Everyone’s path to financial independence is different. One of the big differences is where people choose to live while on their journey. I have seen blog comments and articles about how it is impossible to save any money while living in Manhattan, or how much harder it is to reach financial independence in a big city with the associated high cost of living. So instead of just telling people that it has benefited me financially and sped up my path to financial independence, I figured I’d be more transparent about how it has helped me specifically. There are always pros and cons to any situation, but it seems that the pros have been making their presence known more than the cons since I made the move to Manhattan.
Below I’ll explain how it has directly affected my personal income statement:
Income: Now this one is very dependent on personal situations, industries, performance, economy, career trajectory, employer, etc. My employer gave me a 12% raise for the move along with a one-time bonus. The also paid for all moving costs. These benefits made the move very affordable, and in actuality instantly increased my income and net worth. The move and job switch has also given me other opportunities to increase my pay, which I would not of specifically had if I remained in my other role in a smaller city. Over the course of an 18 month period my income increased a total of approximately 50% from my previous income before the move.
Own downside is that NYC also charges you another ~3.5% on your income for the honor of living here, in addition to New York state income tax.
Housing: My rent has increased approximately 90% or $600. I previously rented a three bedroom house in New England, and now rent a somewhat small Manhattan apartment within walking distance to work, and share it with two roommates. My roommates are my friends, and although I’d like my own place from time to time, I enjoy living with them for the most part, and would rather lower my cost of living with roommates than rent my own place. (Increase of ~$600 or $7,200 per annum)
Utilities: Have gone from about $300 a month to $100 a month. It costs a lot of money to heat a three bedroom house. It costs a lot less money to heat an small apartment, especially when heat and hot water are included in rent. (Savings of ~$200 per month or $2,400 per annum)
Transportation: Has gone from $400 a month to $50. I owned a car before the move, which was fully paid off. Including insurance, property tax, maintenance, and gas, it easily cost me about $400 a month. Right now I walk to work and for most of my errands. I take the subway from time to time at $2.75 a ride. If I want to visit the family or friends I take the commuter rail or Amtrak to their vicinity, and then usually someone is nice enough to swing by the train station to get me. (Savings of ~$350 per month or $4,200 per annum)
I sold my car for $6,500 when I moved to Manhattan. My savings ignores the fact that I had this money tied up in a depreciating asset. I used these proceeds to pay down student loans.
Another saving I didn’t include above comes from the fact that I have three huge airports within my reach where I can shop for killer personal flight deals, and never really have to worry about layovers since I can fly direct almost anywhere. This is a big plus for me since I fly a decent amount for personal travel.
Groceries: Food in the city costs more, and if you shop at the local grocery store prices are probably 25 to 50% higher than what I was used to. But then I found a hidden gem when it comes to grocery shopping in Manhattan – Trader Joe’s. TJ’s has been a life saver. For those who know TJ’s know they eliminate the middle man, and go straight to the source (i.e. farmers, producers, etc.). Therefore their prices are much better than the local corner grocery store. (Increase of $100 per month or $1,200 per annum)
Eating out / Restaurants: This expense can literally eat you alive in the city. In my new role between fancy work dinners for the hell of it, travel work dinners, counseling lunches, late work nights, work drinks, etc., I get my fare share of fancy restaurant food in Manhattan and around the US. This definitely helps curb my appetite to go out and drop my own cash on a fancy dinner. Therefore there has been no incremental costs for me, so I’ll call it a wash (when in reality this has actually been a savings for me since I used to go out more than I’d like to admit to my wonderful readers).
Gym: My only requirement for a gym is decent hours and a squat rack. When I first got to NYC I found an independent gym, within walking distance to my apartment, which was actually cheaper than my gym previous to the move (due to my negotiations). They have become more popular so now the price is pretty similar to what I paid before the move. Avoid the fancy box gyms, which include laundry service and hotel amenities, and gym memberships are pretty reasonable in the city. (No increase or savings)
Clothes, toiletries, home goods, etc.: I buy all this stuff on Amazon, minus clothing. Therefore this is a wash for me and doesn’t really matter where I live since I purchase online.
For those keeping track, my expenses have conservatively increased by approximately $150 per month or $1,800 per year. My cost of living adjustment alone when I first moved here outweighed this cost increase, along with covering the added NYC income tax. Therefore every raise and bonus thereafter has been icing on the cake, and padding on the investment accounts.
Now as a reminder, this is my personal experience moving to Manhattan for work. Others may have lifestyle creep, a job that doesn’t give them a COL adjustment, a family of their own which would cost more for housing, etc.
Now living in Manhattan hasn’t been all peaches and cream, and of course there are some negatives for me. For me personally not having a car to be able to hop in and visit friends and family on a whim, not having a yard, and the increased cost of living have been a pain at one time or another.
Have you sped up your path to FI by making a physical move? Would you give NYC a shot if it sped up your path to FI? Feel free to ask any questions if you’re thinking about a move.