Have you ever wondered how people can live in an expensive city on less than six figures? I wondered this all the time as someone who has lived in New York City and San Francisco for over 23 years.
I first started my career in New York City as a financial analyst from 1999-2001 at GS. My base salary was only $40,000 and I could only afford to share a studio with a friend! It was an amazing time, but boy was it hard to save money.
Thankfully our salaries were raised in the second year to $65,000 after Wall St. decided to pay new first year analysts $55,000 instead of $40,000. Still, a base salary of $65,000 wasn't much to write home about when one-bedroom condos were selling for 5X.
In 2001, I moved to San Francisco for a raise and a promotion. Back then, San Francisco felt dirt cheap compared to Manhattan. I could either get 30% more space for the same money or buy the same place for 25% less. Therefore, in 2003, I decided to go long San Francisco real estate.
The key to living in an expensive city is to get your housing costs under control. Once you have your housing costs below 20% of your gross income, you should start to thrive.
New York City Is Fantastic, But Is An Expensive City
New York would be the greatest city in North America if it weren't for three things: 1) Tough weather for half the year, 2) Never ending crowds, and 3) outrageous prices!
A decade later, I went to New York City to visit my buddy I shared a studio with for two years. He had been looking to upgrade to a two bedroom condo with his future wife. But he was taken aback by the then ~$1.5 million price tag. He said they just might move out of the city instead.
Back in 2001, my friend had bought a one-bedroom condo near the U.N. for only $325,000. The value of his condo is now over $750,000. If a condo owner who saw his property's value grow by 130% can't even afford to comfortably upgrade to a two bedroom, can you imagine what a renter during this same time period is thinking?
So it really got me thinking. How do people live a comfortable life in an expensive city like New York without making six-figures a year? Let's find out.
Breaking Down How Little $100,000 Goes In An Expensive City
First of all, making $100,000 a year puts you in roughly the top 10-15% of nationwide income earners. $100,000 is a great achievement no matter where you live, but it's not that great if you live in an international city such as New York, San Francisco, Hong Kong, London, Tokyo, or Paris.
It's really important for those who make much less to recognize high salaries are generally earned in expensive locations.
Let's break down what a typical $100,000 earner will get after funding their retirement savings and taxes. There is no excuse for anybody making $100,000 or more to not max out their 401(k) for a more financially sound retirement. Here is my 401(k) post by age for your reference.
$100,000 Income Budget In An Expensive City
Gross Income: $100,000
401(k) Contribution ($19,500 max for 2021): $17,500
Taxable Income: $82,500
Effective Tax Rate (includes city, state, federal, SS tax, health insurance): 30%
Net Income: $57,750
Monthly Net Income: $4,812
Expenses From A Frugal Friend Making $100K In An Expensive City
Rent: For One Bedroom On 71st and 2nd Avenue: $3,300. Rent has actually surged in New York City post the pandemic.
Food: $700. He eats out about 30 meals a month and cooks his remaining 60 meals at home (breakfast, lunch, dinner). Groceries are not cheap in Manhattan.
Beverages: $100. He only goes out for drinks with his friends once a week. Beers are $5-$15 and cocktails are $8-$15.
Cabs: $100. From the Upper East Side to Grand Central costs about $15 one way. It's $20 to go all the way downtown. He tries not to take cabs, but it's an inevitability.
Subway: $112. It's $5 to commute round-trip. Back in 1998 one-way fairs were only $1. $112 is now the monthly all you can commute pass cost.
Cable / Internet: $100. Pretty standard package for basic cable and internet.
Entertainment: $200. This category includes movies, shows, and events. Movie tickets cost $15 and Broadway shows cost $50-$100 for the cheaper tickets.
Mobile phone: $50. Family plan i.e. subsidized.
Travel: $150. Cost to go see his family in New Jersey and the occasional fishing or skiing trip up north.
LEFT OVER INCOME: $0!
Not Living It Up On $100K A Year In Income In An Expensive City
As you can see from my example above, someone making $100,000 a year in New York City is NOT living it up. Going out once a week with friends is hardly excessive in a city that seriously never sleeps. He does his best to walk or utilize the subway and his entertainment budgets is pretty tiny for all the NYC has to offer.
At least he is contributing a good amount to his 401(k), which is crucial since he has nothing left in disposable income. Contributing to his 401(k) should result in over $200,000 in 10 years due to company match and conservative performance estimates. If he wasn't contributing heavily to his 401(k), he'd have an extra $1,200 a month to spend.
Finding a decent one bedroom for under $3,000 is not particularly easy unless you know someone who has a rent controlled apartment. If you want to lead a less comfortable life, then you can find studios for around $2,000 a month.
But, are you really going to be happy still living like a college student making $100,000 a year? Probably not since you're closer to 30 than 20. Where are your parents, girlfriend, boyfriend, and relatives going to sleep? One solution is to find a significant other who is willing to split your $3,300 a month one bedroom cost.
Going Out To Eat Costs A Fortune Too
Lunches in NYC cost on average $10-15 after tax and tip. You could eat a Shackburger at Shake Shack and drink free water every lunch for $5.01 like I did for two days, but you might die of heart failure at a young age. You might also turn so big that your armpits emanate massive odor and heat on the passenger next to you like I felt sitting in the middle sit on a red-eye flight over!
There's a saying by New Yorkers to expect to burn $100 each evening you go out. After going out every evening I can see how this saying is true.
My dinner at Strip House cost $77 followed by $35 of drinks at Sparks Steakhouse where a family friend works. Then of course I had to pay another $15 cab ride back home because it was 1am. At least my buddy and I split the bill.
Of course we could have gone to a cheaper place to eat like Kunjip in Korea Town for a more reasonable $25 a person. We could have drank our alcohol at home and ordered water at the bar instead. But come on. It's good to live it up once in a while.
The Ideal Income To Live In An Expensive City
I believe $200,000 a year per person is the ideal income for maximum happiness. To put things into perspective, a 30-year-old second year Associate makes anywhere from $170,000-$250,000 on average in finance as do second year lawyers. 32 year old doctors who don't do fellowships make $150,000-$250,000 as well.
If two, $200,000 income-earning people can combine forces, then even better. Nowadays, a family earning $300,000 a year in an expensive city is considered middle class.
What's also interesting is that two people making a combined $400,000 annual income is right at the limit for where President Biden wants to raise taxes.
