Moving for a Better Standard of Living

More than 40% of our San Diego clients have moved during the last 7 years (since PWR's founding). While that seems like a lot, it is in-line with current trends everywhere. The biggest U.S. metro areas are decreasing in population for the first time in decades. People are leaving expensive cities behind for cheaper ones.

The virtual revolution

Moving to improve your standard of living is not a new concept. During the industrial revolution, farmers moved from rural areas to the city looking for better jobs and higher wages. Now many people can log-in and do their job from anywhere. With their income secured, they are moving to reduce expenses and have a better quality of life. While moving is not the only way to improve your financial situation, it is a compelling option in that it can produce almost immediate results.

Your employment options when moving

1) Continue working at the same job.

Maintain your salary but become a remote employee. This is the ideal scenario because many times it means maintaining a higher salary but living in a cheaper area. When I left my first job in New York City to live in Pensacola, Florida, the company kept me on as I trained my replacement. I was earning a New York City salary but living in a much cheaper area. It allowed me to really jump-start my savings.

2) Find a new job.

LinkedIn and Indeed are great resources for job searching. 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 a new city

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

Positive Impact

1) Housing Costs

Look at Zillow and Redfin to obtain estimates for housing costs in your preferred new neighborhood. For example, we recently 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 the following numbers:

• Mortgage - defaults to current interest rates and a 20% downpayment (both can be changed)

• Property taxes

• Home insurance

• HOA fees

2) Taxes

Calculate taxes based on your new income and resident state (if applicable). For example, if you are married and plan to earn $150K in Denver, Colorado, the tax calculator at SmartAsset will help you with an estimate.

Negative Impact

1) Career Options

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.

2) 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.

Zero or Minimal Impact

1) Childcare Costs

This did not change for us, personally, when we moved from San Diego to Memphis. If you make a trip to the new city to look for houses, check out daycare facilities as well and put your name on the list as soon as possible.

2) Groceries

Don't depend on this cost dropping very much. Nerdwallet's cost of living calculator says you will save 25% on food costs if you move from San Diego to Denver. When you click through to the "Food" section, it is comparing the prices of a 12-inch Pizza Hut pizza and a McDonald's quarter pounder with cheese. If you eat organic or mostly plant-based, a 25% decrease in your grocery bill is unlikely.

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.

If you decide to move, set aside money for the one-time costs you will incur.

Moving is expensive. In addition to how your monthly cash flow is going to change, project how much it will cost to get you into your new place. Save the cash ahead of time so you don't end up going into credit card debt.

The cost of movers

This will depend on how much household furniture and personal items you have and how far you are moving. For example, moving a 3-bedroom home 1,000 miles should cost about $6,000.

The cost of shipping your car

Shipping a van, truck or SUV from California to New York can cost at least, if not more than $1,000. Realize that the person you call for a quote will probably not be the person driving your car. This was not clear to us the last time we moved. You typically call and transact with a broker. The broker then lists the job (your car and where it is going) on a board for companies that have resources in the area. Therefore, even though we signed and paid for someone to ship our car, we had to wait for the broker to assign it to the company that won the bid. For us, the process took a week, but it could take longer.

Getting to your new city (and trips along the way)

Factor in the flight or gas (if driving) and hotels for any stops you plan to take.

Rent in a new area before buying a home.

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 family. 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 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 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.