Financial Samurai posed the following question not too long ago, “How do people live a comfortable life making less than six figures in expensive cities”?
Judging by the fact that over 8 million people live in New York City, I’m guessing a good number manage to figure it out. Are all those people living beyond their means – accumulating credit card debt and living the high life for the opportunity to say “I’m a New Yorker”?
After living in NYC for over ten years, I have come to learn that New York City is as expensive as you want it to be.
Sure, I’d love if it were cheaper to live in New York City, but by the same token, there are ample resources available in the Big Apple to reduce expenses and cut out entire expense categories you’d have to budget for elsewhere – bye, bye car payments.
This sample budget is meant to reflect a comfortable yet frugal New York City lifestyle for a single adult.
You won’t find fine dining or the trappings of luxe living in these numbers, but you may find that the great opportunity that is living in New York City doesn’t cost nearly as much as ill-informed speculators and the media frenzy would have you believe.
Rent: $900/month. This is a totally reasonable price to pay for rent in New York City, even in parts of Manhattan.
No, you won’t be living alone, but you can certainly get your own room in a fairly spacious apartment for under $1,000/month. Some prime neighborhoods for affordable housing include Washington Heights, Inwood, and Harlem (my neighborhood) in Manhattan – Astoria and Long Island City in Queens – Bushwick in Brooklyn- and Weehawken and West New York in New Jersey.
Rental Insurance: $10/month. Renters insurance protects you and your belongings in case of disaster, theft or vandalism. And yes, it’s the kind of insurance that’s totally worth having. And it’s super cheap, provided you don’t have anything too fancy in your new digs that requires extra insuring.
Utilities: $50/month. Heat and hot water are generally included in the price of your rent so that leaves gas and electric. Again, having a roommate or two can be tremendously helpful in cutting down this cost. Even with some A/C use in the summer, an average of $50 per month, per person is a reasonable expectation.
Internet: $30/month. Again, splitting the cost with a roomie and only worrying about internet rather than a full premium cable package keeps this expense low without much sacrifice. Thank goodness for Netflix.
Cellphone: $75/month. The national average cell phone bill is $73/month, though there are definitely major savings to be had in this category.
Transportation: $116.50/month. Unlimited Monthly Metro Card. (*as of 2016)
Groceries: $300/month. I’m basing this off of my monthly grocery bill. I shop at Trader Joe’s and buy a lot of organic fruits and veggies, but you can probably eat for significantly less.
Laundry: $15/month. Most New Yorkers don’t have access to a washer/dryer. I’ve gotten really good about heading to the laundromat only once every 3-4 weeks to bring down my costs. The trick is to own lots of socks and underwear, you can re-wear just about everything else.
Health Insurance: $328/month. Average cost of health insurance for a middle tier health plan on the exchange (note that these numbers change each year).
Personal Care/ Cleaning Products: $50/month. My occasional Amazon orders of contact solution, razors, deodorant, make up, toilet paper and other personal care and cleaning supplies generally average out to around $50/month. (I also go through the Ebates shopping portal to score some additional cash back on all my orders).
Miscellaneous/Discretionary: $200/month. Classes, business expenses, new clothing, postage, gifts, dental cleaning, prescriptions, etc.
Entertainment/Play: $100/month. Happy hours, dinners out, theater, social meet ups, Netflix, etc. (Check out my suggestions for keeping your entertainment budget under $100/month).
Short Term Savings Goals: $100/month. Emergency fund contributions and short/medium-term savings goals.
Long Term Savings/ Debt Pay Off: $250/month. Retirement contributions, long term savings goals, and debt pay off.
Total: $2,524.50 per month
That’s $30,294 per year, after taxes – which means that to live a reasonably comfortable life in New York City, a single person would need to make a salary of roughly $40,000 per year.
Now, this is a comfortable (though far from indulgent) budget. You can absolutely employ strategies to reduce the cell phone bill, the entertainment budget and utility consumption, among other things.
If you’re having a rough month, you can adopt a “make or break” budget , reducing discretionary spending and savings contributions to fund necessities only.
There are all kinds of ways to rearrange and reallocate the above numbers for your specific needs and values, but for the sake of answering the question of how much you need to live in New York City comfortably, as a single adult, while still preparing for a financial future, these numbers are a solid starting point.