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Living on a Budget in Chicago

It’s not a secret that living in Chicago can be expensive. Coming from a non-Chicago area myself, I can honestly say that the first few times I met friends for dinner or drinks was a bit of a shock. The average cost of living in Chicago is significantly higher than the rest of America.

However, you don’t have to feel like you’re powerless when it comes to the high living expenses in the Windy City. There are a few steps you can take to get a handle on your spending.

Understanding Your Expenses

What are you actually spending money on? Before you set a budget or try to decide where you want to spend your money in the future, you need to understand what your expenses currently are. Take a month or two to track where and how you spend. It can be helpful to categorize your spending using an app like YNAB or Mint. You can learn a lot from tracking your spending – not even consciously changing budget habits yet. By tracking those transactions, and creating a budget, you’re subconsciously already making positive changes to the way you use your wealth.

Some of your fixed expenses, like rent, may have been covered by loans, grants, or scholarships. Now, all of your expenses are out of pocket, and you are essentially living paycheck to paycheck without even realizing it. You also have utilities, maintenance, insurance, and more to consider – not to mention student loan payments. Tracking all of these expenses can help you to stay organized.

What Is Your Lifestyle?

Many people I speak with have a certain mentality around their spending. They’ve usually spent a lot of years going without – either as new professionals or as they’ve put themselves through school. Now that they’re receiving a consistent paycheck, they start to feel like it’s time to finally live it up.

First of all, there’s nothing wrong with this mindset! If you’ve spent a lot of years sacrificing, or living below your means, you do deserve to enjoy life. However, there’s a big difference between living within your means to enjoy life and overspending and justifying it because of the hefty cost of living in Chicago or the sacrifices you’ve made in the past.

Taking a careful look at your lifestyle is a good next-step after analyzing your expenses for a few months. Many people think that looking at their fixed costs to lower expenses makes sense. However, fixed costs are fixed for a reason. Lowering them could mean a significant lifestyle change, like moving or finding a less expensive place to rent.

Instead, you might need to look at your variable expenses like eating out, happy hour after work, or expensive events you attend with friends. Let’s talk about how you can start to approach your spending differently to live within your budget.

Reorganizing How You Approach Your Spending

Chicago is a big city with so many different things to do. Unfortunately, so many of the activities available in the city aren’t great for your wallet. The good news is that you can still have a meaningful Saturday or Friday night without breaking the bank! You can start by thinking about where you’re currently spending – and why.

For example, if you’re regularly spending more than you want to at dinner and drinks with friends after work on Friday, ask yourself what you enjoy about those evenings out. More than likely, you love spending quality time with your friends, and relationships are valuable to you. That’s great! Now, you can start thinking of more budget-friendly ways to address those needs and values.

You could grill out on your patio or balcony, attend a local free museum together, or find a free concert or event at a local park. You’ll be getting the time with the people you care about in, while still living within your means.

Know What You’re Working Toward

Let’s be honest, making all of these plans to lower costs, and changing habits, can only go so far if you have no goal or don’t know what you’re working toward. If you have clear-cut savings goals, or debt repayment goals you’re working toward, it can be easier to stay on track with your spending and make intentional choices about your money. Need help setting goals and creating a budget? Reach out! We’d love to talk to you about how to budget while living in a high-cost-of-living area.