Trying to save money? Things like substituting your daily latte for $4.25 with the cheaper, and (less calorically filled) regular coffee for $2.25 is a nice idea. But if you really want to save some cash, it’s time to examine where the bulk of your income is going.
Housing
For the majority of Americans, housing is their number one expense. Most will spend anywhere from 18 to 45 percent of their income on housing. Whether you pay a mortgage or rent to a landlord for the apartment you live in, making out that check each month is probably one of the most painful ones you’ll write. While spending a large chunk of your hard earned cash on housing is often unavoidable, there are ways to cut back.
Start Early
Good habits start early. Recent college graduates have a great opportunity to start their housing search on the right foot by choosing a rental that is priced within their means. Your first job out of college, you’re probably not going to be making the peak income for your field so there’s no reason to spend more of your gross income on housing than needed.
Determining Your Housing Budget
If you’re graduating from college in the next few months and are moving to a new city to start a new job, start budgeting now. Take a look at your starting salary and get out your calculator. A good rule of thumb is to spend no more than 30 percent of your income on rent. In more expensive cities, like Los Angeles, San Francisco or New York, that’s easier said than done. But it can be done. Here’s how.
Weigh the Pros and Cons of a Neighborhood
Most renters will find that living further from a city center means less expensive rent. Often times, the trade off is a longer commute. But, if your work pays for your commuting benefits you could be saving double by living further out because you aren’t paying for daily transport, or the rental premium of living closer in. Sometimes, living closer to work and paying more will offset the costs of gas for car commuting or a transit pass if using public transit. Find out what the case is for your city by looking at how you’ll get to your new job.
Lots of restaurants and nightlife are great, but guess what, that likely means that you will end up spending more of your disposable income eating out and drinking when living in such neighborhoods. Living in a sleepier neighborhood with less bars and restaurants could not only save you in the long run in rent, but also in your spending habits.
Do Your Homework
You’re about to get your diploma and start your new job. We know you never want to do homework again. But, there are tools out there that can help guide you to find the most affordable neighborhoods in the cities you are looking to live. HotPads rental website has created one such too. The interactive map covers 11 US metro areas and shows renters which neighborhoods new graduates can save the most by living in.
Below is a cheat sheet to help grads Rent Here, Not There. Explore affordable neighborhoods in your city by clicking here.
Kristy Hessman writes for HotPads, a rental search website that makes it easy for you to find your next place in the city.
