Updated: 7/15/17
If you live in an expensive city it’s easy for money to slip through your fingers like sand.
With $3,000 studio apartments, $16 cocktails, and gym memberships that cost as much as car insurance, it’s no wonder people say you need at least $200,000 salary to get by. These things can seem like unavoidable facts of city life. And they can add up fast.
But are they really unavoidable? And with a median income of $85,200 for a three-person family, how is the average person not only making it, but thriving?
Like everything else in life, it pays to question the “default” way of doing things. Because spending half your salary to live in Manhattan is asking for a paycheck-to-paycheck lifestyle.
I think you can do better than that.
With a little resourcefulness and a few life hacks, saving money doesn’t have to be about eating ramen at home every night or saying goodbye to your social life. You didn’t move to a city to live like a hermit, so why bother if you don’t take advantage of all it has to offer?
So here are some ways to save in an expensive city without totally hating your life. Oh, and I’ve included some NYC-specific suggestions for maximum usefulness, but the principles can apply no matter where you live.
When It Comes to Housing, Live Below Your Means
If there’s one thing on this list to focus on getting right, make it this one. I’d argue that if you knock this one out of the park, you could even slack off on all the other tips. Here in NYC, landlords have this rule where your salary has to be 40X your rent. So, for example, if I was making $50,000, the most I could “afford” would be $1,250. That’s about 30% of your gross pay. Any more than that and HUD thinks you’re rent burdened.
My idea: try to pay no more than 20% of your gross salary on rent. That’s right. A full 10% less than the norm. How the hell? If you can’t live alone without spending 20% or less, find a roommate situation in your favorite neighborhood. If you do want to live alone, live further out in a less-happening neighborhood. Here’s why:
Both savings and expenses compound over time. For example, at one point I made enough money to live alone and pay up to $2,000 a month. However, I continued to live with my two roommates and paid no more than $950 per month. This means I was banking an extra $1,050 per month, which turns out to be $12,600 a year. What would you do with an extra $12,000 a year? You could buy 6 designer bags. Or go on 8 vacations a year. Or invest it all and make even more money. So, if you’re paying more than 20% of your salary on rent, make sure it’s a conscious choice and that it’s truly your top priority.
And when it comes to your living situation, it pays to be insanely thoughtful before making a decision. Because moving costs money. Packing and purging blows. Having to pony up a new security deposit is painful. Humans are creatures of comfort. When we’re settled in nicely in a luxurious apartment, most people would just stay put, unless they absolutely had to move. Housing is the one decision that’s the hardest to change, so take the time to get it right in the first place.
Which leads me to my next point…
Don’t Rely on Brokers to Find Your Apartment
I have not paid a dime in brokers’ fees in NYC. Most brokers will charge you 15% of the annual rent. So, if your rent is $2,000, you’d have to pay $3,600 in fees. Just because the broker has access to listings you don’t. So doing the work to find your own apartment can save you thousands. If you’re looking to live alone, focus only on the ‘By Owner’ section of Craigslist. If an apartment is by owner, it’s most likely going to be a small-time landlord. Small-time landlords will be more concerned about keeping good tenants and will be less likely to jack up the rent on you. For example, my SO has lived in the same 2-bedroom apartment for almost 7 years. And it’s owned by, you guessed it, a small-time landlord. When he moved in the rent was $2,450. Seven years later? It’s $2,550. So that equals about a $14 increase each year, which is excellent. Meanwhile, our neighbors who moved in two years ago pay $2,800 for the same exact apartment.
Want a 100% fool-proof way to avoid thousands of dollars in brokers’ fees? Then shack up in an established apartment with roommates.
When It Comes to Food, Explore Other Neighborhoods
Convenience comes with a cost. Don’t buy food from the bodega around the corner from your apartment. That’s how you end up with a $10 pint of ice cream. Look beyond your neighborhood, and you’ll find your grocery bill drastically reduced. Trader Joe’s might not be in your neighborhood but maybe it’s on the way home from work. Chinatown is also a great place for ethnic ingredients and super cheap produce.
Stock Up When There Are Sales and Shop Online
There’s no reason to ever buy toilet paper or paper towels full price. If you prefer a brick-and-mortar store, only buy these items when there’s a sale at your local pharmacy. I had a Rite Aid near me, and I would always check the weekly flyers online to see what was on sale. If you’re buying in bulk, Amazon has some great deals, and their Subscribe and Save program can save you up to an extra 15%. Take advantage of new customer discounts at Google Express, FreshDirect and Peapod. By signing up for Google Express I got Whole Foods to deliver a huge jug of oil that I normally would have had to pay them $9 to deliver. And yes, we have a Costco in Sunset Park. Personally, I couldn’t find enough stuff to buy to make it worth the membership fee, but this could make sense for others in the city.
Already used up the new customer discounts? So, create a new account with a different e-mail address.
Maximize That Metro Card
If you live in a major city, you probably have an excellent transportation system. For us New Yorkers, it costs $2.75 to go from the southernmost corner of Brooklyn all the way to the opposite corner in Manhattan. That’s a total steal. If you have a regular 9-5 job outside of the home, swipe that monthly metro card like there’s no tomorrow. If you work from home or have an irregular schedule, a pay-as-you-go card might make more sense for you. Supplement as necessary with a bike for close-by trips.
