Many associate New York City as a pricy city. I always think of it as not necessarily so. The difference here, compared to other places, is that there is more opportunities to spend your money. Specialty stores, expensive restaurants, cabs and street vendors can empty one’s wallet in a day, or an hour for that matter. Being said, living here can actually be cost efficient. The trick is that you need to adjust your spending behavior in order to enjoy seeing more money in your bank account. The adage is true:
You make more money by how you keep it, not necessarily by how you earn it.
Before spending money on your new apartment, you need to create a budget and account for it. Besides rent, what money goes for food, transportation, electricity, internet, phone, insurance and savings? Yes, it is finance 101, but many people seem to trip up over this stuff. Yes, many musicians do dumb things with their money. So, it’s important that you strictly adhere to this budget not only when you first move here, but throughout the rest of your life. Artists and musicians need to dispel the myth of not having money. They simply need to save more of it. They need to put non-withheld money aside for taxes. Most of all, they need to make their money work for them.
It’s imperative you have an emergency fund of at least $500, if not more, in savings. I recommend putting this in a different account than your bank that yields a bit more interest than the dreaded 0.01%, as most basic checking and savings accounts offer. Use liquid savings accounts. This means you can take out the money when you need without penalty. Plus, if your savings is separate from your actual checking account, you’re less likely to dip into it. I recommend signing up for a credit card that offers you cash back. This is a good way to make slow, but short-term money by using it to pay for your necessities. Just use it wisely by paying it on time. Also, don’t get over your head with excessive-spending.
As far as no-hassle free checking accounts, I recommend Chase here in the city. Not only do they have more locations than Bank of America and other competitors, but you don’t need to carry a minimum in the account. This helps because you can transfer more of your money in a better yielding savings account with another institution. Again, this is all personal preference. You should choose what works best for your money.
It’s also imperative that you live below your means. One of the greatest aspects of this city is that you can do stuff on the cheap, and sometimes for free without sacrificing quality. Bottom line, there are deals to be found if you are willing to search for them. However, you may be shocked at some prices when you first move to the city. When I first arrived in NYC, I made the mistake of heading off to a Pathmark. Shocked at the prices of milk and juice, I knew I needed to find a better store. And I did.
Managing basic finances is actually quite simple. Modifying behavior is challenging. Sometimes you’ll need to set boundaries. Sometimes you’ll need to exercise discipline. Sometimes you’ll need to choose to take a train or bus instead of a cab (in fact, I’ve never paid for a cab in my time here in NYC). Sometimes you’ll need to go above and beyond and negotiate a lower price for a service, such as TIme Warner Cable internet.
There isn’t a one size fits all plan and method for personal finances. Each of us have different goals and circumstances. All I can recommend is that you pay down any debt, put away 10-20% of your income in savings and invest well when you have the capital to do so (Roth IRA if income doesn’t exceed limit, mutual funds, etc.). Building a strong financial pyramid is essential, but you want to take your time in doing so. By taking action little steps at a time, you’re well on your way to becoming fiscally responsible.
For New York veterans, what cheap places and services do you recommend that have excellent quality?
Back track to Part 2: The Apartment Hunt.