Budget Guide: How to Afford Living in NYC

Budget guide NYC
(Source: Asim Bharwani via Flickr Creative Commons)

No matter how you slice it, living in New York City is expensive. But as the old axiom goes, you’re paying for “location, location, location.” And when it comes to the preeminent location for career development, diversity, culture and night life, well, you just can’t beat New York City. Regardless of how much or how little you make, it’s important to be honest with yourself about your financial status, keep your largest expenses (housing and transportation) as low as possible, and – most importantly – set a BUDGET.


The 40x Monthly Rent Rule

Although there have been recent reports that NYC’s rental market is leveling slowly (very slowly), rents are still insanely expensive; across Manhattan, Brooklyn, and Queens, median rents are still well above $2,500. To set an affordable budget, you should spend no more than 30 percent of your income on rent. Ha! Sorry, Mom and Dad, but in New York City, most people shell out way more than that. According to one study, the typical burden of rent in New York City is a terrifying 65 percent. Even though this is a city-wide average, you would be well advised to spend less of your income on rent. That sort of rent-to-income ratio is insupportable especially for single people living on a low budget. A more realistic target would be about 40 percent, which is what landlords usually require. Check out this helpful guide to calculate what’s affordable for you when you use the 40x your monthly rent rule. If you can’t hit that threshold, there’s always the option of bringing in a guarantor – but be absolutely certain that your monthly budget can withstand a higher rent.

Expect roommates

Maybe even multiple roommates. Living with other people is a great way to cut down on costs. For one thing, your rent will be cheaper and you’ll also split utility costs. If you can’t find a roommate through your network of acquaintances, sites like Craigslist and Listings Project make it easy to find like-minded people. Just make sure you’re on the same page regarding division of costs: Can you agree that you both want to pay for cable? Will you divide the rent evenly if someone’s room is much bigger? Consider living in the outer boroughs if you’re cutting costs as you’ll get more bang for your buck.

Be Ready to Pounce

The rental market in New York is famously cutthroat. You may see an apartment in the morning only to have another person sweep in with an offer in the afternoon. Make sure to have all your paperwork with you when you see apartments and be prepared to put in an application right away. That being said, if you have the luxury of time when you’re looking for a place, take advantage of it. There are hidden gems in the market, but it takes time to find them.

Moving Costs

Keep in mind that your moving costs will be high. Landlords usually require first month’s rent plus a security deposit. Then you also need to factor in hiring movers and potentially buying new furniture. Make sure to take those costs into account when you’re considering a move.

Budget NYC
(Source: Chris Goldberg via Flickr Creative Commons)


For a comprehensive look at the cost of living in New York, refer to this guide. Once you get the big cost of housing out of the way, it’s time to turn to the other major expenses, starting with transportation.

Transportation on Budget in NYC

First things first: do you own a car? Because it is time to seriously reconsider whether you need one. Monthly payments for insurance add up (insurance prices are much higher in NYC, unsurprisingly), and then there are the inevitable tickets you will accrue when you miss an alternate side of the street parking day. Not to mention gas and trips to the mechanic. God forbid your car gets towed.

If you’re saving your car just for the occasional day trip on the weekend, remember that Metro-North gets you to the most beautiful parts of the Hudson Valley very conveniently – and cheaply! If you use public transportation every day, definitely invest in a monthly MetroCard. And if you’re looking to combine your daily commute with your daily workout, Citi Bike is a cheap and environmentally conscious way to get around the city.

Take Stock of Your Expenses

As painful as it may seem to create and adhere to, your monthly budget is your friend. Analyze your monthly costs: rent and transportation, groceries, credit card payments, student loans, and what you put into your savings every month. What you have left is your discretionary fund, which you should feel free to spend on movie tickets, shots at the bar, trips to the museum, or whatever else your heart desires.

Budget Guide NYC
(Source: Devyn Caldwell via Flickr Creative Commons)


This next piece of advice comes with a word of caution: Get a credit card. Many banks have great deals on points for cash back or travel, so if you travel a lot for work or do most of your shopping with plastic, it’s worth looking into. Just make sure to always pay your card off every month. Living on a strict budget can be a slippery slope to credit card debt, so if you don’t think you can control your spending, maybe skip the credit card.

If you use a debit card – and most of us do – sign up for a bank with low ATM fees or one that doesn’t charge you fees for using other bank’s ATMs. Locate your bank’s local ATMs and try to do all your withdrawals there, so you don’t get slammed with exorbitant fees from bodega ATMs.

Join the Sharing Economy

Our new digital world is more and more inclined to the sharing economy. There are many opportunities for sharing subscriptions with friends, be it Netflix, Hulu, or the New York Times online. Become friends with your neighbors and consider sharing wifi, split a CSA membership with your roommate, commit to only taking Uber Pool. Sharing is caring, and your bank account will thank you!

What Can You Live Without?

The final step in streamlining your budget is accepting what you can live without. You may have already bit the bullet and dumped your car, but now turn to the smaller things that can be a drain on your wallet. For example, do you really need Amazon Prime? Should you be consistently taking cabs home late on Saturday night? Is that new pair of shoes really necessary? The good news is that you live in New York City, and there will never be a shortage of fun cultural activities you can do for free. You may be broke, but at least you live in the greatest city in the world.