It’s always exciting to get a job offer in a new city. It’s especially exciting if you are being offered a raise. However, just because you are being offered more money, it doesn’t mean that moving for a job is the right financial (or life) decision.
Before you take the plunge and move to a new city in the hopes of a better-paying job, stop and consider the cost of living.
How High is the Cost of Living?
Don’t decide to accept that job offer and move until after you’ve researched the cost of living in your (potential) new home.
Some of the factors to consider when considering cost of living include:
- Housing costs: What’s the average cost to buy a home in an area you want to live? If you plan to wait to buy, check into renting. What are the rental costs in various parts of the town or city?
- Transportation: Don’t forget to check into transportation. If you have to live further away from work to afford housing costs, you will need to estimate the costs of your commute. Will you take public transit? What kind of wear and tear will be put on your car, in addition to gas costs?
- Food: You might be surprised at how food costs can vary from location to location.
- Utilities: Check into utility costs and compare your current bill to what it might be in a new city. I’ve lived places where it costs more to heat an apartment than it does to heat an entire house in a lower-cost town.
- Healthcare: Healthcare costs are far from uniform across the country. Check to see if you could be charged more elsewhere.
There might be other costs to consider. You can use a cost of living calculator, like the one from CNN Money, will tell you the average difference between what you pay now in major cost areas, and what you might pay elsewhere.
It’s vital to have that information so you can adequately determine whether or not this is the right move for you.
Could You Be Looking at a Drop in Disposable Income?
Once you have an idea of the cost of living, it’s time to figure out if your raise could mean a drop in income available to you. How can this be?
Cost of living can take a big chunk of your raise — or even all of it.
Using the cost of living calculator, I discovered that I would need to make almost $17,000 more per year if I moved to a more expensive city. If I moved there to accept a job that only paid $10,000 more than I’m currently making, I’d actually be close to $7,000 a year poorer by moving.
In some cases, you might see a similar cost of living, so the salary increase really would be a salary increase. Plus, you might want access to some of the amenities another location offers. Check into those lifestyle items (and whether or not you can afford them) before making your choice.
In my area, there is a very low cost of living. I can do a lot more with less here. It works out really well for me. Additionally, because it’s a smaller town, we have less traffic. We spend less time getting my son to activities, and he has more opportunities than he would otherwise. It’s a lifestyle choice as well as a financial choice.
Sometimes moving for a job makes sense. It can be a way to get a fresh start, find more opportunities for your family, and make more money. However, it’s not always the best choice. You could end up in a situation where the finances just don’t add up. Do your research ahead of time and avoid the expense of moving if you won’t see a true increase in disposable income.