$200,000 Income Breakdown
Gross Income: $200,000
401(k) Contribution: $17,500
Taxable Income: $182,500
Effective Tax Rate (includes city, state, federal, SS tax): 35%
Net Income: $118,625
Monthly Net Income: $9,885
$200,000 Budget Breakdown
Rent For Two Bedroom In Mid Town: $5,500
Food: $1,000. Now we can afford to eat four $100 dinners a month with $500 left over for lunch and breakfast.
Beverages: $500. You can go out twice a week now or feel more comfortable buying a couple rounds of drinks for three friends four times a month.
Cabs: $200. Instead of taking the subway when it's super hot or really late, you get to take a $15 cab ride a little more often for convenience.
Subway ($2.5 one way): $114. Same old monthly commuter plan.
Cable / Internet: $100. Same old package.
Entertainment: $500. A little more breathing room here because now you can afford to take out a date!
Mobile phone: $100. Upgrade to a larger data package because you're on the move more often.
Travel: $300. A couple more trips out of the city. This time, to the Hamptons.
Total Expenses: $8,300
LEFT OVER INCOME: $1,535
$200,000 A Year Is Good, But Not Great Income
We can argue the ideal income to live in an expensive city all day long. But as you can see from the example above, $200,000 will allow you to contribute to your 401(k), save $20,000 (10%) in after tax income and spend freely on much of what NYC has to offer.
Anything more than $200,000 is nice, but higher tax rates are really going to eat into your earnings. It also usually takes more effort to earn in the $250,000+ range so that's a negative.
Here's another example of a single mother with a child. It's clear she's not living it up on a $200,000 income. Thanks to taxes and childcare expenses, her six-figure income gets gobbled up quickly.
Examples Of Everyday Expensive Things You Can Buy In NYC
Let me now share some pictures of things you may want to buy in NYC that costs a lot of money.
Share How You Live Comfortably In An Expensive City On Less!
Given only ~15% of Americans make more than $100,000 a year, it's clearly possible to have a good life living in an expensive city making less. This goes for folks living in other expensive international cities as well. Some of the things I've thought of that allow people to live and save are:
- Co-habitating with a girlfriend, boyfriend, spouse, or roommate.
- Living in a rent controlled apartment.
- Working two or more jobs.
- Residing farther away from downtown
- Living off the generosity of one's parents.
- Having a wealthy spouse.
- Working in the food industry so you don't have to pay for your meals.
- Working as a property manager or hospitality industry to save on rent costs.
- Living for free in your parent's apartment.
- Living off a trust fund.
Housing Is The Biggest Issue
If you can take care of your housing situation everything else can be overcome with cheaper options. For example, you can eat McDonald's for dinner rather than go to Le Bernardin. Entertainment-wise, you can play frisbee in the park instead of paying $100 for a Broadway show.
I do wonder how parents afford to send their kids to private schools given public school systems in big cities are often in need of improvement. There's the Citywide Gifted & Talented programs and Anderson, Hunter, Lowerlab, and Nest are all great elementary public schools.
Then there's Stuyvesant and Bronx Science for public high schools. I'm not sure what parents do if their kids aren't smart, but I'm sure there are scholarships for everyone.
If you live in an expensive city and make less than $100,000 a year, I'd love to hear how you manage to live a comfortable life! Please also mention your savings rate as well. I guess it all depends on what your definition of “comfortable” is and your age.
Related: Scraping By On $500,000 A Year: Why It's So Hard For High Income Earners To escape The Rat Race
Expensive Big Cities Outlook Post-Pandemic
Post-pandemic, I believe thousands of people will be flocking back to big cities again for the job opportunities, network effects, and more. Therefore, I'm looking to buy Manhattan property to catch the wave.
Rents and rental property prices will rebound, just like everything else has so far. If you've been sitting on the sidelines for a while, I believe now is the time to invest before the herd comes back.
All my financially savvy friends are scooping up rental properties in San Francisco and New York City right now. If you are renter, your goal should be to lock in as long of a lease as possible at current rates.
The reality is, people can afford to live in expensive cities due to high incomes. If incomes weren't high enough expensive cities wouldn't be as expensive.
New York City residents require a net worth of about $3.4 million to feel wealthy in 2022. I think $3.4 million is a reasonable amount given how expensive New York City is. However, NYC has more affordable housing so long as you don't live in Manhattan.
Achieve Financial Freedom Through Real Estate
Real estate is my favorite way to achieving financial freedom. It is a tangible asset that is less volatile, provides utility, and generates income. By the time I was 30, I had bought two properties in San Francisco and one property in Lake Tahoe. These properties now generate a significant amount of mostly passive income.
In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. Now I earn more passive income to take care of my family.
Take a look at my two favorite real estate crowdfunding platforms. They are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the easiest way to gain exposure.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
Manage Your Finances In One Place
If you currently live in an expensive city or plan to move to an expensive city, I recommend signing up with Personal Capital, a free online wealth management tool to keep track of your income and expenses.
Money drains out like water if you don't keep a tight lid on your cash. I live in San Francisco and Personal Capital keeps my budget in check by providing me clear snapshots of my finances. They even send me a weekly overview of my net worth progress over email which I highly appreciate.
My favorite feature is Personal Capital's Investment Analyzer tools that assess your portfolio's risk and fees. I discovered I was paying $1,700+ in annual 401(k) fees I had no idea I was paying!
How Do People Live On Less Than Six Figures In An Expensive City is a Financial Samurai original post. Due to inflation, the cost of living in big cities keeps going up. Hence, we need to earn more, save more, and get our housing under control. I've been writing about achieving financial freedom since 2009.
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Is there a way to search for career paths that are easy transitions from other careers and that pay “x” amount?
I live in Ventura County, California, and according to the census, only 36.8% of my neighbors have college degrees, but they all seem to do better than me—owning houses and multiple luxury cars. How can they afford rent? How can I get a job like theirs?
I am 43, have an MA, and work two part time jobs. I rent a tiny bedroom for 63% of my net income ($48k,) and can’t afford health insurance/ a dentist, or my student loans.
There has to be a way to find careers that pay enough. How do I find out what jobs my neighbors have that pay enough to not just rent a bedroom—but actually rent or buy a whole house?
