I recently wrote a guest post for Zero Day Finance detailing my salary growth in only three years of working. Today, I’d like to provide a proper breakdown of my average monthly expenses, to be used as a benchmark for those looking to move here or others trying to estimate what a frugal (but reasonable) financial breakdown in an expensive city looks like.
I make a solidly middle-class salary here in NYC (thanks to The Luxe Strategist for the article find). It’s well above the median household income in the US, but in this city, money goes fast. I’m above the $75,000 national happiness threshold for the US, but below the state-adjusted threshold for my area.
My company’s 401(k) plan is pre-tax only. After retirement contributions, taxes, and insurance, my monthly take-home is $4,085. With my recent big pay bump, this is a $750 increase in take-home income. I intend to have 100% of this increase go towards future Jane, and keep my current expenses unchanged.
Total monthly expenses: $1,935 ($2,935 when including debt repayment).
This may seem unconventional, but I count my debt repayment under savings as opposed to expenses. I should probably switch it, but I’m on track to be done with my debt in just three more months, so it doesn’t really matter at this point.
The unavoidable basics:
Rent. If you’re looking to living in Manhattan, or really anywhere in NYC, it’s far more realistic to budget $1,800 a month for housing. I am in a unique and extremely lucky position of paying essentially nothing for rent. Ian and I split the monthly condo fee for our apartment. This is less than what I was paying in rent when I moved up from Northern Virginia. A one-bedroom place in Manhattan can go for $1,800+. I know people in Brooklyn who have rents that range from $1,000 (a small two-bedroom with a roommate) to $2,300 (a fancy studio apartment in Williamsburg). Housing expenses are typically the single biggest monthly expense for most people in this area. Rent can be “affordable” in NYC at any salary if compromises are made in retirement contributions/savings rate/living expenses. If you’re not super picky, it’s not difficult to find a place in NYC for under $1,000.
Food & Dining. My goal is to get this number down to $400 a month. Ian and I recently agreed, however, that we want to eat healthier on a more regularly basis, so I’ve relaxed this budget a bit to account for more frequent purchases of fresh veggies and fruit. I think $400 a month or even $500 a month is extremely reasonable for living in NYC.
The extras and additionally necessary:
Health & Fitness. Because of my super low rent cost, I splurge in this category. My hobby, ballroom dancing, is extremely expensive ($100 for 45 min, whaaaaaaat). The rest of this category includes co-pay for doctor’s visits, and any other related costs. Because my dancing is relatively infrequent (once a week; I can’t afford to do more). I may expand this category in future months and take up something cheaper, like yoga.
IRA/Emergency Fund/Big Day. As I laid out in my savings goals for 2017, I want to reach a 6 month savings buffer for my emergency fund and also max out my post-tax IRA contribution for the first time. When I finish off my student debt in August, that $1K a month will be refunneled towards these two goals. As for “Big Day”, that’s my savings account for play money. Things like a fanciful dream for a big wedding (of which 100% must be paid fully in advance), big trips, and big expenses come out of this account.
Leaving a buffer! Expenses come up, so it’s always a good idea to budget for them. That’s essentially what my Miscellaneous category is for. When friends visit and we go out, I’ll often recategorize dinner and drinks into this category, so as to not mess up my actual food budget. Small trips and purchases also go here.
I’m a huge proponent of organizing expenses into the fewest categories possible. I think it makes a budget easier to digest. Seeing my almost $2K budget, I know I should do some trimming in order to reach my $1,700 target. With only five categories to look at (two of which can’t be touched), it’s very easy for me to identify where I can reduce spending. It’s also been quite a while since I’ve done a Cash Fast. Now I know where to start!
Additional Comparisons:
If you’re looking for more data points with NYC real-life budget examples, check out this post I created through a poll of friends. I’ve also since updated these numbers in this post, which factor in an apartment and job change.
Comments
I like your approach of keeping your budgeting categories as simple as possible. And only $375 for rent! That is fantastic in any major metropolitan area, let alone NYC these days!
I agree– that rent is crazy! Please let me know when you move so I can take your place.
Curious to know why you have an IRA over a Roth IRA? Usually the advice is young people to have a Roth but maybe it’s a high income thing for you.
Oh, good catch! It actually is a Roth IRA, not a traditional one.
What do you do with the extra $1,100 every month? You could pay off your debt in no time with that!
I’m super jealous of your rent. I’m looking at apartments for when I move back to New York. If I want to keep my fiancée’s commute to 30 mins, we’re looking at $2,500 a month for a 2 BR -_-. We need the space bc I WFH and she runs a business. Gotta accelerate my house down payment fund but that will take years before I can afford anything. If only NY were cheaper.
For now, it’s going towards savings and investments. I’m paying off my student debt quickly, and it’s good to build up a cash buffer as well.
NYC really is so expensive when it comes to housing. I’ve given up on ever having a sub-30 min commute; it’s just not worth the difference in rent for me. Plus, there are perks to living farther away from all the action; my neighborhood has lots of small parks and young families, and I like the vibe.
Yes – rent is crazy in NYC. I live in Brooklyn. But I have a pretty good situation as well. My wife is from Brooklyn and we stay with her grandma in her large brownstone. So rent is cheap for us as well.
Oh my gosh – your total condo fee is only $750?! Did you buy your condo or are you renting? That’s absolutely crazy especially for the cute are you mentioned you live in 🙂
Also, I wish I would have known you were into ballroom dancing so we could have chatted about it when I was in NYC! Tom and I got into it last year but had to stop because of the high expense as you mentioned. He got me some gift cards this past Christmas though that we need to put into use, so I’m looking forward to that.
I LOVE how you are budgeting for the big day. We just recently started doing that too and it feels really great (especially because I know I want some pretty expensive things for the big day).
Ah, this was before my recent move to the Village! I pay more now, but it’s still definitely extremely cheap compared to what other people in the area pay.
I love finding other people who are into ballroom dancing! I’m probably going to branch into more salsa dancing since it’s similar but much cheaper, and I’ve started exploring other fun fitness classes in the meantime to get the workout at a fraction of the price, hah.
And of course, I have to save for my own wedding! I would not expect my parents (or future in-laws) to contribute anything (by my own choice), so my big day has to really come from me. 🙂