How Much Apartment Can I Afford

Is it $1,500?  Or $2,000?  Maybe even $3,000?

How much can you really afford to spend on rent in NYC?

It’s a good question, and a very important one to get right.

Committing yourself to a lease for an apartment that is too expensive is one of the fastest ways to go into debt while living in New York.

Standard NYC landlord rental requirements dictate that your gross annual income (before taxes) should be at least 40x your monthly rent.  In other words, if you earn $60,000 in gross income, you can qualify for a $1,500/month (studio) apartment—which would mean that rent accounts for 30% of your gross annual income.

But is spending $1,500 on rent (30% of your gross income) on rent a good idea?

Probably not. 

Just because you can qualify for an apartment does not mean that you can afford to live in it. 

Spending 30% of your gross income on rent, you will have VERY little left over to actually enjoy living in NYC- and you would likely be much happier and better off living in a cheaper apartment, with roommates, or in a more affordable neighborhood. 

To see why spending as much as 30% of your gross income on rent is a bad idea (particularly for people earning less than $100,000), let’s take a closer look at the math.

The following budget plan covers most of the basic expenses that a person can expect while living in NYC.

Living Expense Budget – Moving to NYC

living expense budget

As you can see, depending on how often you eat out, you will come up pretty short on disposable income at the end of the month (disposable income is highlighted in yellow) —leaving very little money for entertainment and social activities (one of the main reasons that people move to NYC in the first place).

For most people, it would probably make sense to live somewhere that is more cost effective, i.e. with roommates.  Living with roommates not only means that it is possible to pay less in rent, but it also means that you are splitting costs such as utilities, cable / internet and other housing expenses.

Additional considerations

Estimating your living expenses and coming up with a budget is a great way to quantitatively evaluate how much you can spend on rent.  However, there are some other, qualitative, things that you need to consider:

You will not spend much time in your apartment:  Most people do not spend much time in their apartments, and you probably will not either.  You will be busy working, or occupied by your social life, or ensconced in some other activity.  Don’t make the mistake of wasting more money then you need to on a place that you won’t even have time to enjoy.

NYC apartments are basically a place to stash a change of clothes, sleep, and shower—that’s it.

Don’t forget furnishings – If you are definitely going to have to spring for some furniture- don’t forget to factor this in to your overall housing expenses.    If you look for a sublet, or live with roommates, you may not have to buy a single piece of furniture or cookware—definitely something to consider.

Are you good with money? – If you are good at creating a budget, and sticking to it, you may be able to spend a larger percentage of your income on rent, and get away with it.   However, if you are prone to impulse purchases and are known to have a loose wallet—you will need to scale back how much you  plan to spend on rent so that you have a cash cushion left over to cover incidentals.


Knowing how much you can afford to spend on rent is a very important consideration for people moving to NYC. Use the information in this post to create your own budget, and make a plan, so that your time in New York can be spent pursuing the abundant opportunities in this city, rather than worrying about coming up with enough money to pay your rent every month.
 

 

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