I love how this blog pretends Queens doesn’t exist or unfashionable neighborhoods in any borough for that matter. Speaking as a New Yorker, 3,300 for a 1 bed is actually quite a lot. You can find many many 1 bedrooms (or more!) for 2500 right next to a train line that takes you straight to work. But god forbid you tell someone you live in Woodside or Sunnyside.
Actually, I love Queens. Best value in NYC! I’d be buying in Queens. And I always go through Queens to watch the U.S. Open.
Related: The Time To Buy Big City Real Estate Is Now
Queens is boring. It doesn’t have the amenities that (upper-)middle class young professionals desire nor does it have singles night life. Astoria is cool though.
True. But it’s such good value and it’s an improving neighborhood.
My spouse and I live in Chicago. By no means does Chicago compare to New York in regards to the cost of living, however, it’s still a relatively expensive city by American standards. Much like any major city, you will pay a premium for location, and Chicago has many neighborhoods worthy of the “it” location. In some of Chicago’s more premium neighborhoods, you can expect to pay anywhere from 2500-5000+ per month for 1-2-3 bed apartments. Studios can be had around 1800 however. Expect these to be on the smaller size. On the other hand, 1-2 bed apartments can be had for 1600–2500 in less popular, or emerging areas ranging from 500-1400 square feet. Go west or south and you can find apartments in the 800-1200 range. Keep in mind, each person will have a level of comfort they may or may not be willing to compromise on. Things like safety, schools, access to entertainment all will play a major role. One of the advantages of Chicago however is its lower cost of living, yet higher pay when compared to other major metropolitan areas.
My spouse and I work in marketing, and pull in a little over 200k combined. We’re pretty financially savvy and live well below our means. We save in a 401k and receive employee stock options from work for a total combined savings rate of 18% pre-tax. We have 2 children and also save for their college in a 529 plan. Because of the children we’ve chosen to live in one of the more offbeat neighborhoods, where we are able to have a 1400sq foot townhouse and 3 beds including a small yard for about 2600 per month (mortgage), We’re only 2 miles from some of the more lively areas, so nightlife, retail, and the arts is really only a short cab or train ride away. A nice compromise for more space while living in the 3rd largest city in the US.
A typical monthly budget with 10k net income for us:
Housing: 2600
Utilities including cable phone etc:500
Car payment:500
Child care/part time:800
Groceries:600
Eating out/entertainment:350
Miscellaneous/clothes:200
Sports and family Rec:200
Gas and transportation:175
Subscription services:45
Memberships/museums:30
529 college savings:500
Credit cards:500
Savings/investments:3000
School: Free (public)
Could we afford to live in a more lively part of the city, and pay more for housing, even send our children to private schools? Of course. But we’ve chosen to be more frugal, saving for our financial futures, and emergencies. The housing crash of 08 and now with COVID has made us more financially conservative. Knowing that we have the ability to weather a job loss, or travel to see the world means so much more than living next to the Joneses.
Thanks for sharing so much! Chicago is truly one of the best value cities in America where you can also make good money. I’m assuming the winter is what makes it cheaper than more temperate places.
Financial Samurai,
There are a few things I believe contributing to the lower cost of housing. What you have to remember about Chicago, compared to say New York, or even San Francisco is that although it’s population ranks it 3rd in the nation, its density at roughly 12,000 people per square miles is a little less than half the density of NYC at 28,000 and 18,000 for San Francisco respectively. Due to this disparity in density, you don’t have as many people per square mile fighting for square footage. Also, Chicago for the longest time was predominantly, and still is in some areas a blue collar working class city. It wasn’t until recently, say in the last 20-25 years that we started to see a shift towards tech jobs and startups. This has led to a higher demand in denser housing closer in to the city center where the likes of Google, Salesforce, and 37 other Fortune 500 companies have set up shop. We probably can expect prices to continue to rise as time goes on.
Another reason to consider why housing may be cheaper is the tax base in Chicago. Most homes and businesses are taxed at a really high rate. Businesses especially downtown businesses make up the largest portion of tax base for the city which helps to offset the cost of homes for individuals. However, people are not exempt either. Most homes are taxed annually at 2% value so a $250,000 home comes with a tax bill of $5,000 per year, add in the sales tax of 10.25% and employment tax of 5% these things all add to the overall cost of living that may be considered when negotiating rent or sales prices of a home.
Gotcha. Thanks for your thoughts. The taxes really is a killer.
Related: Property Tax Rates By State
This is extreme. When I first graduated from college in 1998, I lived in Manhattan and was only making $47K/year. I then lived in Boston, DC, and now Los Angeles. These cities are almost as expensive as NY. I can tell you that in any of these cities – even NY – it would be VERY easy for a single person to live on less than $200K. I would say that $120K would be the lowest and still livable and would allow to save for retirement. You can still go to nice restaurants and have a decent apartment or a condo outside the city for that salary. I’m always amazed by people’s warped perceptions of $$. Unless you need a private masseur and gold plated toiled seats, these numbers you presented are way out of whack
I moved to the UES January 2019 with a job offer of $122k/yr. got a one bedroom for $2700/mo. Monthly MTA caard with unlimited rides for $127/mo which was taken out pretax at work, $60 for cell phone, $60 internet, and around $60 for electric. Everything else included in rent. I went out every now and then. Maybe 3-4x a week and if you’re ona date it’s guaranteed to be over $100 a night. Rarely take cabs but on rare occasions I do. Biggest killer? I smoke and it’s $14-16/pack here. Anyway, I maxed out my 401k easily and even saved around $1,000 a month. Museums, broadway, etc I would do very occasionally. Baseball games, plenty, but wouldn’t buy anything but cheaper seats. Not the cheapest but around $30 a seat.
As you can see I did fine but there’s a lot more to it. It was pretty rare I went to an actual restaurant b/c it’s so expensive. When I say I eat out most of my meals I mean deli’s, grab a slicer or a bagel or causal fast food places. Typically, under $10 for breakfast and $10-15 for lunch and dinner. Usually I only eat twice a day but not always. Grocery stores? There’s really no such thing in the city. There are a few Whole Foods and Trader Joe’s but not close enough to me and not really any cheaper than “eating out” like I do. Plus, schlepping groceries on a subway or bus? Been there, done that, never again. Local grocery store? I suppose that’s what New Yorkers call them. Like D’Ag, Gristedes, etc but they are very, very small and you likely won’t find everything you need without having to go a different store. Again, not worth the hassle and not really any cheaper.
