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

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


Key points

  • The cost of living in Manhattan is nearly double the national average.
  • The average one-bedroom apartment in New York City costs $3,860 a month.
  • There are ways to significantly reduce your living expenses in New York City, such as scouting low-income areas, living with roommates, and being frugal with your spending.

New York City tops almost every cost-of-living survey out there. In fact, the latest Cost of Living Index (COLI) shows that living costs people living in Manhattan almost twice as much as the average American. Even Brooklyn isn’t much better. Now, you don’t have to live in Manhattan or Brooklyn to live in NYC, but it’s still an expensive, mouth-watering place to live.

So, can you afford it? And how can you find out? Here are some questions to consider.

1. What’s your budget?

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

  • Groceries in Manhattan cost about 35 percent more than the national average, according to COLI data.
  • Going to the movies will cost you over $19 per ticket compared to $6.50 in other parts of the country.
  • Rent could run up to $3,000 a month, but if you’re willing to share and live in a less prominent neighborhood, you could bring 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 New York mayor’s office says that a third of renters spend more than half of their income on rent.

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

Don’t forget to take savings and investments into account. It can be extremely tempting to sacrifice these long-term goals to afford the day-to-day expenses of life. However, if you don’t have three to six months of hidden out-of-pocket expenses in a savings account to cover unexpected emergencies, how are you going to do if you lose your job? Similarly, neglecting retirement savings can prove costly in the future.

2. Are you willing 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 a month. A two-bedroom place will set you back $4,300 a month, which means you can nearly halve your housing expenses by sharing with one other person. If you’re willing to share with more people, you can reduce this figure even further. Living with roommates will also reduce your bills.

3. Are you flexible about your location?

If you don’t have to be in New York City, consider some of the low-cost areas in upstate New York. This may be more feasible if your employer offers hybrid work so you can work remotely for at least part of the week. Some rich people have abandoned New York altogether in favor of low-cost states.

In New York City itself, check out the more affordable neighborhoods, like 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 the salaries are higher too. Data from the US Census Bureau 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’re making a decent salary, New York City will quickly destroy your finances if you’re not watching the bottom line. Living frugally doesn’t mean giving up all the things you enjoy and shivering through the winters. But it does mean spending intentionally and not wasting money on things you don’t really need.

To live in New York City, you may need to eat out less, reduce grocery costs, and walk or bike more than you’re used to. It could mean inviting friends over for dinner rather than eating out, skipping a few takeaway coffees, and opting for secondhand clothes instead of buying new. There are many ways to enjoy life without spending a lot of money, especially if you keep an eye out for discounts on things you want to make and buy.

5. Could you qualify for housing assistance?

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

Bottom line

It’s always hard to know what you can afford because it depends on how many compromises you’re willing to make and how much you earn. If you want to live in New York City, 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, wherever you live.

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