Hi Marisol,

Great question! I talk to so many people who ask these questions too late — once they’ve already spent far beyond their means and are drowning in credit card debt. That is an incredibly stressful position to be in, so let’s figure out how you can start making smarter decisions now.

One of my mentors gave me a gem of advice: Always underspend on your home, and you should get extra breathing room throughout the rest of your budget. Once you allocate the majority of your salary to your apartment, it leaves you very little wiggle room to spend on everything else. (Plus, between work and enjoying NYC, you probably won’t spend much time there anyway!)

While I know it can be challenging in an expensive city like New York, you are absolutely right that we recommend targeting 30% for your housing costs. That’s 30% of your income after taxes. Whenever you’re budgeting, I recommend looking at your net income (what you take home after taxes), because those are the dollars you actually have to plan with. Based on your starting salary, that leaves approximately $600 per month for rent. Considering that the average monthly cost of a Manhattan studio is $2,277 (according to the Manhattan rental-market report in October 2014), I know that may feel like a massive stretch. But, I don’t want you to consider credit card debt a viable option. Credit card debt is designed to snowball, and we recommend only using a credit card if you can pay it off in full each month.

So, how do you follow your dream of living in the city while also starting your money life on the right foot? There are two levers here — how much you spend and how much you earn.