I would agree with $200k as a nice lifestyle. My apartment has an outdoor space but it feels like a small jail cell. There is no natural light. It’s noisy because the building is old and to to get out of the city takes forever. True, the subway system is great but just to get to Brooklyn takes me over 45 minutes. To get to the UWS takes almost a half hour and that’s 2 miles away. FiDi over a half hour. Everything here is a giant pain in the ass. $200 k would allow a car which would make a big difference. It would also allow you to take some time away from the city even if it’s just upstate or visiting family back home. You don’t just run somewhere real quick here. Unless it’s in your neighborhood it’s going to be at least an afternoon affair.
It’s definitely true there are things you can do to make it cheaper. There is a lot of cheap and fun entertainment. Some of it is even free. But it still comes at a price. Central Park is great and free but it’s not a getaway. There will never be a time when you are alone with nature unless you’re there at night which is not a good idea.
$200k gets you a legitimate apartment where you aren’t living like a person on welfare, a vehicle (even with $600/mo parking spot parked probably miles away), the ability to save and invest a difference-making amount of money and very little worry about being able to have fun unless you’re an idiot.
With the coronavirus, I am working from home outside of Manhattan and no longer have any desire or need to go to Manhattan. I was in lower Manhattan last month and it was all boarded up and full of homeless people. Everything is closed and people have moved out. No restaurants, movies, museums, clubs; nothing to offer. Why pay $2700 for a studio now? Many people have been laid off from their jobs in Manhattan. Better off going home to live with family or a friend and bank the extra cash.
I’ve tried but can’t get out of my lease but leasing company won’t even work with me and won’t allo subletting. On top of that I have been out of work since April. Fortunately, I was good with money over the years and am okay for awhile. But there is literally nothing to do here now. They have outdoor dining now but that’s it and I’m certainly not paying that much for lunch or dinner.
I would really discourage anyone from moving here if you didn’t have a well paying job lined offered and accepted. Violent crime is up, somewhere the homeless situation has gotten worse as it was already a dismal situation before all this happened. True the restrictions won’t last forever and rents are coming down but the quality of life is so low unless you make near $200k that it’s not worth it. Not even close.
If I find a job before my lease is up I’ll stay but it’s extremely unlikely I’ll find one paying even close to what I was being paid before. And to be honest, I’m not sure I’d ever come back here even to visit.
My stats are very similar to yours but residing on the Waterfront in Jersey City (i.e., “the 6th Borough”).
Annual salary: $120,000
401k contributions: $1,500/mo ($18k annual)
Monthly Net income after 401k contributions: ~$5,600
Rent: $2,700
Grocery: $600/mo
Utilities: $150/mo
Internet: $55/mo
Phone: $65/mo
What I have found is paying this much in rent affords me a high quality of life, given my interests and proclivities.
My apartment is a newly renovated, modern 1-bedroom with central A/C, in-unit washer-dryer, dishwasher, and in-building amenities like fitness center and patio. At this point in my life, I will not settle for anything less. I am not walking to a laundromat or living without a dishwasher or without an in-building fitness center (though COVID has closed them). Gone are the days of having a roommate or living in “quirky” or “charming” old buildings, or with cockroaches. The premium is worth it for a peace of mind.
Also my unit is in a safe, quiet area in walking distance of grocery stores, NJ light rail, a CVS, a few fitness centers, and a running path on the waterfront.
However, all these amenities comes at an extreme cost. Recently I took stock of my expenses and realized I saved very little to other major life goals like saving for a car, a home down payment, and a work sabbatical. Every month I feel so pinched for money, even with meticulous budgeting and cost cutting. I am also debt free. Then I realized, I pay 50% of my net income on rent! Before moving to NYC, I easily maintained rent under the 30% threshold, but now I spend 50% to maintain the same quality of life.
Also, my grocery expenses doubled. In my Midwestern City, I spent $250-300/mo on groceries; now it’s $500 – 600.
Since COVID, I’ve been struggling to justify this cost. Why pay this much money to live near a city I don’t even visit? Why live in Jersey either? Jersey is ridiculously expensive without offering much in return. (Jersey Cons: The Jersey bus system is antiquated, the State has few noteworthy attractions outside of the Jersey Shore, the residential homes are ugly shacks unless you go further out to Montclair or Princeton … NYC: The MTA feels like the last place I’d want to be right now.)
I also feel like it’s a struggle to access any restorative green space or nature here like wooded biking trails, swimming, water sports, scenic hiking, gardens, etc. Some outdoor recreation; that’s all I’m longing for after being cooped in my apartment 24/7. Central Park and Liberty State Park are lovely but it’s not quite the same feel, especially given all the crowding. Plus it always seems to take 45 – 60 minutes to get to Central Parrk – even when I’m only 2-3 miles away.
What I want now is a car so I can easily escape this concrete jungle, but realistically I can’t afford it. My building charges $225/mo for assigned parking spaces, there’s no on-street parking, and car ownership averages $400/mo.
What I believe is that NYC is “Worth it” if you (1) have family here, (2) are trying to break into a hot industry like finance, the performing arts, or fine art, (3) *really* love fine dining, live entertainment, and art, or (4) long to live among and connect with a specific sub-culture/sub-community (e.g., LGBTQ+ community, Jewish community, etc.) that you couldn’t easily find elsewhere. For me, I don’t quite fall into any of those buckets so I’m just questioning why live here?
Agree 110% with the last paragraph, which is why we are leaving Brooklyn for Charlotte, NC. It offers similar tastes in some of those things we cherish (i.e. the art scene in NoDa).
I also used to live in JC Heights for 3 years when I first moved to the area so that I could focus on being debt free and saving. This was from 2012-2015 and I was sharing a large townhouse with 3 people paying $850/month with an income between $70-90k.
I’ve been fortunate enough to have extremely successful years in sales the last three years so my income is more than triple it was back in 2015 which allowed me to save for a down payment on a beautiful home.
I think I am part of a large migration pattern from large metropolises to smaller/medium-sized cities. COVID, family and preference are the main reasons for this migration pattern. It will certainly lower the cost of living in big cities and bring back more creative minded folks but I think it will also be less safe. IMHO we saw the best era of NYC Ever and it’s sadly over.
