I have been living in New York City for the past 5 years, earning what most people working in tech would consider to be very modest salary for the city.
From my calculations, I have made an average of $44,500 a year before taxes over the past 5 years, which has ranged from salaries of $24,000 to $75,000. Despite the general high tax rate and high cost of living, I have managed to save my first $100,000 after 4 years of living and working in the Big Apple.
I moved to NYC right after I graduated from grad school, with no job. With no student debt and still under my parents’ insurance for another year, I had freedom that isn’t available to many of my millennial peers. With relative health (which isn’t saying much, given my recent scuffle with brain surgery and brain injury), part time babysitting gig for $15/hour, and a sublet secured in the Upper East Side for half a year, I began my life in the big city.
In the past 5 years, I estimate that I spent around $1,200 ~ $1,500 a month on living expenses, ignoring extraneous costs like travels, medical fees, or large purchases. This, I think, is pretty reasonable cost of living for most people, even for those in the suburbs.
I’ve definitely scaled my life up little by little over the past few years. Which, to an extent, I think is healthy. I really shouldn’t be living the same way I lived when I was making $25,000 a year when I make $75,000 a year now. And I have a bit of a hoarding and numbers addiction, so I think I am one of those rare people who need to “loosen up” a bit more rather than get nitty-gritty with my dollars.
Living on $1,500 a month has been a challenge that a few friends and I are embarking on in 2019. This allows me to save one paycheck a month, as my take home is around $3,000 a month.
Let’s explore how I do this… Both on where I cut down costs and where I don’t. I’ll even share my average monthly budget at the end!
My rent is $810 a month. There is a lot of talk about the Latte Factor (which I don’t discount), and the virtues of saving little here and there, nibbling a dollar there and a dollar here off the daily spending. But for most of us, rent or mortgage is the highest monthly cost. So rent is what should be tackled first, and chances are, you can keep your $4/day latte and still come out ahead.
My rent is very low and affordable rent for New York City. I don’t live in Manhattan (though when I used to live in Upper East Side, my rent was $750 a month for my room in a 4 bedroom/2 bathroom duplex), which helps to bring down my rent. When I first moved to Queens, I had a bedroom in a 4 bed/1 bath apartment with someone living in half the living room with suitcases and curtains as walls for $500/month. My rent for the bedroom was $750 a month.
Few months later, because the windows wouldn’t close, the ceilings were caving in, and they turned off heat at 6PM every evening in the dead of winter (and it was the year of the Polar Vortex and lots of snow), I moved out of that apartment, and moved to an apartment I signed the lease for myself. My previous apartments were sublets or room shares. This apartment was officially my own!
It was a 2 bedroom apartment for $1,670 a month. And I technically could afford it. I was making a salary of $37,000/year, and if I didn’t save any money, I could just make it, especially with my tutoring side hustle.
But of course, an arrangement like that would be way too anxiety inducing for me, so I got a roommate. I’m about to complete my 3rd year in this apartment, and for as long as I live in NYC, I don’t think I will be moving.
I found out after the 2nd year that this apartment is rent subsidized, which means there is a limit to how much the landlord can increase your rent every year. In the 3 years I have been living here, my rent has gone up by $20/month. A marked difference from hundreds of dollars my friends’ apartments jacked up for their rent every year.
In the past 5 years living in New York City, my rent has ranged from $750 to $850 a month. With utilities and wifi, my housing costs are around $900 a month. I believe my salary tripling while keeping my rent the same has contributed greatly to my ability to save.
This coming spring, my rent will probably go up again when I sign the new lease. But even then, my share would probably be no higher than $820 a month.
Of course, every time I see my friends’ apartments or I see a new development, I get FOMO, lusting over having a nice new apartment, fancy gym, office area, elegant reception, maybe even a pool… But then I do the math, and decide that my apartment is “good enough,” and maybe when I have enough of an income stream, I can find an apartment that actually has natural light…
Single with No Debt
Ok, so I said rent is probably the biggest factor, but depending on the amount of debt you have, this might be the actual biggest factor. Having debt, student, consumer, or otherwise, obviously HIGHLY impacts your ability to save and spend.
I don’t have a mortgage (though that would kind of go with the rent aspect) because I can’t afford to buy anything in the city. I don’t have car loans because I don’t need a car. I don’t keep credit card debt, and I got out of college debt free because my parents paid for college.
I don’t have much experience in this except maybe up to $10,000 in credit card “debt” that I cleared up in span of a few months from a trip to Paris last fall, so I won’t talk much about it. (I don’t even really consider it “debt” because I paid it off in full with no interest being levied. Got me a lot of points though!)
