If you live in an area where the cost of living is high, you may assume your salary will make up the difference. Unfortunately, that is not always what happens. Even if you have a very healthy salary, for example, from working in the tech industry, rent can consume a huge portion of your income. Paying more than you can comfortably afford for rent is unsustainable and stressful, no matter how high your salary. Managing your living expenses in a high cost of the living area takes work, but it can be done.
Determine How Much You Can Pay for Rent
The first step in getting a handle on your finances is determining how much you can afford to spend on housing. The general rule of thumb is to spend no more than 30 percent of your income on rent. This may not seem possible when you look at the extraordinary prices for many rentals in a high cost of living areas. There are ways to make the numbers work, and the first step is in determining exactly how much you can afford.
Look for Ways to Afford Housing
Once you know how much 30 percent of your income is, you are ready to look for places to live. Don’t be discouraged if you can’t easily find a place that is affordable on the amount you have determined; you still have options. You can look for a roommate to share expenses with. Roommates are not just for recent college graduates, many people who are well-established in their careers see the benefit of having a roommate. They not only make living in the city more affordable, but it also gives you someone who can feed your cat or carry in the mail if you are out of town for the weekend.
Another way to afford to house is to rent a room in someone else’s home. Just as rent is expensive in the high cost of living areas, so are mortgages. Some homeowners are interested in getting a little help with their mortgage by renting out a room. Finally, consider moving further away from the center of the city. Prices often drop relatively quickly once you move out of the most conveniently located areas. Before doing this, factor in changes to your commute and any added cost that would develop. For example, if you don’t own a car, moving to an area without an efficient public transportation option will lead to you purchasing a vehicle. This can increase your expenses by several hundreds of dollars a month.
Decide on Your Priorities
When you live in a high cost of living area sometimes you need to make some tough choices. You may love your job, so staying at that place of employment is highly desirable. In that case, finding a place to live that makes staying in the area becomes a priority. Maybe you pick up a side hustle or some freelance projects to loosen up your budget a little. Perhaps you move to a further suburb with a longer commute but can negotiate your schedule so you only have to come in four days a week.
Maybe you find that you don’t love your job all that much. Perhaps looking for a job in a lower cost of living area is the answer. Although this will probably come with a lower salary, you may be surprised at how much further it stretches without the expenses of living in a more expensive city.