By Kelly Hodges
It’s not a secret that some areas of the country have a higher cost of living than others. A resident of zip code 90210 will be shelling out far more for housing, groceries, transportation, taxes, and pretty much everything else than their counterpart in 50210. For anyone considering a move, cost of living is an important factor to take into account. If the move is precipitated by an attractive job offer one needs to be especially careful. It’s easy to get caught up in the potential increased earnings that a geographic move could mean, without fully realizing the effect of the potential increased expenses as well.
Fortunately there are several cost of living calculators available online to assist in assessing the financial impact of location when contemplating a move. Sperlings makes a nice calculator that only requires you to enter your current city, the city you want to compare, and your current annual income. You can then see what you would need to earn in the comparison city to equal your current salary when adjusted for cost of living.
Here’s an example. Let’s say you live in Minneapolis, MN but are thinking of taking a job in Washington, DC. If you earn a salary of $145,000 in MN you would need to earn $197,765 in DC to maintain your same standard of living, since DC is 36% more expensive than MN. Knowing this information makes the $50,000 pay raise at the job in DC seem far less enticing.
This tool can also be helpful for those looking to make a career or lifestyle change that will result in smaller earnings. For example, let’s say a person in New Haven, CT who earns $90,000 wants to semi-retire. By moving to Phoenix, AZ (which has a cost of living 24% lower than CT), that person can maintain their same lifestyle for only $68,081.
Cost of living can really make a difference for those with careers that don’t physically tie them to a certain location. If you have the ability to work from anywhere, then deliberately deciding to live in a lower cost of living area leaves a lot more discretionary income on the table. Obviously there is far more to factor than cost of living when deciding where to live, but if you have the luxury of flexibility, then choosing a lower cost area will translate into thousands of dollars of savings over the years; and this savings can be allocated to other goals and purposes.
No matter the motivation, if you are considering a move in the near future make sure you play around with a cost of living calculator before you commit. It’s far better to have a sense ahead of time of what your new expenses will be then to be surprised once you’ve already arived.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of her employer or any other person or entity.