Revised May 2024
Explore the potential savings and lifestyle changes of relocating to a lower-cost-of-living area (LCOL). Is this the financial solution you need?
If you’ve checked the news headlines, you’ve likely seen the claims that millions of Americans have examined their living expenses and have been relocating to areas with a lower cost of living (LCOL).
A recent analysis by Zillow, referencing North American Van Lines moving data, confirms a 'nationwide moving boom' towards more affordable regions. This shift is particularly noticeable as people move away from expensive cities in states like New York and California, seeking better quality of life and affordability in places like Indiana, Tennessee, and Missouri. This boom has been made possible by the growing number of remote jobs available since the pandemic.
Maybe you’re wondering if relocating to a lower-cost region could be worthwhile for you too. Could you save substantially more money living in a different location? The truth is it depends on where you currently are, where you move, the housing you choose, and your other household expenses.
If you’re feeling a tug toward making a move, perhaps God is calling you to a new adventure, and moving to a LCOL could be the right path forward. As you prayerfully consider your next steps, here are some practical considerations to make.
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Potential Benefits of Moving to LCOL Areas
With so many people deciding to relocate to less expensive areas, there must be some advantages to leaving your residence, right?
Here are several pros of moving to a more affordable town:
Homeownership and Real Estate Advantages
If you own a home in a more expensive city, selling it during a peak market can provide you the funds to buy or rent a less expensive place in a different community. You can also put money from a sale toward loan payments or investments. Another bonus? The home in the lower-cost area may be newer, larger, or less expensive to run than your current home.
Renting Benefits
Renters may find they can also afford bigger spaces with more amenities for the same or lower prices in an affordable location. That allows you to splurge on nicer accommodations or put the money you're saving from living less expensively toward other financial goals.
Tax Considerations
Lower-cost areas may also have lower tax rates. While states with minimal or no state income tax can save you thousands of dollars each year, also consider the other types of taxes you'll have to pay. Before you decide to move, make sure you understand your unique tax situation. You can start by trying out SmartAsset's Federal Income Tax Calculator. Then, use their state income tax calculator to help determine other applicable taxes in the region you’re considering moving to, like income tax, municipality taxes, sales tax, property tax, gas tax, and inheritance taxes.
Lifestyle and Community
When you've always called the same city or state home, moving to another allows you to experience a different environment and way of life. Coming from a larger metropolitan region, you may enjoy the slower life in a rural town and greater access to more outdoor activities. You can skip sitting in traffic jams and enjoy wandering through small businesses that make up the heart of "Main Street" in your new community. A smaller town could also mean finding a more close-knit church community, where you can get to know one another on a deeper level. Depending on your interests, you may find a higher quality of life away from the hustle and bustle of a major city.
Building New Networks
As you get to know your new neighborhood, you'll make a new network of friends and potential business relationships. You may experience stronger social ties if you join a local community group focused on an interests or hobbies which can allow you to form a more tight-knit relationship by supporting common interests or local causes and activities.
Serving a Different Community
Your new community will have needs and challenges that differ from your current one. These present opportunities to serve others in new ways. You may be able to use your gifts and passions to help others in ways you hadn’t been able to in your previous city. Perhaps the skills or interests you developed in your current location will uniquely equip you to help others in your new community. Perhaps God has been preparing you precisely for it. Keep an open mind and look for new opportunities to come alongside new friends and neighbors.
Opportunities to Be More Generous
When your house payment and other regular costs are down, it gives you an opportunity you may not have had before to be even more generous with what God has given you. You can use those savings to bless others in your community by supporting them through life changes or hardships, donate to a local ministry or organization, invest in your local community center, or give more to your church. Saving on the basic costs in your budget allows you more opportunities to give to others.
Incentives for Moving
While it might be hard to believe, you could get paid to move if you’re flexible about lower cost-of-living locations. Cities in various areas of the United States are providing incentives for people to move to their region. For example, remote workers can apply to the Ascend WV Remote Worker Program. If you have a full-time remote job in a state outside of West Virginia, you can earn up to $12,000 and recreational gifts and incentives of another $8,000 to move to Morgantown. Other relocation incentives are offered in Indiana, Tennessee, Michigan, Maine, Iowa, Arkansas, Oklahoma, Oregon, Pennsylvania, and more. Check out Make My Move to learn more about options to receive payment for a move.
Potential Drawbacks of Moving to LCOL Areas
There are plenty of great reasons to consider changing where you live. But you can't ignore the emotional and financial disadvantages of leaving your current home when you want to make a smart decision about moving.
Legal and Financial Considerations
To take advantage of many of the benefits explained above, your move will need to be more than just a temporary relocation. Your "domicile" (legal residence) determines how your income is taxed among other legal issues.
Moving Costs
Moving can be expensive. So, you’ll want to consider how long it will take for the savings from your new home to “break-even'' with the expenses to move there.
Housing Competition and Costs
It’s become quite popular for remote employees to move to more affordable cities. This means you'll likely face more competition for housing, potentially resulting in higher costs than you may expect.
Additional Expenses
You also need to consider potentially higher expenses in other budget categories too. A new city or a bigger home could mean higher utility rates or maintenance costs. Your transportation expenses (gas, vehicle maintenance, insurance) may be higher if you’re driving more because of where you live, too. If a grandparent helped with childcare, make sure you add daycare or a babysitter to your budget to make up for their service to your family.
Income Considerations
Living in a more affordable area means salaries and business income in the region may be lower than you'd expect as well. Carefully research local wage and income data if you or anyone in your family will be looking for a job or running a business in your new town. If you're working remotely, your employer may make a location-based salary adjustment that aligns with the lower cost of living in your area, too.
