The Best Budgeting Strategies for Living in an Expensive City

Everything is bigger in the city, especially the prices.

Photo-illustration of a city using U.S. bills as well as illustrations of conceptual higher denomination bills
By + More

If you want to live as cheaply as possible, you are not going to live in the big city.

According to the cost of living index produced by the nonprofit Council for Community and Economic Research, the most expensive metropolis in the country is Manhattan (population: 1.6 million), where the cost of living is 127.1 percent above the average, followed by Brooklyn, N.Y. (71.4 percent over) and Honolulu (71 percent over). The least expensive city has, as anyone might have guessed, fewer residents: Harlingen, Texas (population: 64,849), which is 18.2 percent below the average cost of living.

So if you're living among the skyscrapers, unless you have extremely deep pockets, you are going to have to do some serious budgeting. Otherwise, you might get used to the idea that not far in your future is a train or plane ticket right back to where you started. Here are some budgeting strategies that might help.

Do your homework before moving. If you haven't yet packed your bags and signed a lease, start estimating what your budget might be, urges Leslie Tayne, a financial attorney and debt specialist who runs the Tayne Law Group, P.C., in New York City.

[Read: 5 Budget-Busters Draining Your Wallet.]

"Do some research in advance so you know approximately where you will financially stand in terms of groceries, utilities, rent and transportation," Tayne says. She adds that you'd also be wise to stock up your savings account in case the move is more expensive than you planned.

Decide you don't mind being inconvenienced. Some cities have plenty of inconveniences already, like traffic and those higher prices, but Jeffrey Lamoureux, a 25-year-old who works in public relations and recently moved from Washington, D.C., to Chicago, says he and his girlfriend, Angela Kim, 27, are "saving on rent by living in an older building that is farther from public transport."

They're nonetheless paying $995 a month for a two-bedroom apartment, and when they get another bed, they plan to occasionally rent out one room. They need to save where they can, because like many twentysomething couples, they aren't yet raking in the dough. Lamoureux, an independent contractor, makes $36,000 a year before taxes, and Kim, in graduate school, makes about $15,000 annually waiting tables.

They don't have a car and ride bicycles everywhere they can. Not a bad idea, considering that AAA's 2013 Your Driving Costs study shows that the cost of owning a car ranges from $7,000 to more than $11,000 a year for the average American, which includes everything from insurance and gas to finance charges on a loan.

And parking in a big city can really do some damage to a bank account. Colliers International, a real estate company headquartered in Seattle, conducted a study two years ago that showed the median monthly parking cost for a Chicago resident was $289. In New York, the median cost was $541 a month. But it could be worse: Colliers found that Londoners typically spent $1,084 to park their cars, the highest-priced city in the world when it comes to parking.

Avoid the nightlife. Hannah Hupp, a 23-year-old account manager, says she and her boyfriend, Cory Cain, 24, a senior research analyst, moved to Chicago respectively in 2012 and 2013 and quickly decided that while they enjoy going out to the occasional bar and restaurant, it wouldn't become a habit.

"We prefer to spend the bulk of our fun money on experiences instead of two and more nights a week at the bars and clubs," Hupp says.

The couple pays $1,050 for a 250-square-foot studio apartment and makes a combined income just shy of $100,000. Instead of spending on nightlife, they steer their money toward things like weekend trips to nearby cities including Milwaukee and Louisville, Ky. They both ran in the Chicago Marathon (entry fee for Americans: $175), and they are planning a trip to Peru. Hupp says it would be much harder to do all of this if they frequented bars and clubs.

She has a point. According to, a website that allows expats to compare the cost of living between cities, the average price of a solitary cocktail in a downtown club in Chicago is $11. For comparison's sake, in Los Angeles, it's $12, and in New York City, $14.