Money Management 101
Something I’ve always prided myself in is my money management skills. And honestly, I owe it all to my mom. She taught me that if I want something, I better be ready to work for it. My money management skills started forming when I turned 16 and I begged my mom for a car. She said, “If you want a car, then you better get a job to pay for that car.” So, I did. I got my first job at a small grocery store (that I walked to, mind you), and eventually saved enough money for a car (And no, I did not stop working after I made enough money).
Knowing that my mom has instilled this in me at such a young age has truly set me up for success. Mind you, I am not perfect. I definitely have impulsive moments where I spend too much on something I shouldn’t or I forget to budget for something important, but I always try to maintain healthy spending habits that will benefit my present and future self.
Just so we are clear moving forward, I am grateful that I was lucky enough to have a role model like my mom growing up, especially in terms of providing me with money management skills. However, I know that not everyone has this luxury. And that is okay. Whether you’ve unwillingly absorbed your parents’ habits or you created your own bad habits, there is always an opportunity to make a change. And that goes with ANYTHING in life.
To help you become better at managing your money in New York City, I’ve determined three very simple, yet important steps you must master. So let’s break it down.
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1. Start ballin’ on a Budget
We all know that New York is one of the most expensive cities in the country. Duh. When I graduated from FIT, it took me a few months to figure out how to budget accordingly with my new steady source of income (aka, my full-time job). I find this to be the most important aspect of avoiding being broke.
In order to help you out with what you can expect to budget for when living in the city, I’ve made a list below of everything I personally budget for. Some of these things are 100% my choice to spend money on, of course. But I have a horrible case of FOMO and New York City only emphasizes that.
One of the most important aspects of budgeting is determining if what you’re budgeting for is a “need” or a “want”. I’ll get more into that later but for now, I’ve included a rough estimate of what you can expect to pay for each, based on an estimate of what I typically spend.
*Please note these numbers calculated based on my own personal experience. Obviously costs will vary per person/lifestyle. For reference, I’m a 24-year-old living in Hell’s Kitchen with two roommates and I have a full-time job.*
- Rent + utilities: $1300-1600
This is a rough budget you’ll need for a decent apartment w/ roommates.
- Groceries: ~$50-80 every two weeks
Not everyone goes grocery shopping every two weeks in the city. Many people go once every few days to pick out specific items they need. I personally cannot do that as I like to meal plan.
- Metro card: ~$130/month
This is for the unlimited card, which you will absolutely need if you are commuting on the train to work twice every day.
- Phone Bill: $60
I’m on my parents’ plan which is a little less expensive than most phone bills.
- Uber: ~$15-25 per ride
I Uber around 2-3 times a week and I only take UberX. Ubers will be cheaper if you take an Uber Pool but I hate people so paying extra to be alone with my thoughts and the Uber driver is worth it to me.
- Eating out (food only): ~$20-40 per dinner
I typically eat out once a week which is a lot less than most New Yorkers.
- Drinks: ~$12-20 per drink
You must FULLY expect to pay $20 for a drink in the city. If you want cheap drinks, go to any Hell’s Kitchen gay bar. A vodka soda runs $4 at most of them. Or find a Chad to buy a drink for you. It’s all about finessing out here, ladies!
- Any extra wants/activities: ~$100-200/month
This could be anything from clothes, to liquor, to museum admissions, to music subscription services. I personally spend this extra amount on things to do, like museums, movies, etc. Experiences matter the most to me (what a ~millennial~ thing to say).
As I said, this is solely based on my own personal experience. As you can see I have more “wants” than “needs”. But these are things I enjoy to have in my life and I will continue to budget for in order to do so! However, there may be things listed here that you may not necessarily need to budget for! Maybe you’ll only go out to eat every two weeks or you’ll make a point to take the train, even if Uber seems like a more convenient option for you.
To determine what you will need to budget for, I recommend creating a list, similar to the above, of things you know you spend money on every month. Then, record everything you buy during the month. At the end of the month, calculate it all per category and add 5-10% to everything that has potential to fluctuate (food, Ubers, etc) and bam, there’s the budget you need to follow for your expenses. It sounds like a lot, but I promise it will help you in the long run.
2. Save Your Heart Out
Saving money is a crucial part of living ANYWHERE, but especially an expensive city like NYC. In addition to the list I mentioned above, it is important to make sure you are saving money from every paycheck you receive.
To start saving, I recommend using this AMAZING app named Albert. Albert analyzes your spending habits and pulls money from your checking account to a savings account in the app. Seriously, they’ve pulled money that I don’t even notice is gone (typically ranges from $5-30). I’ve saved thousands of dollars with this app throughout the course of a year or two that I’ve had the app. It’s perfect because you can even save for a bunch of different goals and Albert will pull money to go in each fund! Seriously, it’s the best. Check it out here!
3. Get your priorities in check
Last by not least, it is SO important to prioritize your spending. This is where the difference between “needs” and “wants” come into play. Ever since I was younger, whenever I would be debating a purchase, my mom would ask me “is it a want or a need?” In fact, she still does this! Because of this way of thinking, I’ve been able to prioritize different purchases as I’ve made them throughout my life.
There are various levels of wants and needs. An absolute need would be, for example, groceries. An absolute want, for example, would be a vodka soda. However, the lines can be sometimes blurred. I’m not saying that you should ONLY purchase needs. I’m only saying that if you feel hesitant about a purchase because it may not be in the best interest of your budget, maybe you should reconsider. For example, if I desperately need a new pair of Air Force One’s (I beat those bad boys up so much, I replace them more often than I’d like), then I will absolutely purchase them. Will I die without them? No. Do I consider them an essential part of my transportation in NYC? Yes. Also, side note, if anyone has any suggestions for white sneakers that can handle NYC streets for more than a few months, please let me know here.
Moral of the story, you must be smart about what you choose to spend your money on. Find the difference between your “wants” and “needs” and prioritize them as such. If you have no self-control, you’ll be in trouble. New York City takes no prisoners.
I want to briefly talk about credit and how you can avoid piling on debt in the city. Along with implementing the suggestions I wrote above, I also recommend only having one credit card. Not only is this a safer option in terms of theft, but there are plenty of credit card companies that have programs where you can build up cash rewards or points. Obviously I don’t know your situation, but you most likely DO NOT need more than one.
Although this is very obvious I need to remind you that, CREDIT IS NOT FREE MONEY. You MUST pay it off to avoid any interest or other potential penalties, such as late fees. I recommend setting a personal limit for yourself. I pay my credit card off whenever it reaches $200. I’ve never paid a cent of interest on my credit card because of this and if you’re smart about your spending, you won’t need to either. Also, I’ve racked up hundreds of dollars worth of credit card points by only using my credit card to pay for basically everything. It’s a win-win, but only if you’re smart about it.
If you have taken the time to read this, I thank you. I know that money is not the most exciting thing to talk about. However, I believe that in order to live your best life, it’s important to be financially smart and secure. Now go into the world and spread your wings, my beautiful financially stable butterfly.