If you’ve checked the news headlines over the last year, you’ve likely seen the claims that millions of Americans have relocated to more affordable regions of the country during the pandemic.
A study by the freelancing platform Upwork determined up to 23 million people were planning to move to a different area because they could now work remotely. And a recent analysis by Zillow of North American Van Lines moving data confirms a "nationwide moving boom" to lower-cost regions of the country. Americans want to leave big cities and settle in a place with lower expenses and more space to enjoy.
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.
While the amount of money you need to cover basic costs may be less in certain parts of the country, or even in the county next to yours, that doesn't mean you’ll end up with more money at the end of each month or a guarantee that your net worth will increase.
“Money in” still must exceed “money out” if you want a surplus of cash. The grass may be greener in the countryside, but keep in mind that moving and travel can be expensive. Adding to your commute time or making many trips back "home" for visits may wipe out any savings from your move.
That's why it is crucial to understand:
With so many people deciding to relocate to less expensive areas, there must be some advantages to leaving your residence, right? Here are several of the pros of moving to a more affordable town.
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.
Here are some downsides of relocating to a less expensive geographic location.
If you’ve been in your current home for years, you may have forgotten everything involved with a move. While it can be exciting to research new places to live, don't let rose-colored glasses prevent you from being realistic about the challenges and stress of actually packing up and moving.
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.
If moving talks have been happening for years, you've probably hashed out the pros and cons of making this significant lifestyle change. But the pandemic is prompting many people who never dreamt of moving to consider changing their place of residence.
It may be a good decision if you need (or want) to reduce expenses drastically or you’ve recently found a new job. But uprooting your life during unprecedented times could be a reactionary move you'll later regret.
Unless you’re moving out of necessity, make a list detailing what the move will accomplish.
Your list might include things like:
Whatever your reasons, having a clear understanding of why you want to move will help you decide if you should do it. It can also help you choose what new area and type of home to consider.
While you might have plenty of great reasons to move on your list, don't forget to take time to review what you'll miss by leaving your current home and community.
Currently living near your family and spending time with them often? Consider how you'll feel when those visits are fewer or with lots of time between. Will you be able to find new neighbors that are as wonderful as your current ones?
A move may force you to leave a terrific school district your kids attend or access to a wide variety of cultural events in your region.
Unless you really don't enjoy your current living arrangement, you'll lose at least a few things that matter to you when you make this kind of move.
Those who are single without family members nearby may not need to consider how their move will affect others.
But if you’re married or have children, carefully reflect on how relocating will impact each person in your family. Is each member of the couple entirely on board with moving? How will your kids handle being in a new location at their age?
While you ultimately need to do what is best for yourself and your immediate family, consider how your move could impact aging parents, siblings, or other extended family members.
When frequent travel back to visit family is in your plans after a move, ensure those travel costs factor into your decision-making process. Driving a few hours probably won't bust a budget. But buying plane tickets for each person in your family a few times a year to visit loved ones can negate a chunk of the savings from moving to a lower cost of living area.
One of the reasons you may want to live in a lower-cost area is to free up money to put towards debt and save more aggressively for your future. While those are good reasons to consider making a change, it's also essential to understand your current financial situation.
Moving has costs and if you aren't sure how much you'll really save or where you'll allocate those savings to improve your financial health, you may not progress much on your goals. Staying put and considering other options to address your financial situation may be beneficial instead.
You're more likely to succeed if you carefully track your expenses and create a debt pay-down strategy linked to lower cost of living expenses. You might even be able to boost retirement accounts or add to college funds with savings from living in your new community.
Business owners will need to consider how a move will affect earnings. It may not make a difference to a freelancer who works online but opening a brick-and-mortar business in a LCOL area or finding new clients for your service business will require much due diligence. You could find great opportunities in a new community, or you may find your income will be much lower.
In addition to your finances, take stock of your overall wellness. This includes you and your family's physical, social, emotional, and mental health.
If you’re generally healthy, making a significant life change may create short-term stress that’s relieved after you settle in a new home. But those suffering from significant health challenges need to think about the consequences of making a tremendous change carefully.
The benefits of living in a LCOL region may outweigh any difficulties a move creates. But be sure any health needs you or a loved one has can be met as well (if not better) in the location where you’re planning to move.
It's essential to have a written list of goals you want to accomplish. Include short-term goals (1-3 years), medium-term goals (4-7 years), and long-term goals (8 years or more) on your list.
Without knowing specific things you want to do in general time frames, it'll be challenging to figure out whether relocating makes sense. If you decide to move, you'll also be more likely to put the extra money you have each month toward your identified goals.
When you decide to relocate to a new area, there’s plenty of other decisions ahead of you. Some of the choices may include:
These are just a few of the questions you may need to answer as you narrow down your options.
While some people write pros and cons lists to help with decisions, it’s a challenging strategy to use when you have multiple options. Another approach enables you to weigh your goals against various possibilities.
First, list your goals in terms of importance. If a goal is extremely important to you (such as saving the most money possible or buying a bigger home with more land), it needs to go at the top of your list. Other less essential goals should be further down your list, in order from very important to just somewhat important.
Then, list all of your relocation options and see if they meet the goals you've identified as being critical. When a choice you’re considering doesn’t align with your essentials, it may not be a smart move unless you understand the trade-offs you're making.
For example, if saving the most money possible is your number one goal, then moving to the suburbs to buy a bigger home for your family may limit how much you can save. While you may enjoy more outdoor space and the slower pace of the suburbs, it may be more expensive than another smaller home in a rural area.
Don't be surprised if you need to revisit your goal rankings when you start looking at the trade-offs required. It's better to take a hard look at your "why" for moving before settling on where to move. Otherwise, you may be unhappy with your decision or fail to make progress on your finances.
Moving to a LCOL area shouldn't be just about the money - unless you’re in a serious financial crisis. And even in that situation, you need to ensure that relocating won't end up costing you more in the long run. Being unhappy about where you’re living may cause you to spend any money you'll save being there in other ways.
If moving is not what’s best for you, devote time brainstorming different ways to "grow the gap" between your income and expenses. Then, instead of moving to save money, put the newly "found" money in your budget towards the financial goals you set.