You’ve weighed the pros and cons, scoured the internet for apartments, and imagined yourself settled in your new neighborhood. Now you’re crunching the numbers to see if relocating makes sense. If your finances look tight, we’ll teach you how to relocate on a budget.
How to budget for a higher cost of living when relocating
Follow these steps when budgeting for a higher cost of living when relocating.
- Understand your current monthly expenses
Examining how your money flows in and out can tell you whether you can afford your relocation plans. It can also alert you to bad spending habits you could adjust. Calculate the percentage of your income used for living costs and your personal expenses.
- Calculate your new net income
Perhaps you’ve scored a job with a healthy pay raise. Before getting ahead of yourself, calculate what you’ll actually take home from your monthly paycheck after taxes, health insurance, retirement contributions, and other deductions. Look up the specific state income tax rate, and remember that some cities, such as New York City, Detroit, and Washington, D.C., have city income taxes as well.
- Compare the cost of living
With that magic number in mind, you can compare the differences in the cost of living. For instance, if you’re moving from Columbus, Ohio, to New York City, your rent will climb, but you might ditch your car (and car insurance) for public transportation. Groceries, gas, and other day-to-day essentials will also vary in price — some drastically, others slightly. For a more concrete comparison, plug in your current city and preferred city in a cost-of-living calculator from Numbeo or NerdWallet.
- Create a budget
Next, create a budget with your new take-home pay, estimating your monthly living costs and personal expenses. A utility calculator can help you estimate your utility bills. Plan for the unknown and set money aside for an emergency fund you can dip into when unexpected things arise.
- Make cuts if needed
If you find maintaining your current quality of life will be tricky, you may have to cut back on certain areas of your budget to support your new lifestyle. Living with roommates is a great way to help reduce your cost of living. If you’d rather live alone in the long run, you could set a fixed time to room with someone else and save for your own place.
Tips for moving on a budget
Moving to a new place can be a real financial drain, with relocation expenses, your first month’s rent, your security deposit, and other costs all adding to the bill. These tips can teach you how to move on a budget:
- Get friends and family to help rather than hiring professional movers.
- Compare quotes and negotiate if you hire professional movers to get a good deal.
- Move outside of peak periods, such as during fall or winter, and choose a weekday or a day in the middle of a month.
- If you do hire movers, pitch in and help them to get the job done faster.
- Sell or donate items you don’t need so you have less to move.
- Source free boxes from grocery stores, liquor stores, recycling centers, family and friends, or online marketplaces.
- Use clothes, towels, linens, newspaper, and plastic bags to cushion your fragile items rather than buying expensive packing materials.
Tips for saving money when the cost of living increases
While you can predict your living expenses before moving, it’s difficult to anticipate what your expenses might be a year or more after relocating. Most people say their wages aren’t keeping pace with the growing cost of living, which can make managing a budget and saving any money in a new city challenging. As the cost of living rises, these tips can help you save money:
- Negotiate your bank and service providers for better deals.
- Pay off or consolidate your debts.
- Understand fees and change habits to avoid them, such as automating payments to avoid late penalties.
- Plan meals to reduce waste.
- Switch to supermarket-brand groceries, which are often a fraction of the price.
- Eat at home more often.
- Cancel subscriptions you don’t really need.
Final thoughts
While moving to a new city is an exciting prospect, it’s important to assess your finances. After crunching the numbers and employing our money-saving tips, you can feel confident and successful in your new city and able to enjoy all it has to offer.
Need help finding the perfect place in your new city? Browse apartments for rent now on Zumper.com!
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