In the $100k scenario I doubt a landlord would have rented to that person. Salary doesn’t even meet the 100k / 40 threshold minimum for the $3300 monthly rent. Also savings in pre-tax transportation to take advantage of.
Came across this while researching for my book on the NYC housing market. Had to chuckle at the living in a 1 BR in Manhattan paying market rent. Only people dying to live in Manhattan, usually from out of town, would pay that. If you have the money, there is plenty of cheap housing if you are willing to be resourceful and navigate the system.
Perhaps market rent is not market rent then? Because the very definition of market rent is what the people pay.
I work in midtown, live in the suburbs, and am currently looking at NYC apartments. While $3200 is fairly market rent, that much for a 1-bedroom is going to mean living in a prime Manhattan location, possibly renovated. Probably in a walkup with no doorman, but still there’s a real element of choice in renting a 1-bedroom at that price.
I agree with Cash Chronicles that there are nice, viable alternatives for much less than that (say, $2700) if one doesn’t just let a broker tell you what your options are. I definitely believe that a lot of foreigners, new-to-the-city young professionals, etc. help create artificially inflated rent prices because they don’t necessarily take it upon themselves to see all that is out there.
I agree with you our newbies and foreigners jacking up rent and not knowing better. It’s the same thing in San Francisco. There are so many great deals in the city, but all people read about are the headlines of expensive rents.
I live in the Alexandria, Virginia (Suburb of Washington, DC) I am a single female with no kids and I live in an almost 600 square foot studio apartment in a safe area. I pay $1,135 but my rent is going up to $1,175 soon.
Right now my commute to work is bad (2 hours) and the further out you go on our subway system the more you pay. I buy a subway train pass for shorter trips which is $38 a week. I also need to ride the bus during my commute and that is $15 a week for a pass. I am trying to get a position closer to home so I can just pay for a bus pass. My groceries are not too expensive. I shop in Aldi, Trader Joe’s and other supermarkets where I get items mostly on sale…
I want to purchase something and there are things that I don’t like about living in this area so I plan to move to the Southwest where rents are lower, pursue my masters degree and buy a condo with low assessment fees or a single family home. I hope to be married and that will help my income but until then I don’t want to stay in this area too much longer.
Be careful about buying a condo with an HOA, they can go up yearly like rent and fighting an HOA in court is an exercise in futility.
Alright coming from someone who was born and raised in NYC and moved to Florida, cost of living isn’t that much different. Living in Manhattan is a luxury. You can get a small 1 bedroom near the 7 train in sunny side queens, or a small 1 bedroom in Morris park or Pelham bay in the Bronx (both retelivetly nice areas) near the train for $1,700 give or take a couple hundred depending on how new the building is. Do you need a car? Fuck no! So the money saved on rent in NYC goes to car payments, insurance, and gas I’m Florida. Next is food, pretty much the same grocery bill in Florida. Then there’s utility bills. In Florida I pay about $120 a month for electricity, $70 for water, $80 for internet. Those costs in NYC are $220 for electricity, no water bill because that falls on the landlord under NY law, and $55 for optimum internet. So basically it’s the same basic costs. Yrs entertainment is a little more expensive in NYC but not enough to justify the pay difference I’m about to shine a light on. As a union pipefitter in NYC’s local 1 at top pay I’d make $68 an hour before tax. The union pays for great health insurance and pays into my pension meaning I could opt out of the 401k and retire just fine, or I could opt in and live like a king when I retire. Now the UA (United Alliance) is the national union. It’s kind of like a parent company. As a union pipefitter in Orlando’s local 808 my top pay is $23.50. They too cover pension, but the pay out to retired workers is minuscule compared with local 1 in NYC. They too cover health insurance but the health insurance in Florida sucks across the board, so I have a $2,500 deductible, meaning I pay out of pocket up to $2,500 then insurance kicks in. Now me and my wife both have medical conditions meaning we 100% will pay that 2,500. Local 1 in NYC was a copay of $40 for us. Now we can argue all day about money saved in taxes and cost of living, but I’ve lived in both places. I make 1/3 the money, the bulk of everyone’s tax comes from the federal level (even ny is only 4%-8% state) and the only thing that’s really cheaper is housing. Granted making 23.50 with the same bills and 4% less tax doesn’t get you closer to a house, it gets you closer to poverty. Especially with the car costs added. Every job that pays more then $12 will require reliable transportation. So a $250 car payment and $250 in insurance plus $150 in gas a month is mandatory. Not to mention oil changes, tire rotations, new tires, just general car maintenance. Where as the MTA is about $150 a month anywhere in the city in 1 hour. I know I could keep monthly costs around 3k in NYC and I know I can make $7k a month after taxes. Meaning I’m doing very fucking good. Florida costs about 3k in expenses but I make about 3k a month. I literally can’t leave my house without doing overtime down here. If I want to save I need overtime. Anything that is not related to my basic needs requires overtime. Now what I should have done is work in NYC local 1 for 10 years living very poorly and humble. Save every penny and put it in stocks, 401k, and savings. 10 years would have earned me a half pension worth about 3k a month and I could have saved enough to buy a house out right in Florida while collecting dividends from the stocks I bought. That would have given me 23.50 in Florida as almost entirely disposable income. Bottom line don’t take NY for granted. I did and I’m fucking stuck in this hell hole unable to save and get out.
Why did u move ?!?!? Why can’t you move back?
This really tells you how out of touch rich transplants to NYC are against the typical New Yorker. Take it from a native, born and raised:
Yearly income: $51,000 (also the median individual income in NYC according to the Census Bureau’s American Community Survey)
Monthly income: $4250
Monthly 401K contribution: $425 (10%), plus company match
Total monthly taxes: $956 (25%)
Rent for a small studio apartment: $1800
Monthly utilities: $200
Monthly food and toiletries: $400 (buy groceries and cook at home)
Alcohol: $0 (I don’t drink)
Monthly transportation: $120 (Use the subway, cars aren’t meant for NYC)
Remaining: $349 per month
What kind of native New Yorker is losing money on Broadway shows and ski trips? None. Don’t come here if you can’t live the working class life.
Do you feel you are getting ahead with your income? What happens if you want to meet somebody or start a family?
