A new job, your bucket list, or simply a change of pace – there are many reasons that people choose to pack up and move to a new city or state. While it can be the start of an exciting new adventure, there are some risks involved that you should prepare to handle, especially when it comes to your finances. When you make a big move without taking a deep dive into your finances, you’ll likely find that you’ve bit off more than you can chew. To avoid migrating to a place that’s too expensive and running out of money, think about some of these financial considerations to ensure your migration is financially smart.
1. Cost of living
Cost of living is an average number that accounts for all living expenses ranging from groceries to childcare to real estate. To research the affordability of your potential new home, conduct some research by laying out all the expenses you would have, and then find out the exact costs of those goods and services. For those buying a home, search through new home listings to get an idea of the average price of houses in the area and monthly mortgage payments. Virtually scan through grocery stores to pinpoint prices on your most purchased items, and make phone calls to discover costs of services you’ll need like childcare and utilities. This will help you determine your ability to afford this new city and if it’s practical for you.
2. Job market
Once you know how expensive it is to live within a certain area, analyze the job market. How much will you need to make in order to support the lifestyle you’ll carry on in your new city? Not only will you need to consider your desired income, but you’ll also need to consider whether jobs that fall within your desired salary range are even available in the given city. The availability of jobs and the salaries associated will directly affect your capability of living there. That said, search available jobs in the area long before the move to ensure that this city is the right fit for your career.
3. Moving costs
The cost of relocation averages around $1,400, with long distance moves sometimes creeping up on $5,000. Of course, the amount will depend on the distance you’re traveling, services you need, and company you choose. Moving companies often provide a number of services, like packing, transportation, and even cleaning. While the distance you travel is not a flexible variable, you may be able to curb the costs of moving by performing some of the components yourself. Although, remember that these teams are certified professionals, making it a cost worth debating for long-distance relocations specifically.
4. Financial health
Knowing that moving can be expensive, and that other cities can require more money than anticipated to live there, it’s important to cushion all aspects of your finances. As a starting point, begin to boost your savings as soon as you know a relocation is on the horizon. For those buying a home, you’ll also need to consider financial criteria that will affect your ability to buy a home in the new city, such as your credit score and debt-to-income ratio. If either of these scores are low, your chances of renting an apartment or getting approved for a mortgage will decrease, making your dreams of living there more difficult to achieve. Paying down debt and consulting a credit repair professional can help you stabilize your finances before the move.
As with any major investment, moving to a new city requires some serious planning. With the help of a financial expert, you can budget, boost your credit, and live the lifestyle you want in the city of your dreams.