7 Simple Ways to Save Money When You’re Living in a Major City
Big city life has its perks. From the hustle and bustle to the smells and sounds that can get your adrenaline pumping, many people thrive in a city environment. However, this type of lifestyle comes with a heavy price tag that can wreak havoc on our finances. Money plays a huge role in all aspects of city life so the faster you learn how to manage it, the quicker you’ll be able to accomplish all of your financial goals. Here are seven ways to keep your wallet full when living in a major city.
1. Break Down Your Expenses
While it’s important to put away a portion of your paycheck into savings each month, you also need to know where your money is going. This is where a budget comes in handy. You can break down the expenses into different categories like rent, food and entertainment. Then use a budgeting app to track your spending for the month. This can help avoid making decisions based on feelings and keep your spending habits aligned with your goals.
2. Automate Your Savings
When we see that paycheck hit our bank account every month, it becomes much easier to justify that spending spree. However, if you want to meet financial goals, you should avoid these impulse purchases at all costs. A sure-fire way to meet your saving goals is to automate a portion of your paycheck into savings each month. This way, you don’t actually have to consciously think about saving and the lower balance in your checking account makes it harder to spend money.
3. Go On An All-Cash Diet
This financial diet is exactly what it sounds like. For an entire month, you pay for all your expenses with cash. You may wonder how this can actually help you save since you’re still paying for all the same things but the reality is that you become more conscious of your spending when you use cash. With debit and credit cards (also known as invisible money), it becomes easy to swipe the card at our convenience without understanding its repercussions on our financial goals.
4. Have No-Spend Days
With the holiday season just around the corner, it’s going to take a little more effort to accelerate your savings. There are many ways to get better at managing your finances. For instance, you can try no-spend days or even an entire month. You can still pay for necessities like rent, food and transport but no-spend days can help curb those splurges on happy hours or that Kate Spade bag you just had to have!
5. Cook Your Own Food
Research shows people in big cities like New York and San Francisco spend close to $300 million at restaurants. While it’s always fun to check out the hottest dining spot in the city with your friends, it can also eat into a large portion of your paycheck. As an alternative to the fancy dinners, you can call your friends over and make a home-cooked meal. Not only is this easy on the wallet but it can also help you lead a healthier lifestyle. During the week, you can also bring your lunch to work everyday to avoid racking up a hefty lunch bill.
6. Follow The 50/30/20 Rule
Before you create a budget, you need to decide how you want to spend your money. One of the most effective ways to deal with your finances is the 50/30/20 rule. This is where 50% of your income goes towards necessities like rent, food, or auto payments, 30% of the income can be your ‘fun money’ spent on dinners, movies, or vacations, and the last 20% of your income goes into savings.
The breakdown isn’t always attainable, especially if you have debt looming over you but it is the balance that you should strive to attain. Once you have an idea of where your money is going, it can be easier to breakdown the budget this way.
7. Increase Contributions To Your 401K
A 401K is a great way to start saving for retirement. It is often a much better option to contribute to this account rather than keep the money in your checking account where you may be tempted to spend it. If your company matches your contributions, even a small amount deposited each month can result in substantial returns in the long-term. If you are looking to save more money, consider increasing your 401K contributions at least by 1%.
Big city life can be fun but that doesn’t mean that it needs to drain your wallet. Your 20s and 30s are your peak saving years and can set you up for capital investments in the future like a house or a car. As long as you budget and track your spending while making more conscious decisions, saving money in a major city is a piece of cake!