Here’s another specific budget: https://www.financialsamurai.com/living-a-middle-class-lifestyle-on-300000-year-expensive-city/
I guess most people here miss some of the most important points.
Of course, one can save money by living with roommates, cooking and bringing lunch boxes to work, etc.
BUT
Everything depends on where you are in life and what kind of preferences you have. Not everyone wants to continue living like a college student. For example, as a couple you would want to live in the privacy of your own apartment. What’s wrong or should I say lavish and luxurious about that? Someone in their early 20s might be okay with living with roommates in a less developed area with lower rents, but what about a couple with kids?
I moved to NYC few weeks ago and for a couple looking for a decent place to live its easily 3500k+ for a 1br apartment in decent areas. One very important thing most commenters seem to forget: people move to certain neighborhoods because they value the quality of life there not because the rent is low. Also things like commute to work play an essential role in picking the area to live. Stupid comments like “commute like everyone else” can only come from those who dont work long hours and/or have short commutes. What we lack most is time. So I understand people who would rather spend 1000 more on rent if it saves them 30-60 min of commuting – because it can make sense given the personal preference for time over money. The same people do likely not have the time or energy to spend another hour+ after work to cook dinner and prep the lunch box for the next day. So stop generalizing and pushing your own style of living onto others.
I grew up in a very frugal household outside the US (continental Europe). This has influenced how I value and manage money. Yet, after coming here and moving in with my girlfriend I can see why earning 200k+ is considered still average in NYC. We have about 250-300k together, but apart from the few “luxuries” that we allow ourselves to have due to long hours / commutes, we are far from living a lavish lifestyle. We have no car, rent a 1br apartment, dont pursue expensive hobbies and eat at home most of the time. Still, expenses rack up to 90-100k. Back where I am from we would probably be spending a third of that while maintaining a similar standard of living in a country as developed as the US. True, we are not just scraping by, being able to save 50k. But alone the experience that living a fairly normal life costs around 100k proves to a certain degree then point the author is making.
Also, cheap lunches for 5 bucks. Show me the places to get that around midtown east. 10 bucks seems to be the lower end at most places
Im a female 30 year old, Single.
-Moved back to NY this summer after living overseas. I live with my grandmother who owns a condo in fort greene.She bought it back in 87’ for 50k. It is now worth 700K. I basically live here for free while looking for my own apt.
-My choices are affordable housing in greenpoint/williamsburg/park slope(because i wouldnt live anywhere else on the list). Or Live in New Jersey because I refuse to pay to live with roommates again. Outside of affordable housing, the cheapest 1 bedroom in a ok neighborhood is in greenwood heights next to park slope for $1800. -70k salary-Credit score also has to be 650-700.
– Multiple jobs- i have advanced degrees yet still struggling to find that ideal full time job with benefits. I work three jobs to meet the salary requirements. One of my jobs is in my field, broadcast media but is part time.
i need more than 1 job because of student loans and housing but it helps i have family members in major cities giving me more time to find ideal full time professional job.
-Entertainment- a date will take me to a broadway show or live music/fine dining(free).
-Fitness- a combination of running in the park(free) and barrys bootcamp 3 X WEEKLY($340).
– KIDS-I have no kids and dont plan on it.
-PHONE- I use my ipad to make free calls using facetime and skype.I use a home phone instead of a cellphone. otherwise $20 unlimited plan or Burner phone with no data.
-FOOD- i love to cook and shop at trader joes, whole foods, and target.(200 per month). Im mostly vegetarian. I dont consume red meat or junk food like mcdonald. Occasionally chinese food once a month costing less than $10.
-CLOTHES- ebay vintage, etsy or modcloth, thirft stores, century 21 discounted store or SAKS August summer sales.
Im currently looking for the ideal full time day job with benefits in media or tech so i can get rid of my overnight job. My part time broadcast media temp to perm job is a 1 year 3 month contract so its possibility this will turn into full time next year.
These examples are a joke. I lived in NYC for almost 7 years making $65-100k a year and I always had roommates paying $750-$1400 a month on rent. You do not need to live by yourself if you can’t afford it (which he obviously cannot if he’s living paycheck to paycheck). People act like they have to live in Manhattan: there’s plenty of cheaper places in Queens and Brooklyn, which are super close to work and entertainment. Also the food budget is ridiculous. There’s plenty of cheap lunch options in midtown where you can get chicken and veggies for 5 bucks or you can bring your own lunch. I saved plenty in NYC and save even more now that I live in Chicago. People are just entitled and think they deserve everything when they move to these large cities. It’s expensive but there are definitely ways to reduce expenses.
I noticed your buget breakdown doest include utilites such as heat gas/electric, water, sewer, trash, etc. Also laundry, and personal necessities. Btw – I was considering moving to NYC because of the medical field job im in, and the hospitals there are world-class. But i could never make the salary it takes to live in NYC :'(
Bingo. It gets worse!
See: Why Households Needs To Earn $300,000 A Year To Live A Middle Class Lifestyle Today
I think there are alot of young people who are low to middle income(26K-84k) who are not aware of affordable housing lottery in nice buildings and neighborhoods.Maybe they are picky and will only live in manhattan where people pay more for less sq ft.
I’m fine cycling to manhattan. In rain/snow i will do subway or uber. Some employers offer unlimited metro cards.
I forgot to include my bicycle.
I have one dutch bicycle from papillionaire. I had it for years.
I also bought faster one from public bike R24. Worth every penny.
Hey,
So I’m from here, grew up in the heights, but latter moved to Brooklyn. Then deeper Brooklyn as gentrification pushed us out of neighborhood after neighborhood. I make 28k a year, and survive- somehow despite being constantly broke.
But let’s be real- the New York of the underclasses is almost a completely separate co-existing city in the same geography. Down the block from Morimotos is a 24hour greasy spoon you can get 5$ breakfast at 3am. Instead of meatpacking clubs filled with finance bros, there’s wearhouse parties, there’s actual unlicensed speakeasyies where drinks are 7$ instead of 18$. I rented my first apartment in college from a teacher who bought a bunch of brownstones in the 70’s.
So yeah sure, you can move to NYC on a 200k salary, but you’re getting the tourist experience at 10x the price tag.
