How to Create a Budget That Works for You in an Expensive City

How to Create a Budget That Works for You in an Expensive City

Saving money is never easy, especially when you live in an expensive city like New York or Los Angeles. In fact, a lot of people avoid pursuing their dreams of living in one of the most exciting cities in the world because they feel like it’s going to be too expensive and they’ll end up out on the street or moving back home with their parents. However, if you know a few budgeting secrets, you can save money and live the life you want to live in an incredible city, even if that city is more expensive than most.

Do the Math

First of all, you need to determine how much money you’re making each month and how much you absolutely need to spend to live per month. Get out a piece of paper and write down your monthly income in one column. Then write down your monthly expenses, including rent, utilities, transportation, food, and anything else you absolutely need to survive.

Subtract your expenses from your income. If you have a negative number, you’re going to have to figure out how to either get more income or spend less money each month.

Negotiate Your Salary

If you’re moving to a new city for work, your employers should be paying a wage that will allow you to live there comfortably. If you’ve done the math on your budget, and you come up negative or dead even, you may have some leverage to negotiate a higher salary or a living and/or transportation stipend. Most companies expect some negotiation when hiring new talent, so don’t be afraid to ask for what you’re worth and what will allow you to live comfortably.

Reduce Your Living Expenses

If you can’t negotiate a higher salary, you do have other options to reduce your expenses and get your budget in order. For example, instead of living in a two- or three-bedroom apartment, you could live in a studio. Or you could move in with friends or your significant other to save money, as well. If you own your apartment, you could rent out the spare bedroom to a roommate to help with your mortgage and utilities each month.

Rethink Your Transportation

Another great place to save money and help with your budget is to rethink your transportation to work and play. If you own a car, and you’re in an area where you don’t need to drive to work, you could sell your vehicle and save a lot of money on gas, car payments, insurance, registration, and/or parking fees. If you’re close enough to work to walk or ride a bicycle, you could even save on public transit costs. And you’ll be getting more exercise, too, which will improve your health and fitness. It’s a win-win!

Use the Envelope System

Now, take your monthly expenses and subtract them from your monthly income again. You should have a positive number – the amount of “excess” money that you’re saving each month. Decide how much of that you need to put in savings and how much you can spend on things like entertainment, dining out, clothes, etc.

Withdraw that amount from your bank account and grab an envelope for each category of spending (clothes, entertainment, etc.). Put the amount you’re willing to spend on each of these in its respective envelope. Then, throughout the month, only use cash from your envelopes to pay for those things. At the end of the month, you can let your envelopes rollover to the next month, treat yourself to something fun, or put that money in savings and start over.

Living in an expensive city doesn’t have to be hard. You just need to know how to budget for it, and these tips should help you do just that.