How to Evaluate Moving for a Better Standard of Living

Where you decide to live and settle down is a deeply personal decision. There are many factors at play - what you do for work, where your family and friends are located, and your ideal climate just to name a few.

That being said, people have more options than ever to try out new cities. It is tempting for those without deep roots to want to explore areas that offer a more affordable lifestyle.

Your employment options when moving

1) Stay with your Current Employer.

Many companies now support remote or hybrid arrangements. While your salary will be adjusted based on where you live, it still is an “easy button” to help you transition to a new city.

2) Find a new job.

A move can also be an opportunity to explore new roles, companies, or even industries. Consider hiring someone to help you with your resume, especially if you haven't looked for a job in a while.

Don't be turned off by lower salary offers. Use Nerdwallet's cost of living tool to show you the income required to maintain the same standard of living in the new city.

3) Start your own business.

This is the riskiest option but it also provides the greatest amount of flexibility. Build up your cash reserves to buy time to get the business up and running and lock in as much recurring revenue as possible before moving. For example, if you are a software engineer, you may be able to obtain project work from small businesses that can't afford to hire a full-time employee.

The financial impact of moving to more affordable city

To understand how moving can improve your finances, compare your current spending to your projected spending in the new city.

Housing Costs

Look at Zillow and Redfin to obtain estimates for housing costs in your preferred new neighborhood. For example, I did an analysis for someone looking to move from San Francisco, California to Denver, Colorado. We found a 3 bedroom / 2 bath house that was 1,800 square feet. It was comparable to their current home in the Bay Area except it cost $670K instead of $2M. When you click on a property in Zillow, you can obtain an estimate for the mortgage, property taxes, home insurance, and HOA fees.

Taxes

Calculate taxes based on your new income and resident state (if there is state tax). Your tax person or financial planner can help you with this calculation if needed.

Career Options may Decrease

While you may have dozens of potential places to work in your old city, there may be only one or two viable employers in the new city. What if your job doesn't work out? Build up a professional network and have a back up plan.

Time & Stress

Moving and changing jobs are two of the most stressful life events a person can go through. Moving means finding new doctors, caregivers, schools and friends. Join Facebook groups in the city you are moving to. We have found it to be one of the best ways to obtain accurate information on schools, safe neighborhoods, and other factors that are important to you.

What is the financial impact of moving?

Once you finalize the projections for your potential move, compare the bottom-line (income minus expenses) to your current cash flow. What is the difference?

If moving will save you $500 per month, it might not be worth making the change. If the savings is $2,000 per month, that is a different story. Moving may be the tool you need to meet your goals faster - whether it is to retire earlier, own a home, or fund your children's college.

Renting versus buying in your new city.

Unless you are very familiar with the area you are moving to, we recommend renting for at least one year before buying. This offers you the opportunity to learn about the new city and surrounding areas before committing a large amount of your capital.

Not everyone can just pick up and move. Many clients are tied to cities because of jobs or their community. A surprising number of people, though, aren't. We have seen firsthand how moving can yield serious financial savings, but it takes time and effort to build a new life in a new city. It is not for everyone, but if moving is something you are considering, we can help.

Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout Virginia Beach, San Diego county, and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.

Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in Virginia Beach, San Diego, and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.