgency.
Two versions of this come up most often. One is the professional watching their industry with some unease, wondering whether their role is secure and what their equity will look like if the stock doesn’t recover. The other is the executive who has the financial freedom to leave and is trying to work out what comes next, which turns out to be far more about identity and purpose than about money.
Both are easier to navigate with a cash reserve already in place, a plan for your equity, and a clear view of what your plan can support. We can put those in place while a paycheck is still arriving and the pressure is lower.
GO DEEPER: CAREER TRANSITIONS
Leaving Corporate America: Deciding What’s Next for Your Life and Wealth
Designing a path out of a long career, and what to have in place before making the transition.
You don’t have to have all the answers yourself. The right team can help you work through the decisions and stay focused on the bigger picture.
PART THREE: WHO PLANS THIS WITH YOU
What Should I Look for in a Bay Area Financial Advisor?
Most of the people who come to us have had an advisor before. What they typically had was investment management and very light financial planning, which left the larger picture with no one watching it. Their previous advisor wasn’t proactive about reaching out as things changed in their lives, so planning happened after decisions were made instead of before them.
Comprehensive planning catches the decisions a transaction-focused relationship misses. Because your finances move as one system, working on them together tends to produce different answers than working on any one piece alone. A tax decision made without knowing what’s coming up in your cash flow lands differently than one made with that context. A real estate decision made without knowing what your equity is about to do can commit you to the wrong timeline. Those are the moments our team are proactively watching for.
I was told once that we leave no stone unturned, and that’s the standard I hold our work to. Clients are consistently surprised by the thoroughness and the clarity we consistently provide. We simplify the complex information, lay out clear pros and cons, and make it easier for you to make important financial decisions.
– Why it helps that we’re based here
We have a deep understanding of the local industry and of the growth or the pullbacks specific to this area. Because we live here and pay this cost of living ourselves, we understand the financial pressures our clients face from the inside. We know the local property market, tax regulations, specialized tax strategies, and cash flow dynamics of high-income earners here, because they’re ours, too.
Our Bay Area office is in Foster City, and you’re welcome to visit us there.
GO DEEPER: CHOOSING AN ADVISOR
Seven questions to bring to any advisor you’re evaluating in this market.
Conclusion
If you’re already working with us and something has shifted, a promotion, an offer, a house you’ve started looking at, or a liquidity event on the horizon, reach out to your advisor. Earlier is better than later, because more of the plan is still in front of us.
And if you’re not yet working with Team Hewins, I’d welcome the chance to hear where you stand and meet our team. We can talk through your full picture and show you what this planning looks like in practice, whether we meet at our Foster City office or connect virtually.
Still exploring? Click here to learn more about our philosophy and our people.
Team Hewins, LLC (“Team Hewins”) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Certain information provided herein is based on third-party sources, which information, although believed to be accurate, has not been independently verified by Team Hewins. Team Hewins assumes no liability for errors and omissions in the information contained herein.