A few weeks ago I sat down with my dad to talk about moving to New York City after graduation. I was overwhelmed and nervous at first because I knew that he was not going to fund my move to New York. Being a broke college student, with the exception of a little in savings, I didn’t know how to start planning the move to one of the most expensive cities in the country. After laying everything out on paper, I discovered exactly how much I would need to earn per month to survive and I feel more comfortable knowing the salary necessary for living. Here is the step-by-step process that I went through to figure out my new budget for a new city and hopefully this will be of assistance to you too.
• Start your monthly budget by filling in this template. You may not need to fill out every area in the template depending on your individual needs. You may also need to add another category or two. This is just a starting point, so feel free to customize to your needs.
• When filling out the income taxes withheld, do some research online to find the correct numbers for your estimated tax bracket. Also be sure to look up or ask someone about any other specific taxes that the city you are moving to has. For example, New York has a 4% luxury tax.
• Next, add up all withheld tax percentages to see how much of your income will go to taxes so you can adjust your spending accordingly. When I added up everything, about 38% of my income will be withheld and this does not include any tax refunds.
• Rent can be tricky if you are moving to a new city by yourself. Luckily, I have friends who are moving to NYC as well and together, we researched thoroughly to find the best place for rent in a safe location. Decide what you are willing to sacrifice when it comes to rent. I will have a 35-minute commute to work everyday, but I will be saving $300 a month in rent by living further away in a larger space. For me, it’s definitely worth it.
• If you are moving by yourself, research sites that pair people together and decide what you are looking for in an apartment and a roommate. If you know someone in the city that you’re moving to, ask him or her for recommendations on safe areas of town.
• For transportation costs, add up the mileage and calculate your estimated gasoline costs to and from work. Personally, I will not need a vehicle and will be taking the subway, so I looked up the price of monthly metro cards and also budgeted in some money for cabs.
• Decide what items are needs versus wants. You might have to sacrifice things that are not necessities in order to fit your budget, such as Starbucks every morning or spending money eating out. Living beyond your means is a surefire way to get yourself in financial trouble.
The hardest part about making a budget is estimating costs, because more times than not, people don’t know exactly what they intend on spending. With that said, it is better to overestimate than underestimate. Knowing how much you will need to make in order to meet your monthly needs financially will make moving to a new city seem more manageable. You will know whether or not you will need to get another job to cover costs. I hope these tips will help prevent you from being blindsided by the costs of supporting yourself in a new city. Good luck to you!
Hat tip: About.com