5 Ways You Can Make A Big City Move Without Draining Your Bank Account

by David Adams

A big city move isn't for the faint of heart. With a new transit system to learn, a new network to build and new friends to meet, who has the time to even think about money?

Chances are, you'll find yourself in this situation at some point in your life. Millennials are increasingly choosing cities over suburbs, with single-family suburban home-building rates the lowest they've been in decades. There's a predominant “because I can” attitude.

Why live in a suburb when you could take a chance and live in Midtown Manhattan? You'll be exposed to the heart of the city, not to mention get the bragging rights you get when you mention, “that one time I lived in New York City.”

Unfortunately, with the glitz and glam of city living comes an unwelcome sidekick: an empty wallet.

Big city living means big city spending.

Many of the biggest budget concerns will change drastically, based on your city of choice. Among rental costs, food expenses and transportation, your monthly spending breakdown may surprise you. Here are some of the trends in the most popular cities:

  • In San Francisco, you may spend less on rent, but public transportation options don't cover all reaches of the Bay Area. Owning a car is a surprisingly practical choice. You'll need to pay for insurance, lease payments, gas and maintenance on the car you might own. Distances in the Bay Area are much longer than in other areas. You'll need a car to cover the entire Bay.
  • In New York City, you won't have to own a car, as the city has one of the world's best public transportation networks. However, you might not even have a full kitchen to cook in. Instead, you'll be eating out more and spending more on dining. Work culture is different in NYC, too. You will be out more after work for happy hours. Your budget in NYC focuses more on going out than commuting.
  • In Los Angeles, where public transportation is basically nonexistent, you'll need a car. Thanks to atypical traffic patterns, you'll be stuck in your car for hours every day, trying to navigate from one side of the city (or even county) to the other. In addition, thanks to Los Angeles' coastal climate, cooling costs will be higher compared to most in the Bay Area, where many apartments don't even have air conditioning.

These are the basic needs for every city:

Even with the many spending differences among locations, a good planner could find success in any metropolis. Here are the top five monetary concerns of living in a big city, with how to allocate your money accordingly:

1. Keeping a Roof Over Your Head

First and foremost, you need shelter, so it's important to determine your living situation upfront. The rest of your spending should be determined by what percentage of your after-tax income goes toward rent.

If you decide to live it up in an expensive place, you'll have less excess cash to spend day to day. If you decide to rough it, you'll have some extra money to spend on entertainment and other activities.

It's a personal preference, but it's one you need to think through early. If you think you'll somehow end up in a nice loft with extra happy hour money, it's time for a reality check.

2. Not Starving

Eating may seem like an inconvenient, expensive necessity, but it can't be ignored. See whether your employer offers meals or a stipend.

For example, does your company have an onsite cafeteria? Does it comp your lunchtime meals? You can expect critical savings here if you aren't paying for and eating out for lunch every day.

Decide how much to spend eating out versus shopping for the week. I like to set a budget for myself — say, no more than $30 a day — for the amount I will spend on food. But that may not be feasible in an area like Manhattan, where cooking in your apartment is a foreign concept, and going out for happy hour is a social requirement.

3. Getting Around

Again, start by checking what perks you can get through work. Does your employer comp commuter fees?

Don't pay out of pocket for your MetroCard in NYC or Clipper card in the Bay Area if work will cover it. Your employer likely has a program that lets you pay using pre-tax dollars.

Do you really need a car and its expenses (loan, insurance and maintenance), or could you forgo the car for a few months and stick to public transit?

4. Avoiding Avoidance Tactics

It's tempting to ignore your bank account, but this is the time when you need to bring out your inner accountant. Start tracking your expenses, and create your own expense report.

Don't jump ahead to what you might buy. Instead, look into your past and write down all the things you've purchased. Apps like Mint or Level Money will help you keep track of daily expenses, so that you can stay accountable. This will give you the best idea for what you can expect over the coming months.

5. Preparing For The Future

If you haven't already, you should open an individual retirement account. You should be maxing out your contribution as much as possible each month (the maximum is $5,500 a year).

Ideally, your employer will match your contributions to a certain percentage, essentially giving you free money for the future. Don't pass that up.

Be honest with yourself about your spending patterns. Don't try to buy things or go out for the sake of others. If it's not in your budget, it can wait.

The move to a big city is no easy undertaking, but it's true that you get what you pay for. Swapping out a long commute for post-work drinks (and a little luxury for a lot of living) will be worth it. Just make sure to keep your budget at the top of your mind, even when it seems inconvenient to do so.