It’s become increasingly common for young people to cast a wide net when they’re deciding where to live. Moving to a new state or a new city is something that happens all the time. And, as you might expect, a move like that presents some unique challenges.
Here at Addition Financial, we help our members figure out big life decisions like relocating all the time. One of the issues you’ll need to think about if you’re moving to a new city or state is how to manage the financial aspects of the move. Here are six financial considerations to keep in mind.
#1: Cost of Living
It costs more to live in some places than others. Most of us know that we should expect to pay more for an apartment in Miami than one in a rural area. But even armed with that knowledge, it can still take people by surprise when they realize that they’ve moved to a place with a significantly higher cost of living than they’re used to.
One way to mitigate the sticker shock is to do some research ahead of time. For example, Sperling’s Best Places has a cost of living comparison where you can check out the price differences in key indicators such as rent, groceries, healthcare and utilities. Keep in mind that if you’re relocating for a job, you should factor cost of living into your salary negotiations.
#2: Commuting Expenses
How will you get from point A to point B after your move? That’s an important consideration because if you’re not careful, commuting costs can add up quickly.
If you’ve got a reliable car, then it may not be a big deal to find a place that requires a bit of a commute. But you should check out car insurance prices, gas prices, tolls and anything else that might increase the cost of commuting.
Without a car of your own, you’ll need to rely on public transportation or ride sharing. Most big cities have decent public transit. Finding out what it costs for a monthly pass or ride sharing will help you create a budget that works for you in your new home.
#3: Income Taxes
There are a few states that don’t have an income tax, but most do. The rates can vary greatly from state to state. For example, there are seven states that have no income tax, including Florida. Some states have rates as high as 13.1% – we’re looking at you, California – but in most cases, they apply only to people with high incomes.
You can find a complete list of 2019 income tax rates by state here. If you know what you’ll be making, you can do the math to figure out the financial impact your new location will have on your paycheck.
#4: Sales Tax
Another tax consideration to research is the sales tax of your new city or state. Some of the states that don’t have an income tax make up for it with very high sales tax. For example, Florida has no state income tax. However, the average combined sales tax rate is 7.05%.
Groceries are not taxed, but other necessities will be. In addition to the state sales tax, you may also be subject to a city sales tax. Alaska has no statewide sales tax, but they do allow individual municipalities to charge a sales tax if they choose.
#5: Job Market
If you don’t already have a job lined up, then taking the job market in your new location into consideration is a must. The same is true if you’ve got a job but your partner doesn’t – or vice versa.
Unemployment rates can vary widely from place to place. Some cities are known for specific industries. An example is Hartford, Connecticut, which has lots of insurance jobs. Getting a feel for the job market can help you narrow your choices. And while you’re at it, it’s a good idea to research salaries in the area.
#6: Financial Continuity
Finally, you may want to talk to your credit union or bank about your upcoming move. Moving to a new state is stressful enough without worrying that you won’t have easy access to your money.
If you do need to switch banks, then you can do some research ahead of time to find out what your options are. For example, Addition Financial welcomes new members living anywhere in our service area. If you take care of the financial logistics ahead of time, it will minimize the work you need to do once you’re in your new home.
Moving to a new state requires work and research. The six financial considerations we’ve outlined here can help you do the financial planning you need to do to make your move as stress-free as possible.
To learn more about Addition Financial’s checking accounts and how they can help you with your move, click here now.
Posted on Jul 3, 2019
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