Can You Afford to Live in New York City? Here's How to Find Out

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  • The cost of living in Manhattan is almost double the national average.
  • The average one-bedroom apartment in New York City costs $3,860 a month.
  • There are ways to significantly lower your New York City living expenses, such as seeking out lower-cost areas, living with housemates, and being frugal with your spending.

Living in New York City can be extraordinarily expensive, but it doesn't have to be.

New York City tops almost every cost of living survey out there. Indeed, the latest Cost of Living Index (COLI) shows that life costs people who live in Manhattan almost double the average American. Brooklyn isn't much better, either. Now, you don't have to live in Manhattan or Brooklyn to live in NYC, but it's still an eye-watering expensive place to live.

So, can you afford it? And how can you find out? Here are some questions to consider.

1. What's your budget?

Everybody's financial situation is different, so the first step is to look at what you earn and how much you expect to spend. It's hard to estimate your living costs if you're not living in New York City already, but it's fair to say that almost everything will be more expensive. These stats may help your calculations:

  • Groceries in Manhattan cost about 35% more than the national average, according to COLI data.
  • Going to the movies will set you back over $19 per ticket compared with $6.50 in other parts of the country.
  • Rent could cost upwards of $3,000 a month, but if you're prepared to share and live in a less illustrious borough, you could shrink that figure to $1,500 or less.

In terms of rent, the rule of thumb is to spend no more than 30% of your income on housing, so use this as a starting point. Be prepared to spend more -- the NYC Mayor's Office says a third of renters spend more than half their income on rent.

Once you have an outline of a budget, you can play around with the figures and see what New York City living might mean for your quality of life. If you're spending 40% or more of your income on housing and another big chunk on groceries, utilities, and transportation, you may not have a lot of breathing room.

Don't forget to factor in savings and investments. It can be extremely tempting to sacrifice these longer-term goals in order to afford the day-to-day expenses of life. However, if you don't have three to six months' worth of living expenses tucked away in a savings account to cover unexpected emergencies, how will you cope if you lose your job? Similarly, neglecting your retirement savings can prove costly further down the line.

2. Are you willing to live with other people?

Recent data from Zumper shows that the median rent for a one-bedroom apartment in New York City is $3,860 a month. A two-bedroom place will set you back $4,300 a month, meaning you can almost half your housing costs by sharing with one other person. If you're willing to share with more people, you can cut this figure even further. Living with roommates will also reduce your bills.

3. Are you flexible on your location?

If you don't have to be in New York City, consider some of the lower cost areas in New York state. This might be more feasible if your employer offers hybrid working so you can work remotely for at least some of the week. Some high earners have abandoned New York altogether in favor of lower cost states.

In New York City itself, check out more affordable neighborhoods, such as Riverdale and Spuyten Duyvil in the Bronx, Kew Gardens and Sunnyside in Queens, and Bay Ridge in Brooklyn.

4. Can you live frugally?

New Yorkers may pay more for the privilege of living in the Big Apple, but salaries are higher as well. Data from the U.S. Census Bureau puts New York State in the top 15 states by salary, though D.C., New Jersey, and Massachusetts all have higher average incomes.

The trouble is that even if you are earning a decent salary, New York City will quickly destroy your finances if you aren't watching the bottom line. Frugal living doesn't mean giving up all the things you enjoy and shivering through the winters. But it does mean spending intentionally and not wasting money on things you don't really need.

To live in New York City, you might need to eat out less, reduce your grocery costs, and walk or bike more than you're used to. It might mean inviting friends over for dinner rather than eating out, skipping a few take-out coffees, and opting for secondhand clothes instead of buying new. There are lots of ways to enjoy life without spending a lot of money, especially if you keep an eagle eye out for discounts on the things you want to do and buy.

5. Could you qualify for housing assistance?

There are housing assistance programs in New York City but competition is fierce. If your income meets certain criteria, you can put your name down for a Housing Connect lottery and/or sign up to a waiting list for affordable rentals when they become available. You may either have to undergo a credit check or provide 12 months' worth of rental history, and you'll also need to have a couple of months' worth of rent as a security deposit.

Bottom line

It's always difficult to know what you can afford because it comes down to how many compromises you're willing to make and what you earn. If you want to live in New York City, the important thing is that you find ways to live within your means and don't neglect your other financial goals. Spending more than you earn is a recipe for financial difficulties, wherever you live.

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