But definitely having no debt and no liabilities really help. And not having anyone depending on me to be fed or clothed. (I USED to have an ex boyfriend whom I was housing for free, but thankfully that life is way behind me now!)
Track Spending, Use Cash
I constantly do a back and forth on tracking my spending, because as I mentioned above, I can get a little neurotic about numbers. (I had to stop wearing a Fitbit for a while because I got too obsessed with the numbers and had to quantify every movement. Now I have the Fitbit Versa, and am a lot more chill about it.)
But for at least the first few months of 2019, especially because I am participating in the budget challenge, I have been writing down everything I spend money on, both in my Bullet Journal and a Google Sheets spreadsheet.
I wasn’t sure if I should introduce more work (having to write it down AND put it in a spreadsheet) into a habit that is already out of my way, but at least in the past month and a half, I feel like my annoyance at having to do extra work every time I spent money has been a positive deterrent in spending impulsive cash. Not sure how long it will last though!
In the same vein of being more accountable for where my hard earned greens disappear, I’ve been living on cash for my daily living expenses (like food and laundry). It’s definitely upped my accountability to have to fork over real cash instead of swiping a card! I’m not anti-credit card by any means (I think it’s a great tool), but for this period of my life where I’m trying to stabilize my spending, using cash has been a great deterrent for overspending.
Pay Myself First
I can live on $1,500 a month or less because I don’t have anything more to spend. Every month, I pay myself first. I max out my 401k and my HSA. Those are automatically taken out of my paycheck so I never see them, but they accumulate in my separate accounts.
Since I get two paychecks a month, I do an automatic transfer of $1,500 a month right after the first paycheck of the month hits my checking account so that I never “see” that either.
By setting up the withholdings and the automatic transfers, saving money and investing in my future and medical costs (which are high, but completely covered by my HSA fund every year thanks to maxing it out) becomes a mindless routine that I never have to worry about. The system takes care of it all for me, so I just have to focus on not spending more than what is remaining in my checking account.
It’s amazing how much you can achieve when you don’t have a choice! Don’t make yourself manually save money; automatically transfer a set amount so your brain starts working around that constraint! You’ll probably be surprised that it’s not as hard as you think!
During the first few years of my life in the city, I had a rule for myself that a meal could not cost more than $12 before tax and tip. After tax and tip, a $12 meal would come out to be around $15. I didn’t order desserts or appetizers, and drank water.
Now, I’m not as strict with my eating out budget. Since I eat in so much recently, I am a lot more liberal with paying more for the food I want, instead of finding a cheaper alternative that might not be as satisfying.
I don’t drink. I can’t even begin to compute how much money I must have saved in the past decade because of this anti-habit. And I don’t smoke or do any other recreational drugs, which means I don’t have to worry about forking over bills to indulge in any of those activities. If you do any of the above, it doesn’t necessarily mean that you have to quit, but it does mean you’ll probably have to cut down on the consumption or cut things out in other places in order to keep up the habit while being mindful of the budget.
Food is a place that I try to not compromise too much. I am of the mind that food makes up who we are (literally), and enjoying food is important. But I also realize that I haven’t been eating very well the past few years, so I should cook more. With my new mindset of spending my money aligning with my values, I want to spend money on food I enjoy, but also eat healthier.
To combat the issue of not being able to cook with the need to consume more vegetables and “real” food as opposed to processed foods, I’ve started eating hotpot at home most of the week. This allows me to keep my grocery costs low, as I know exactly what I need to make a delicious pot of hotpot, and I love eating it.
I am blessed with multiple affordable grocery stores, 24/7 vegetable/fruit stores, and even a Japanese convenience store within 15 minute radius from my apartment. I think there is at least a dozen grocery stores within 10 minute walking distance from my apartment, and many of them are low-cost grocery stores (though I am starting to see a lot of organic grocery stores popping up these days). I have more or less determined which grocery stores sells certain ingredients for cheaper, and I make my rounds on Sundays so I can pursue no spend work-weeks most weeks.
My monthly budget for food, groceries and restaurants combined, is $500 a month, up from $350 a month last year.
Moving from Upper East Side to Queens meant the cost of food went down substantially, both for eating out and groceries. Honestly, the cost of groceries in UES was unattainable for me. Many times, it was cheaper to get something to eat at a take out and bring it home than to get groceries. Moving out to the outer boroughs was one of the best decisions I made, both for my mental health (less people/congestion/buildings) and my wallet.
