When planning a relocation, do you know how an area’s cost of living will affect you? Cost of living is one of the most important factors to consider when it comes to relocating, but it's often overlooked. Fortunately, there are many tools and guides available online to help you compare a possible destination to your current location before making the decision to move.
Why Cost of Living Is Important
When it comes to living expenses, relocating is not as simple as researching the cost of a home in the new area. Comparing two similarly sized homes in different regions of the country may seem like an apples-to-apples comparison, but that's rarely the case. In addition to looking at the cost of your new home, you have to consider all of the expenses that come with the area including taxes, utilities, retail prices, the cost of gas, and more.
If you're still working, whether full or part-time, the amount of money you can make will change where you relocate as well. Even when transferring within the same company, employees often have their salaries adjusted to better match the cost of living in their new geographic area. Those expecting to find a new job after relocating may be surprised by the salaries offered if they don't do their homework first.
How To Calculate Cost of Living
There are different ways of calculating the cost of living for an area, but you don't need a degree in economics to sort it all out. Simple online tools and guides make it easy to compare two geographic areas. With a little planning, you can see just how far your savings might take you in a new city.
With this simple calculator, you only need to know your annual salary, your current location, and your destination. The calculator will tell you how much more or less you can expect to spend on certain expenses.
According to this cost of living tool, a $60,000 salary in Newark, New Jersey is comparable to making $51,342 in Phoenix, Arizona. This means you would have an extra $8,658 to spend each year. The tool also says that if you move from Newark to Phoenix, groceries will cost 9 percent less, housing will cost 16.3 percent less, transportation will cost 10.5 percent less, healthcare will cost 8.6 percent less, and utilities will cost 1.5 percent more.
However, various cost of living calculators give different results. Plugging the same information into the cost of living tool at Relocation Essentials yields less exciting results. You would still have more money when moving to Phoenix, but only $4,608 more each year. Similarly, the tool at Moving.com provides extra cost of living information by zip codes.
By using a variety of online tools and working with a relocation specialist or financial advisor, you can learn the importance of taking cost of living into account when planning a move to a new area. This is an important step for anyone who's planning to relocate, but it's crucial for retirees on a fixed income.