Access to Entertainment
When you move to a more affordable suburban or rural area, getting to some forms of entertainment you enjoy may be more challenging.
Social Connections
When you move away, you may also lose touch with friends and neighbors you enjoy spending time with, including your church family. While you may plan to maintain those relationships, your busy life in a new town may make it challenging to keep up with the people you've left behind.
7 Questions to Ask Yourself Before Deciding to Move
Relocating can greatly affect your cost of living and quality of life. If you've lived in one place for a while, the thought of moving – maybe to a state like Indiana or Tennessee, known for their lower cost of living and thriving small town charm – might be both exciting and scary. To navigate whether this life-changing decision is for you, consider these seven key questions:
Consider writing out your answers to the questions below. If you have a spouse, answer the questions separately and discuss your responses to determine how closely you align on thoughts of relocating.
You may also decide to set your answers aside for a few days (or weeks) and revisit them after reflecting and talking to people you trust.
1. How long have you been thinking about moving?
If it's a new idea, maybe spurred by the pandemic's shift towards remote work, weigh the benefits against the potential of a reactionary decision.
2. Why do you want to move?
Identify what excites you about relocating. Are you looking to improve your financial situation, maybe by moving to a state with no income tax like Texas, or seeking a new home with better access to healthcare and childcare? List your reasons, including motivations like paying off debt, getting more affordable housing, or finding better job opportunities in booming American cities. You may not want to move but find that God is calling you to. It's important to prayerfully consider where he's asking you to go.
3. What will you give up by moving?
Consider what you'll miss by leaving your current location. If you're enjoying the cultural diversity and public transportation convenience of a big city like Chicago, think about how relocating to a smaller town in Georgia or the Midwest might change your daily life. You will have to find a new church, a new community and new routines. Remember, a lower overall cost of living can mean different lifestyle adjustments.
4. How will a move impact your family?
If you have a family, talk about how moving will affect each member. This includes not just the immediate financial benefits, like lower housing costs and savings on everyday living expenses, but also the emotional and social changes, especially for children who may need to adjust to new schools and friends. You should also consider extended family, if you currently live near them. How will seeing them less often affect you, and how much will frequent travel to visit cost?
5. How is your current financial health?
Analyze your current financial health. Use a cost-of-living calculator to estimate how much you might save in a new city or state. Consider the costs associated with moving, from hiring movers to potential increases in car insurance or property taxes.
6. How is your current overall wellness?
Assess your and your family's overall wellness. Moving can be stressful, and it's important to ensure that both acute and chronic health care needs can be adequately met in your new location. The availability of healthcare providers and services can vary significantly across different parts of the country.
7. What are your goals?
Finally, make sure your moving decision lines up with your short-term and long-term goals to make sure your relocation supports your broader life plans.
By thoroughly answering these questions, you'll have a clearer understanding of whether relocating will help you reach your life goals and financial plans. Remember, moving to a new city or state is more than just an address change; it's a step towards a new chapter in your life.
Making the Decision to Move
When you decide to relocate, you’ll have multiple choices that can greatly affect your cost of living, quality of life, and financial well-being. Here are some key considerations:
Choosing Your New Location
Selecting the right city and state of residence is important. Whether you're considering the busy life in a bustling city like New York or Chicago, or the quiet setting of a small town in states like Indiana or Tennessee, each offers distinct advantages in terms of lifestyle, healthcare access, and affordability.
Type of Community
Deciding between a suburban neighborhood and a rural setting can greatly affect your living expenses and quality of life. Suburbs might offer a balance of community feel and access to amenities, but rural areas may provide peace and lower housing costs. While it may be easier to find a Christian community in an area with more churches, the communities that exist in less culturally Christian areas may be more committed to their faith or offer you and your family an opportunity to serve a missionaries or the light in a less churched community. Consider all these possibilities when you think about your potential new community.
Homeownership Decisions
The dilemma of renting versus buying is probably bigger now than ever before. In some parts of the country like Texas or Alabama, owning a home might be more affordable than renting, especially when considering property taxes and real estate trends. Use a cost-of-living calculator to compare these costs in different areas.
Home Specifications
The size and amenities of your home are important. In states with a lower overall cost of living, like Missouri or Arkansas, you might afford a larger home or one with more amenities for the same price as a smaller residence in a more expensive city.
When thinking about your options, consider creating a list of pros and cons. List your goals in order of priority—whether they are saving money, improving quality of life, or accessing better childcare and healthcare providers—and then compare your options to decide if they’ll help reach your goals.
For example, if your primary goal is financial savings, relocating to a more affordable housing market in the Midwest, like a small town in Iowa, could offer significant benefits. But it’s important to consider the trade-offs, like distance from family, job opportunities, and lifestyle changes.
Revisit and reassess your goals often throughout this decision-making process. A move that doesn't line with your core objectives might make you unhappy or could cost you even more money.
So is Moving the Best Way to Save Money?
Moving to a lower cost of living area can be a smart move, especially in America where regional differences in cost, tax rates, and real estate can be sizable. But the choice shouldn’t be based only on financial considerations. If moving doesn't align with your overall life goals or makes you unhappy. There are other factors to consider too like lifestyle and community changes. Is the potential financial gain of moving worth the loss of certain conveniences and close relationships?
If moving isn’t what’s best for you, take time to brainstorm different ways to "grow the gap" between your income and expenses. Try to find ways to reduce your living expenses, lower your childcare costs, or grow your income. Then, instead of moving to save money, put the newly "found" money in your budget towards the financial goals you set.
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