Expensive cities are great for having an active social life in your 20s and 30s, but the cost of living in one can put a dent in your wallet. Whether you currently live in a major city or you plan on relocating to one, you will benefit from learning some financial tips to help you save money on a monthly basis. Here’s what you should know.
1. Live Below Your Means
One of the most often heard pieces of financial advice is to live below your means. Despite its simplicity, a lot of people have a hard time following it, especially those who are renting in an expensive city. But living below your means is crucial if you want to save more and spend less. Your biggest expense is probably rent, and the general recommendation is to spend about 30% or less of your gross monthly income on it.
If you are overspending on housing costs, look into moving to a cheaper neighborhood or consider downsizing your home to a smaller space. In Washington, D.C., the average rent is $2,227, but if you move just 8.3 miles away from the city to Alexandria, VA, you’re paying $1,765 on average. That’s a cut of $462 a month or $5,544 a year. This will vary from city to city, but making sacrifices regarding space and location can go a long way anywhere.
2. Increase Your Income
If you’re not planning on packing up and moving just yet, your next step should be to look for opportunities to increase your monthly income. Your paycheck might be enough to cover basic necessities and entertainment costs, but your financial goals should aim higher if you want to afford the big city life. Saving for retirement or for a down payment, or building an emergency fund are important steps in becoming financially stable.
There are some ways for you to increase your income, provided you have the time and energy to do so. You can consider a part-time weekend job or even a side hustle; some of the best side hustles to consider are driving for Lyft or Uber, delivering food, registering as a freelancer, and babysitting or dog sitting. If you make enough money with your side hustles to cover rent, your main income can be split between savings and other lower costs, and you’re practically living rent-free.
3. Cut Back on Transportation
If you really are looking for ways to save, then you should ditch the car. If you’re living in an expensive city like New York or Chicago, you can get around via public transportation. You may be surprised to learn that the average cost to own a car is about $9,000 a year, according to AAA.
If you want to find another way to save money, then consider getting around your city by public transit, walking or biking, or ridesharing. Even if you don’t see it as a big cost, every penny counts and eventually the money you’d spend on your car can pile up into a nice savings account.
4. Monitor Your Daily Spending
Living in a big city is great because you have everything at an arm’s length. But this means that your daily spending can also rack up easily. The trick is to take control of your finances by monitoring your spending and setting strict budgeting rules. This way, you know how much money is going towards food, entertainment, and everything else you budgeted for.
You can use free budgeting tools and apps that make it easy to set up budgets and monitor your spending. This makes saving money a breeze even in an expensive city.
5. Plan Your Meals
Lastly, you’ll want to focus on eating out and ordering in less. Eating out is a very pleasant but expensive habit, especially among millennials, so it’s a perfect expense to cut out of your life.
The occasional dinner out with a date or group of friends is fine — but don’t make it a weekly thing. Most savvy savers tend to cook and eat healthy meals at home. Also, they cook meals at home and bring them to work.
If you’re a big fan of eating out and you just can’t get yourself to cook a homemade meal, then plan for it in your budget. Maybe spend less on entertainment and you can squeeze in eating out more often. And be sure to keep an eye out for deals in mid-range restaurants and affordable places to eat.
Brian Meiggs has a Finance degree from Virginia Commonwealth University and founded My Millennial Guide after six years of Financial, Accounting, Mortgage, and Credit Lending experience in Virginia and Washington, D.C. Meiggs has spent the last several years writing about personal finance and been quoted in prominent online publications, including Yahoo! Finance, NASDAQ, MSN Money, AOL, Discover Bank, and GOBankingRates.