It might seem strange for someone who is so keen to save money to spend extra money doing laundry. But in all honesty, I HATE doing laundry. I have to go to the laundromat down the street, and basically 2 hours of my life is spent shuffling back and forth every 30 minutes making sure my clothes aren’t stolen, and moving them from the washer to dryer.
Even if I did it myself, aside from the hours it takes (time is money!), it would cost me at least $8 a week to do the wash and dry.
Instead, I drop of 2 weeks worth of laundry at the laundromat in the morning to be done for me to pick up in the afternoon after work. This costs me around $20 each time, which is barely more per week than what I would pay for to do it myself. And they even fold the laundry for me so I can just transfer it into my dresser!
For me, being in the position of having to pay to do laundry anyways, it makes a lot more sense to recoup those 2 ~ 3 hours every week to do work that makes me money or resting.
No Car, No Uber
My monthly transportation costs are around $50 ~ $75 for commuting 2 times a week and some weekend travels. I used to have an unlimited metro card for $121 a month, but since I started working remotely 3 days a week, it didn’t make much sense to keep it. Instead, I cut my monthly contributions down to $80 which goes into a self-refilling metro card.
Instead of spending $121 a month on a metro card that “expires” every month, I use EasyPay MetroCard which refills every time my metro card’s remaining balance nears $20. This means that I am no longer “losing” whatever balance I don’t use. For a $121 monthly unlimited to break even, you need to commute 5 days a week AND use it on one of the weekends.
Unlike a lot of my peers, I also rarely user Uber or Lyft. The only times I use a ride share app are to go to the hospital (which happens once every 3 or 4 months now) and the airport (which happens even less often). Otherwise, I walk or take the train everywhere.
Walking is a hobby of mine, which helps keep me fitter and saves me money. Win-Win! And as I mentioned above, living in the city allows me to not have to buy, maintain, tag, or fuel a car, and I can keep my transportation expenses to a fraction of the cost of owning a car.
Until recently, when visiting DC, I would take discount bus for $15 each way. In the past year, I’ve “bouged up,” and began taking the Amtrak. It takes 2 hours less each way, is much more comfortable, and is rarely delayed. Sure, each ticket costs $50 instead of $15, but I’ve decided that for the amount of time I get back, bigger seats (better for my arthritis/chronic pain), less stress, and less threat of motion sickness (I seem to get it more and more often these days when on a not!train vehicle), it’s worth it. This only happens once every few months though, so I just have to have $100 on hand every 3 or 4 months to cover this cost.
One thing I am able to do more often now that my income has come up substantially is to say “Yes” to many “YOLO activities” that I would’ve never been able to accept before.
Like buying last minute Frozen Broadway Tickets because a friend visiting from California wanted to see it, or buying Sailor Moon the Musical tickets for a weekend-only appearance in March. (YES I DID, AND I HAVE NO REGRETS.)
I can take impromptu trips to Paris, buy 2 Hermès scarves (one as a gift, one for myself), and take my boyfriend out on a Michelin star KBBQ restaurant downtown for his birthday. I can donate to charity or friends in need without much thought. I can buy books friends publish to support them. I save enough to have enough money for things I think are important.
But I am also not afraid to say “No” if a spending or activity doesn’t meet my “values” criteria. If a lot of money and effort are on the line, but I don’t think I will enjoy it or get the amount of “value” I expect from that amount of money, then I decline the invitation or try to come up with a compromise.
If I am invited to happy hour, I will attend, but I don’t drink alcohol (now, I have a legitimate excuse because of chemo, but even before then, I just didn’t drink). I will try to accommodate if it’s just some money on the line, but if it’s a large amount of money or something I really don’t think I don’t enjoy, I decline.
I have to honestly have talks with myself to determine at what point I’m just being “cheap” vs “reasonable” and “pursuing my values.” It’s a definite tight rope to walk, and I don’t really know the answer yet. I guess it’s all a phase of growing up – to figure out what is being “cheap” and what is being “responsible,” both financially and with my time and energy.
Because I’m doing a challenge with friends, I created an average budget to keep my costs to around $1,500 a month. As I mentioned above, keeping my costs to or below $1,500 means I can save $1,500 a month via automatic transfer.
It adds up to $1,600 a month, if I maxed out every category. But aside from the set costs (like rent, wifi, Netflix, gym), I rarely max out any category, much less all at once, so I don’t usually run into too many issues. I would always rather over estimate my spending than under estimate for purpose of budgeting.
Are you curious about any component of financing my life in NYC on $1,500 that I didn’t go over here? Let me know! It might become my next topic!
The REAL Numbers
If you are interested in seeing this in action, head on over to my Monthly Updates for my Spending, where I break down how much I spent that month on what!