How To Save Money While Living in One Of The Most Expensive Cities In The World
What It’s Like Living In An Expensive City
Whether you live in U.S. in cities such as New York, Los Angeles or San Francisco, or if you live abroad in London, Singapore, Hong Kong or Sydney, the cost of living in these cities is way higher than other places in the world. Costs for housing, transportation, taxes and entertainment are some of the biggest factors that influence why these cities are some of the most expensive. Even if you don’t live in one of these cities that tops the current list, living in any major city adds significant cost to your bottom line each month. However, no matter how expensive these places are to live, it doesn’t seem to be stopping people from moving to them, and it also isn’t possible to avoid them altogether.
This is the case for me, and why I am currently living in one of the most expensive cities in the world while writing about saving money (Please keep reading before you discredit me). I’ve been living in Sydney, Australia now for just over 2 years when I had the opportunity to move here for work, and being an avid traveler and a big fan of the land down under due to their great weather, laid-back lifestyle and friendly people, I took the plunge and moved to Sydney in September 2015. I had been to Sydney before as a student, however, it wasn’t until I moved here for work that I realized the true cost of living.
The minimum cost for a 1 bedroom apartment in Sydney is around USD$1500/month. If you want to live in good location, say near the business district or one of the beaches, you will be looking at USD$2000/month! I found out very quickly when I started looking at apartments that it was not going to be cheap, and you will not be getting a lot for your money. We currently pay USD$1900/month for 1 bedroom, and we live in an unrenovated apartment without air conditioning or a dishwasher. But we do live 2 blocks from the beach so it isn’t all bad :).
A few other costs that came as a shock to me during my first few months in Sydney were:
- USD$15 for a cocktail at pretty much any bar in the city
- Monthly toll bill for my company car regularly being over USD$150
- Cheeseburger at a local restaurant costing USD$16. Burger only, no fries.
- My income tax bracket being at 37.5%. Don’t be too impressed, I don’t make that much money
Then I recently heard a statistic was released saying that currently in the Sydney metro area, it is impossible to buy a house for under AUD$1,000,000 (About USD$800k)! So it’s safe to say that Sydney truly is one of the most expensive cities in the world.
Most Cities Are Expensive For Similar Reasons
From New York to London, Singapore to Sydney, or even just most U.S. cities such as San Diego, Austin or Washington D.C., most cities are expensive for many of the same reasons. There is some sort of draw to these areas whether it be business, weather, lifestyle or culture that attracts more people than normal, which then inflates the cost of living due to increased demand for common services. The most common items to be most expensive in these cities are:
Unfortunately, it seems it’s the things that most people can’t go without that are the most expensive, making it hard to just cut them out completely from your budget. However, if you have to live in a major city and pay the inflated prices, it is still possible to find deals to decrease your cost of living in comparison to others living in the same city.
How Can You Save Money And Still Enjoy Living In An Expensive City
While I have been living in Sydney, I have still been able to consistently save 40-50% of my take-home pay each month. I wish it could be up in the 50-60% range, but unless I lived 2 hours outside the city and never enjoyed what this great city has to offer, the basic costs of living take too much out of my budget. That being said, I still get to enjoy living in this great city and save a solid portion of my income, and here are 5 things you can do to help stick to your budget:
- Change your living expectations. Housing is the most expensive cost when living in just about any major city, and the best way to find cost savings is by changing your expectations. You may be able to live in a brand-new, 2-bedroom apartment with a pool, balcony and garage parking in a small city, but in a major city like Sydney, you can save a lot of money by living in a small, unrenovated 1 bedroom where you have to walk up the stairs to the 3rd floor. It has probably saved us at least $1000-2000/month.
- Take Public Transportation. Luckily my job has provided me with a company car because I travel a lot locally for work. However, I would never have a car if I had to pay for it myself. Each month I spend about $300 on fuel, $200 on tolls, $300 on registration and insurance, and then the cost of the car itself was $40k for a Mazda crossover SUV. Even Uber costs about 2x as much as my former home city of Chicago. Taking public transport costs between $1.50 and $5 depending on the length of the trip. The choice is pretty easy….
- Cook at Home and Shop Local. Cooking at home is almost always cheaper than going out to eat no matter where you live, and with a $18/hour minimum wage and high taxes, Sydney is no exception. However, with year-long growing seasons, local produce is actually pretty cheap to come by. Shopping at local farmers markets and cooking at home helps us save hundreds of dollars per month on food costs.
- Enjoy the Outdoors. One of the best aspects to living in Sydney is the weather and the outdoors. Surrounded by beaches, mountains and national parks, there are plenty of free activities to enjoy year-round due to Sydney’s mild climate. You can go surfing in the morning and hike up a mountain in the afternoon, and do this in January or July. The outdoor lifestyle is endless! If you do some research, every city has outdoor activities that can be enjoyed at little to no cost.
- Minimize Your Alcohol Consumption. One of the quickest ways to waste your money is on alcohol. Not only does it inhibit your ability to make good financial decisions, but many times it’s an expensive way to have a good time. Sydney has strict alcohol laws and high taxes, so the average price for a drink at a bar is $8-15, and a case of beer costs $30-40. One or two nights a week at the bar could easily set you back hundreds of dollars a month. Best to strictly limit or avoid the drunken nights if you want to support your savings plan.
How do you cope with the costs of living in a big city, and do you have any strategies you use to stick to your budget? Leave a comment or send me an email!