I’m late to this thread, but here is my story. I lived at home saving money after college until I was 27 (not making much money 30k/year). I got a small 350 sq ft 1 bedroom walk up rent stabilized apt for $1250/mth that I found on craigslist with no broker fee. I lived on my own and was making about 50k at this time. I had cable and a cell phone. I went on vacations (cheap Caribbean) or a cruise every year. I went out to happy hours and on the weekend. I never took cabs. Only subway or walked as tended to go out in my neighborhood out of convenience. I maxed out my 401K and contributed to a Roth IRA most years. I also saved at least 10% of my income at that time in bank accounts that made about 5%. After 5 years I saved enough to buy a big alcove studio co-op that was renovated in a full service door man building on the west side. I put more than 25% down and after 3 years I refinanced my mortgage down 1.25%. at this time I was making about 75k and after I bought the co-op I continued to save the same way and live the same lifestyle. It is definitely possible to live in NYC under 100k/year, and if you save up first you don’t need roommates. I lived in that apt for 5 years and then sold it to buy a house which I have been in for 4 years now. I made money on the apt and the house has increased in value 100k. I’m always looking to trade up in real estate. I don’t want to be a landlord, but like to use the equity I build up in my home to buy bigger and better. My personal net worth is over $1,000,000 and I don’t even make $200k/year.
Well, I live in East Tenn, and I make 95,000 a year. I work a lot, and I always thought I was poor until I realized that I would make 232,000 dollars a year in New York City… How is that possible; more than a Doctor? I feel really poor in Tennessee, so I could not imagine living there with what I make, and apparently that is good money because its the 10-15 percent, which is more like 8 percent now. (2018) I don’t understand how people survive. I know I have been blessed, but I just wonder how people with nation average incomes like 59,000 live. It’s crazy!
Oh, I forgot. Manhattan is entertaining enough that you do not need cable.
Other tips- real NYers do not fear public school or college. Some of the greatest minds in our nation attended the public schools or colleges of NYC (I’m looking at you Elena Kagan, Jonas Salk, Ruth Bader-Ginsburg, and Eric Holder, to name a few). Real NYers go to Orchard Beach, Coney Island, or maybe Fire Island and ignore the Hamptons. We do not own cars if we live in Manhattan.
Your fellow up there is a crazy high roller. I grew up UMC in NYC and knew no one who lived that kind of life until they had bumped up their earnings. And we had a great time. You think the progenitors of hip hop, punk, and new wave lived like that? Look deep and hard, and you will find a more rewarding and fascinating (and cheaper) city.
Native NYer here. Yes, the city has gone mad, but let’s make like a native and learn to save. Some things, unfortunately, are written in stone, like the insane taxes and cost of health insurance.
First, upper Manhattan and the Bronx are actually quite nice, and much less expensive than the prices listed above, even two years later in 2017! You can rent a nice two bedroom in Harlem for 2200-2500 a month a few blocks from Central Park, which is fairly reasonable if you have a roommate. Washington Heights is even cheaper! Many of these apartments are no fee, too, and rent stabilized. You’ll have more space and be able to entertain at home and save money by cooking.
Also, please, bring your lunch to work like a real NYer, or grab a slice or a dirty water dog for just a few dollars. You can get five dumplings in Chinatown for $1.25 even in these gentrified days! Check out happy hours, early bird specials, and explore new neighborhoods.
Entertainment? Last month I went to three free talks at different bookstores and one at the Tenement Museum. Get an NY card and enjoy all the free and discounted museums and cultural attractions the city has to offer. Walk everywhere and take pictures. Enjoy a free day people-watching in Central Park or watching the chess players in Washington Square Park. Take the train to Flushing and check out the its exciting colonial history and its interesting immigrant present.
Join Citibike or buy a used bike on Craigslist and ride it everywhere. You can even cancel the gym membership! I earn plenty now, but in my younger days in a dirtier, scarier NYC, I NEVER took cabs. I don’t think I took a single cab all through high school. Even now I consider a cab to the airport a daring treat!
Walk. ‘Nuff said.
Groceries- avoid WF and TJ and shop at Associated and Western Beef (it’s not just beef). Make a monthly trip to Chinatown or Flushing to buy cheap groceries at an Asian market. Buy your fruit from a peddler, not from the store. Befriend the vendors at your local farmer’s market and get free or discounted leftovers.
These tips should lower your COL by several hundred, even a thousand, a month, while opening your eyes to all the city REALLY has to offer.
Mostly great advice, accept if you eat cheap pizza and dirty water dogs for lunch everyday your going to need to factor in some serious health factors!
This is one of the silliest articles I’ve ever read. I am 26 years old in NYC making 20,500 a year.
So yeah, I don’t go out to eat ever and I buy $4 bottles of wine from Trader Joe’s and I live with 4 other people in a boarding house in Brooklyn but I do NOT believe I am less happy than you are. My roommate plays Jazz music and we dance a lot. Sometimes the neighbors come by and we drink beers on the roof.
There are tons of free shows to go to in Brooklyn all the time.
It’s easy to write me off that I’m not hard working but in fact I work 60-70 hours a week, have been in 2 masters programs, and have lived all over the world, I do with my time makes me happy.
Eventually, it boils down to managing your expenses. I see a lot of expenses in the budget example that can be trimmed down and instead diverted to savings.
e.g: The annual gas expense is shown to be 4,800. So, if we assume that price per gallon is $4 and the avg mpg is 20, then this amounts to (4,800/4*20) => 24000 miles per year. That’s a lot of mileage for a single person who stays in a city with good public transportation.
Also, I think that donating to charity should only be done after getting one’s own financial future secure.
The budget could be easily trimmed by another ~15k, which would basically triple the after tax savings, without sacrificing too much but rather making informed choices.
Frugality in general will always payoff in bigger networth and greater happiness in the long term.
oh my god this is the most depressing article I’ve ever read.
As one raised entirely outside Manhattan – in the outer boroughs – I question the frugality of your friend for living on the Upper East Side.
Sometimes you have to pay to play.
I currently live in Weehawken, just on the other side of the tunnel in NJ. Have a really good deal for a studio under $800/month, rent stabilized, rent went up around $6 this year. Not giving it up anytime soon (having a smaller space also helps to accumulate less junk). Allows me to put more money towards savings and experiences (ticket prices are expensive and competitive).
But time is money. Most of the places I meet up with friends take an hour to get to (almost always going to their place or meeting in between, never coming to my side). I have called nights early, when my friends want to stay out, because I have to factor in the commute (24 hour buses, but you never know when there will be traffic in the tunnel).
