In this video, I compare the budgets of two people: a single person living in Indianapolis making $10/hr (above minimum wage there), and a single person living in New York City making $15/hr (exactly minimum wage there). The result: if you’re working in something that could be considered a “minimum-wage job,” there’s a good chance you’d take home more money in NYC than in the middle of the country.
If you’re watching YouTube videos about moving to New York, and someone gives you a list of expenses and calls it a budget–that’s wrong. Unfortunately that’s a lot of YouTubers who talk about moving to New York. But that’s not what a budget is.
A budget is an estimate of expenses and income for a set period of time. A budget doesn’t just have all the money going out, but also all of the money coming in.
Both of those numbers together tell you whether a place is affordable or unaffordable, expensive or cheap. If you only have a list of expenses, you just know how much a place costs, without corresponding knowledge of how much it returns.
Comparative Budget Calculator
So: in my video, I break down a comprehensive budget that includes expenses and income. The Excel calculator that I use is embedded below, and you can use it yourself; I recommend changing the yellow cells, but leaving the white ones alone. If you refresh the page, the calculator will go back to its original form.
Explanation of Budget Numbers: Expenses
- Car ownership:
- Insurance: estimate pulled from AAA.
- Car payment: there’s so much variability here. I took the monthly cost of a used car from here and cut it almost in half–this budget is for someone working close to minimum wage.
- Parking: this cost is a composite of several things. The potential cost of parking even semi-regularly within the city, either in a garage or at a meter; the cost of parking tickets; any increase in rent to provide you with parking. Lower this number as you see fit.
- Gas was calculated like this: 1,200 miles driven a month in a car that averages 25 miles per gallon, with gas at $2.50 a gallon.
- Monthly car maintenance was calculated like this: I assumed a cost of 4.97 cents per mile driven, plus 1 cent a mile for wear on tires. This totals 5.97 cents per mile of incurred maintenance costs, and since I assumed an average 1,200 drive per month above, that means an average monthly cost of $71.64. Of course, this wouldn’t be paid every month. You’d pay larger sums for maintenance that are then averaged across the whole year.
- Another note about car ownership: having a car brings much more risk and potential expense into your life. One accident can land you with a four-figure fix that a New Yorker wouldn’t ever have, not to mention an increased insurance rate.
- New Yorker’s transportation: a monthly metro card with unlimited subway use is $127. I added $30 more for incidental Ubers and taxis.
- Entertainment is a small flat fee that I sort of pulled from thin air. It’s the max you’d likely spend if you’re on minimum wage.
- Food was calculated roughly, since it varies so much by one’s size and level of physical activity. I spend about $200-250 as a tall, active 28-year-old man. You can find food prices for Manhattan here–they’re quite reasonable.
- Subscriptions: like entertainment, I pulled this out of the air. Common subscriptions I would expect people to have are things like Spotify, Netflix, Hulu, Amazon Prime, and some personal product (mine is Dollar Shave Club).
- Gym: there are cheap gyms almost everywhere, so this is just a ballpark figure.
- Internet: This is half out of thin air, half real. I used central Indianapolis (see here) as an example, and saw that internet speeds of 500 mbps and higher become expensive quite quickly. RCN is a popular internet provider in NYC, although it’s not universally available, and they have a 500 mbps plan for $35/month (that’s also the one I have), which I split with my roommate.
- Misc: laundry, haircuts, contact solution, renewing a license, new work shoes, &c. The $150 number is out of thin air, but seems realistic. I couldn’t find reliable data to nail this down, so I ballparked it.
- Renter’s insurance: this assumes a price of $200/year, although there are much cheaper options available, like Lemonade.
- Utilities: this is a ballpark. There are too many variables here, like: how many roommates to split the bill, how big is the apartment, etc. In New York, who pays for heating gets interesting.
- Rent: ballpark numbers based on canvasing sites like these for New York and apartments.com and zillow.com.
- Debt/savings: I left this blank.
Explanation of Budget Numbers: Income
- Taxes: I used this tax calculator to estimate taxes.
- Calculating average net (after-tax) pay:
([hourly rate] x [40 hours per week] x [52 weeks per year]) – [taxes] = annual net pay. Divide this by 12 for the monthly average.
- Calculating the net pay in months with two paychecks, and those with three:
([hourly rate] x [40 hours per week] x [52 weeks per year]) – [taxes] = annual net pay. Divide this by 26, which is the number of paychecks in a year if you’re paid every two weeks. Multiply this number by two to get your two-paycheck months’ take-home pay, and by three for the two magical months where you have three paychecks per month.