Can you afford to live in New York? Here’s how to find out

Living in New York can be extremely expensive, but it doesn’t have to be.

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Key points

• The cost of living in Manhattan is almost double the national average.
• The average one-bedroom apartment in New York costs $3,860 per month.
• There are ways to drastically reduce your living expenses in New York, such as finding lower-cost neighborhoods, living with roommates, and moderating your expenses.

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

So can you afford it? And how can you know that? Here are some questions to consider.

1. What is your budget?

Everyone’s financial situation is different, so the first step is to consider what you earn and how much you plan to spend. It’s hard to estimate your cost of living if you don’t already live in New York, but it’s fair to say that almost everything will be more expensive. These statistics can help you in your calculations:

• Rides in Manhattan cost about 35% more than the national average, according to COLI data.
• Going to the movies will cost you more than $19 per ticket, compared to $6.50 in other parts of the country.
• Rent can cost up to $3,000 a month, but if you’re willing to share and live in a less illustrious borough, you can cut that figure down 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 that as a starting point. Be prepared to spend more – the NYC Mayor’s Office reports that a third of renters spend more than half of their income on rent.

Once you have an outline of a budget, you can play around with the numbers and see what living in New York might mean for your quality of life. If you spend 40% or more of your income on housing and another big chunk on groceries, utilities, and transportation, you may not have much wiggle room.

Don’t forget to consider savings and investments. It can be extremely tempting to sacrifice these longer-term goals to meet the day-to-day expenses of life. However, if you don’t have three to six months of living expenses in a savings account to cover unforeseen emergencies, how will you cope if you lose your job? Likewise, neglecting your retirement savings can be costly later on.

2. Are you ready 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 per month. A two-bedroom unit will cost you $4,300 per month, which means you can almost cut your housing costs in half by sharing with another person. If you’re willing to share with more people, you can lower that number even further. Living with roommates will also lower your bills.

3. Are you flexible on your location?

If you don’t have to be in New York, consider some of the cheapest areas in New York State. It might be more feasible if your employer offers hybrid work so you can work remotely for at least part of the week. Some high earners have abandoned New York altogether in favor of lower-cost states.

In New York itself, discover 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 wages are also higher. US Census Bureau data places New York State in the top 15 states by salary, although DC, New Jersey and Massachusetts all have higher average incomes.

The problem is, even if you make a living wage, New York City will quickly destroy your finances if you don’t watch the bottom line. Living frugally doesn’t mean giving up all the things you love and shivering through the winters. But that means spending intentionally and not wasting money on things you don’t really need.

To live in New York, you may need to eat less at restaurants, cut back on grocery spending, and walk or bike more than usual. That might mean inviting friends over for dinner rather than eating out, skipping a few take-out coffees, and opting for second-hand clothes instead of buying new ones. There are plenty of ways to enjoy life without spending a lot of money, especially if you keep an eye out for discounts on the things you want to do and buy.

5. Could you benefit from housing assistance?

There are housing assistance programs in New York, but the competition is fierce. If your income meets certain criteria, you can apply for a Housing Connect lottery and/or join a waiting list for affordable rentals when they become available. You may need to pass a credit check or provide 12 months of rental history, and you will also need to have a few months’ rent as a security deposit.

At the end of the line

It’s always difficult to know what you can afford, because it depends on how many compromises you are willing to make and what you earn. If you want to live in New York, the important thing is to find ways to live within your means and not neglect your other financial goals. Spending more than you earn is a recipe for financial hardship no matter where you live.