Yahoo Finance 7 Ways to Save Money When Your Cost of Living Is High
If only living in an expensive city were as easy as it looks on most TV sitcoms, where the lead characters lounge in the most palatial digs while working a job you know doesn't pay enough for an apartment that size in real life.
It's a nice, aspirational fantasy, but the truth is that paying rent in most cities -- let alone saving money -- isn't easy, especially in Manhattan, Los Angeles, San Francisco and other metropolitan areas known for their enormous cost of living. Expenses in these places can be astronomical, according to a 2016 cost-of-living study by GOBankingRates.com. To live reasonably in New York City, the most populous city in the U.S., for example, the study found that you'll need to earn at least $87,446 a year. That's about $34,000 more than New York's median income. And that kind of gap isn't exclusive to Manhattan. In the last five years, rent prices across the U.S. climbed 15 percent, but renters only saw a pay increase of 11 percent, according to a 2015 survey by the National Association of Realtors.
You don't have to give up your dream of making it in the big city, though. You just need to find some creative ways to cut back on expenses in order to manage your city's cost of living. Try these practical tips to save money and give yourself some more breathing room in your budget.
[See: 11 Expenses Destroying Your Budget.]
1. Trade Down, Not Up
Finding a roommate to split your rent can take a big chunk out of your monthly expenses, but don't forget the most important factor in choosing an apartment: location, location, location. Don't squander your budget trying to live in an exclusive part of the city when you might be able to get something of equal size or bigger for less money in a cheaper neighborhood.
Cheaper doesn't mean worse. If you research your city, you can likely find a lesser-known neighborhood that offers the same features as more expensive areas. Check out apartments in neighborhoods adjacent to the area you want to live in or look for features you want in various areas instead of trying to stretch your budget to pay for an apartment in a specific neighborhood just because it has an impressive reputation or ZIP code.
2. Rent Out Your Couch
If you moved to a city, chances are you'll be visiting family elsewhere at least once a year. Consider renting out your apartment while you're away through a service like Airbnb. You might even rent out your couch for a lower rate than area hotels for special occasions, like when a major sporting event hits your town. Having extra income could enable you to build your savings or pay off debt.
[See: 10 Easy Ways to Pay Off Debt.]
3. Say Goodbye to Your Ride
Have you ever been walking down Broadway during rush hour in Manhattan and noticed that you're moving faster than all the cars stuck in traffic? If you live there or in a city with a similar traffic problem, you've got a good reason to ditch your car and explore alternatives such as mass transit.
Selling your car can save you money on auto loan payments, gas and insurance costs, not to mention the cost of parking if you have to rent a space on a monthly basis. The money earned from the sale of the vehicle can be redistributed in your budget for rent, amenities and savings. If you must have a car, you could rent a Zipcar as needed.
Biking can be a cost-effective alternative to driving that also provides free exercise, so you could cut your expensive gym membership, too.
4. Become Your Own Personal Chef
If you live in an area with numerous restaurants, it can be tempting to eat out frequently. And if you're working long hours or have a long commute, you probably don't feel like cooking every night. The problem is, you could go broke dining out too often.
"The best way to avoid it is by simply making dinner beforehand and meeting your friends when you've already eaten," says San Francisco resident Joseph Nagle, marketing director for electric vehicle charging solutions provider EverCharge.
By planning ahead, you can make cooking for yourself less of a time-consuming chore and more of a cost-saving hobby or lifestyle change. Shop for groceries strategically at farmers markets and discount chains like Aldi or Food4Less, taking advantage of sales and app-based coupons whenever possible.
"By simply stocking up on sale items that I use often, I can cut costs by at least 50 percent," says Nedalee Thomas, Los Angeles-based CEO of Chanson Water. "I also use the supermarket app to add digital coupons to those sales, saving 67 percent." And when you go shopping, bring your own reusable bags to save money on the fees many stores charge for paper or plastic.
5. Stay Loyal
You don't always have to forgo services to save money. If you understand a store's policies or are a loyal customer, you might be able to qualify for a discount.
"Dry cleaners will usually deliver and provide a discount for payment upfront," says Kristin Fernholz, founder of marketing firm Fashmark in New York. "Liquor stores will offer wine discounts if purchasing cases -- and also deliver," she says.
Fernholz also suggests asking stores if they carry student or affiliated discounts. You might be able to get a price reduction on purchases if you're a member of a museum, nonprofit or other organization.
6. Negotiate Your Bills
Negotiate lower rates on every bill -- even your rent. Ask your landlord, utilities provider, insurance carrier and credit card issuer for lower monthly charges and rates on all the incidentals. The worst they can say is "no." Even $100 combined savings across several bills is still $1,200 in savings a year.
You can even get some services for free. Instead of visiting a ritzy salon, for example, get your hair styled by students who need the hours of experience to obtain their hair styling licensure.
[See: How to Live on $13,000 a Year.]
7. Go Cheap or Go Home
Every major city has free things to do. "You just have to know where to look to find them," says consumer savings expert Andrea Woroch. "Search your local newspaper's online event calendar for local listings. It might be a makeup tutorial at a local beauty shop or free yoga in the park."
Make Google your friend for finding free things to do in your city. Art galleries, film festivals and museums often open their doors at low to no cost. "Many cities offer free movies in the summer and free fitness classes," Woroch adds. Look to see if there are free movies, concerts or plays in the park or at one of the local universities.
And at home, ditch the cable bill and stream your TV shows via options like Chromecast, Netflix or Hulu. You'll pay far less for these entertainment options than for traditional cable, and you can access movies to watch at home instead of racking up the costs of going out to a movie theater.
Keep your cost of living in check by remembering that it's not completely out of your control. You might not be able to change the sales tax rate in your city, but you can take actions to reduce other expenses and make living in an expensive area financially manageable, if not comfortable.
Paul Sisolak writes for GoBankingRates.com, a source for the interest rates on savings accounts, CDs, mortgages, auto loans and more.
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