Plus dating is more difficult. People seem interested, then ask where I live. I say Jersey, they say is it along the PATH. Once I say it involves the bus, it’s a non-starter. I have talked to female friends, and they mention the disadvantage of not being in the city (at least for a couple years). Saying I should move into the city to find someone, and then move out when it’s more serious and I want to save. But you know, lifestyle inflation and all that.
I will say that I have seen some larger studios/junior 1 bedrooms starting around $2.2k-$2.5k in pretty good neighborhoods which I wouldn’t mind, if I were able to get my salary up to $150k (a few years/certifications away though).
The bottom line is this… If you want to live a decent quality of like in Manhattan you need to make well over 100k if you are single. I would say at least 160k. I am talking to buy a 1 bedroom in the city as opposed to splitting rental costs and all that non-sense. You have to compare it to what you would get in another city. Also, you need to factor in the monthly maintenance fees and property taxes that are huge. The average 1 bedroom in the city now is 800k – 1M. Even if you made 160k you can not afford to buy even a 1 bedroom in Manhattan. Now imagine if you have a wife and a kid. The amount you must make skyrockets from there. Now you need at the very least a 2 bedroom and preferable a 3 bedroom. Oh yeah that is 3 million dollars at a low price point. Also in NYC you have to put down more than 30% down payment bc of the other competition. That means you would need 1M for a down payment. Then you ad in the taxes are probably 60k a year and monthly maintenance fees are 3,000. So for a family of 3 not including anything else you would need to take home 15,000 a month after taxes just to afford your housing. This means you would have to make at least 360,000 a year minimum just cover that let alone other bills. When you factor in other bills, food, cloths, transportation, entertainment, SCHOOL etc. In all honesty, as a family you need to make 500k to live pretty average. This is the most expensive city in the history of the world!
Check out this post:
Scraping By On $500,000 A Year: Why High Income Earners STILL Can’t Escape The Rat Race
Hi Financial Samurai,
I like the breakdown of this post, however I disagree. I believe if you think you are not making enough and hypothetically get a pay raise to $200k you will still find a way to not have enough money. I graduated college 2 years ago and live in manhattan on $70k, happily. Do I wish I make more? Absolutely.
First of all, your rent estimates are above what you could quality for by the 40x rule. Ie on 100k, your max rent is $2500. You see how this, in and of itself provides a large cushion you did not have. Secondly the food budget of $700 which is mostly home cooked and not including beverages is ridiculous.
I believe the taxi budget can also be significantly reduced with low priced ubers, especially if you have an unlimited metro card. Here is my breakdown
Gross: 70k
Gross/ Month $5833
Take Home/ Month: $3686
Rent: room in luxury flex apartment- 1480
Electricity & Internet (bc I split w/ roommates) $30
My work pays for my cell phone
Taxis/ Ubers: $50
Cost of metro already removed from my paycheck pre tax
Food: (including drink) $500 and I eat out 90% of the time
Student Loans: $500
Play money (movies, shows, travelling, clothes etc): $343
Leftover savings: $783!!!
It is all about choosing to live frugally.
I don’t see 401k anywhere in that list yuppie77, which means you missed literally HALF THE POINT of the article. Good job.
The author even pointed out that if his 100k earning friend didn’t contribute to his retirement fund, he’d have an extra $1200 to spend each month. Did you even read the article?
I have lived both in NYC and San Francisco. I presently reside in NYC.
There is a very clear reason that it costs so much to live here. It is called GREED.
Profiteering landlords and destabilized rents make it nearly impossible for anyone making less than 6 figures to even move here.
The infrastructure of Manhattan cannot support the unfettered growth of the population.
I would like to see you do a cost analysis of Philadelphia or Chicago.
City planning in NYC goes to the highest bidder. Period. The sanitation department, bridges, roadways, transit department and so on see not designed to support the giant influx of new residential and office buildings. The only people getting a “break” in this town are developers who keep the rents and real estate prices extremely high while they walk off to the bank.
There is no longer any such thing as middle class living in NYC. Every wealthy property owner – I mean BIG property owner, makes their money off the backs of renters and taxpayers slaving away to keep up.
There is a reason for rent regulation and affordable housing. How can NYC expect to educate its population, pay teachers, police officers, firefighters and sanitation workers a living wage if the landlords basically run NYC politics?
Do your home work. City planning is based on who has the most money. It is not based on keeping the infrastructure up to date and building only where there is a good infrastructure already in place. Zoning variations happen all the time. NYC now caters to the wealthy and powerful. There is no such thing as a middle class
Population here, and the the government does not care at all.
Come visit our overpopulated city with over inflated prices for every thing from a quart of milk to a roll of toilet paper. The reason? Out of control rents.
A shopkeeper cannot afford the rent. The landlord asked for an exorbitant increase. The shop has to close. The landlord gets tax breaks on it vacant property as infinitum.
GREEDY landlords and a complicit city government is what makes it so expensive to live here.
High construction costs?
Why is it necessary or prudent to build so many more buildings? There is trash all over the place here, broken water pipes, aging subway system, etc.
There is just so much room for prudent land development here.
The governing body does not care about that AT ALL. The real estate development community is very heavily favored here. It is NOT in the best interest of quality if life for anyone but the very wealthy.
Why should a postal worker who delivers mail in NYC take a 2 hour commute here? What if the sanitation workers decided to work in a smaller municipality do they could afford to take their kids in vacation?
What municipal worker earns $250,000 per year? Any I what other sector apart from law and finance does anyone get a reliable “associates” pay hike annually?
This is a very short sighted article dealing with a very small spectrum of the population it takes to make this city “go”.
I have lived here 40 years. In that time my real spending capability has significantly decreased. Checked interest rates at the bank recently?
The author of this article was obviously born in a different era and location than the majority of born and bred New Yorkers.
I you were to go back to where you came from, this residential and commercial rent problem we face would disappear.
Its all because of the Bloomberg administration. All of this happened under his watch for 10 years and it didn’t help he was a billionaire either who catered to the rich.
Brooklyn is kinda nice comparing to crowded Manhattan. But with the $6 million house listing right now, I guess I would never make it to buy a house there. Consider Seattle maybe a better option for city life and beach views with much less cost comparing to NYC.