Cabs should only be used when it’s late and you feel unsafe where you are, or if you’re running late to something important.
Find Friends Who Are Frugal
If your friend group is super spendy, well, it’s going to take a ton of willpower to be frugal when you’re around them. First, don’t feel the urge to keep up with other people. Understand that they may not have the same financial circumstances as you. They could have financial help (let’s face it: so many people in NYC do!), credit card debt, or might be living paycheck to paycheck. If they’re constantly suggesting expensive activities, they probably don’t know you’re trying to be frugal. Be honest with them. If they’re real friends they’ll make an effort to find more affordable things to do, or will understand when you turn them down every now and then.
Always Check Happy Hour Deals
Let’s be real: you’re going to go out for food and drinks no matter what. So pick a place that has a happy hour. There are plenty of sites that list happy hours, but I’ve found the most accurate source is Yelp. Use their filters to pinpoint an area and either use the ‘happy hour’ filter or search for ‘happy hour’. And happy hours don’t apply just to food and drinks, either. I’ve been to a couple birthday parties at karaoke spots and spent half the usual price just by going a few hours earlier.
Pro-Tip: Places with good happy hours tend to close down after a while, so before heading out, call places first to make sure the deals are still happening.
Make Your Own Coffee at Home
At $2.50 per cup bought every week day, that’s $600 a year. My SO used to buy a coffee out every single morning. One of the first things he did to cut down on spending was buy a $20 coffee maker where you could program the brew time. That way we can set it up before bed and we wake up to the smell of freshly brewed coffee. Best decision ever.
Don’t Ever Buy New Furniture
After moving into a new place, your next step is to buy furniture. But why does it have to be brand new? Aside from your mattress (because eww, bed bugs), stalk secondhand furniture from Craigslist. Think about it: there are tons of people in the city with high-paying jobs and discerning taste. That means you’re more likely to find more variety and better-quality items when you live in a city.
Yet another plus for living with roommates is the common areas in the apartments will most likely already be furnished. That means you’ll only need a bed and a desk for your room, which is a lot more manageable than furnishing an entire apartment.
Work Out for Free
Yeah, you might see a celebrity at gyms like Equinox and SoulCycle, but they can cost hundreds of dollars a month. If you’re on a budget, consider joining a sports team, using a workout app like Workout Trainer to exercise at home (which I used to do), or volunteering your time for discounted classes. I personally love street running, as it helps me see the city in a new way.
Get Creative With Date Ideas
Controversial opinion: Dinner and drinks is pretty played for a first date. Also, do you really want to drop $80 on someone you don’t even know? Someone you probably will never see again? My favorite first dates were just going for a walk in a park, or even walking around the city.
We Have Amazing Libraries. Use Them.
You’ll never need to a buy a book again. With dozens of libraries in the city, all you have to do is reserve an item online and it can be delivered to your branch of choice when it’s ready. Borrowing e-books is my favorite thing ever because hello, instant gratification. Aside from books, libraries are great place to hang out and browse. The Netflix options are crappy this month? The library has tons of DVDs you can rent out. For free. Japanese fashion magazines? We’ve got those, too.
Free Events Are Everywhere. Look Them Up.
What cities lack in affordable housing they make up for in the sheer number of free and low-cost events. In NYC, there’s almost never a reason to pay the admission fee to museum. Check the list of free museum days. And subscribe to The Skint, which sends out a daily e-mail of the best free events happening around the city. Also follow your favorite brands on social media. I personally follow a lot of fashion brands, because that’s what I’m into.
Other excellent events sources:
Plan Ahead, Always
Going out for the day when it’s 80 degrees out? You’re probably going to get thirsty. Bring a water bottle with you so you don’t have to buy water when you’re out. Headed to the club? Pre-game at home first. Hitting up a cocktail bar? Have a drink limit in mind. I personally won’t buy more than two drinks when I’m out. Tired from work and want to gorge on Seamless? Hey, we’ve all been there. Eat half of what you ordered and save the rest for lunch.
Take Advantage of Work Benefits
Wanna be smarter than 99% of your coworkers? Then take the time to read your benefits package from cover to cover.
By enrolling in my company’s pre-tax transit program, I’m saving about $30 a month on commuting costs. That’s $360 a year.
My SO’s company offers $8 movie tickets. Retail cost for movies here is about $15, which is crazy. My company also offers discounts to gyms, even high-end ones like Equinox. Don’t over pay because you didn’t take an hour out of your day to educate yourself on benefits you’re entitled to.
Keep Your Eye on the Prize
You moved to the city for a reason. Probably because of the countless opportunities that the city offers. Maybe you wanted to work in fashion. Or act on Broadway. Or work on Wall Street. When living here gets hard (because it will), then remember why you moved here in the first place. When it’s late and cold outside, and it would be so easy to pay surge pricing for a car ride home, thinking about the goals you’re trying to achieve will help avoid temptation.
Final Thoughts
When it comes to city living, strategically focus on your biggest expenses, like your housing situation. Doing this alone could result in thousands of dollars in savings. And with a little bit of know-how and an opportunistic attitude, enjoying the city doesn’t have to cost a dime.
What are some ways you save in the city?
Images: The Luxe Strategist
