Relocating for a new job is a big financial decision that can affect your savings. Although salary may seem like the most important variable at play, there are other things to consider before packing up and hitting the road. You may feel strongly about a job and its potential to push your career in an upward trajectory, but that job shouldn't require putting your short-term and long-term savings goals aside.
So before you jump into adventure, keep these money-smart considerations in mind:
In some places there are no state taxes, so your bi-weekly paycheck could go a lot further. But oppositely, it’s also important to remember that employees in some areas must pay city taxes in addition to state and federal taxes. Investigate the tax laws if you're considering a job in a different state, and then think about how they could influence your savings plan.
Are you moving a couple hundred miles away or across the country? The difference in relocation costs could be dramatic, especially if you have a lot of stuff. If your new company totally or partially covers relocation, then factor that into the overall picture.
Moving Costs That Add Up.
Even when you're not paying for professional movers, moving is still expensive. You may need cash for a down payment on a new house or a security deposit and first month's rent. You might need to restock on toiletries, cleaning supplies and groceries that won't survive the trip or make the cut with the limited space you might have. And when you get to your new home, you'll probably want some cash to explore, try new activities and meet new people.
On average, companies that pay for employee relocation spend nearly $20,000 on a new hire. So, imagine taking your new salary and cutting $20,000 — or even $10,000 — off the top if your company does not cover your relocation. But there are a few ways to help manage these costs without turning down that fantastic new job opportunity.
Negotiate a "signing bonus" with your employer.
It's not uncommon when negotiating with a new employer to point to some of the additional costs associated with a soon-to-be lifestyle and ask to add certain compensation to a relocation package.
Join the shared economy.
If you're moving to an urban area, consider selling your car. Then, rent one by the hour when you need one. There are many shared services available that offset the costs of owning or leasing a car.
Stay with a friend.
If you know someone in the area where you are relocating, ask if you can crash for a few weeks, or even a couple months. In addition to saving money, it will help you get to know the area before you commit to living in a neighborhood you don't know a lot about.
Managing these relocation costs can help you keep your short-term and long-term goals on target. Although moving to a new area can be exciting and promising, the associated expense doesn't mean that you can't still save for retirement or regularly add to your savings account. If you have other questions, consider talking with a professional at PNC who can help you navigate the financial aspects of a career change.