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How Relocation Impacts Your Net Income

Share current LOB: PersonalBanking

If moving ahead in your career means moving to another city or state, don’t let the allure of a big paycheck blind you to the cost of relocation, which may outweigh the increase in salary and benefits. Here are some factors to consider when estimating your take-home pay before you relocate.

Look at your lifestyle

Big cities like New York and San Francisco regularly make the list of priciest places to live, but composite cost of living indices include many variables—some of which may affect you more than others.

For Sam Cullison, a 63-year-old family practice physician, the decision to leave Seattle for a senior leadership position at Methodist Health System in Dallas hinged on one thing. “The idea of moving away from our grandchild was a big drawback for me and my wife,” Cullison says. Ultimately, the low cost and convenience of non-stop flights between Dallas and Seattle tipped the balance in favor of changing jobs and relocating.

For families with young children, the cost of childcare may be paramount. “In a new city, you can't just drop the kids off with friends or family,” says Brian Braudis, an executive coach and consultant with the Braudis Group in Oceanville, N.J. He reminds clients to think about childcare in broad terms. “Even the smallest errands, when done with children in tow, add time and stress,” he says.

Take a close look at housing

As the largest monthly household bill, your mortgage payment can impact a pay raise faster than any other expense. “Know the cost of living index for the destination city, and negotiate a reasonable multiplier to address the gap,” says Roy Cohen, career coach and author of The Wall Street Professional's Survival Guide.

To see if your new mortgage payment might exceed your raise, compare the home-price-to-income ratio in your current city with your destination city. To calculate these ratios, divide the median home price by the median income for the given city. Current statistics are available through the U.S. Census Bureau website. While the median U.S. ratio is around 3.0, it varies widely from city to city. Atlanta (1.9), Dallas (2.2), Pittsburgh (2.3) and Minneapolis-St. Paul (2.6) are among the U.S. cities where your housing dollar will stretch the farthest. Locations where your raise may not close the gap include Los Angeles (6.8) and Boston (4.5).

Your financial advisor may also be able to help you compare other key factors like property taxes and mortgage interest rates.

Sweat the small stuff

The expense of moving is more than the final bill for boxing, loading and transporting your belongings. “Build in reimbursement for the miscellaneous goods and services that ensure a seamless transition,” Braudis says. Line items might include new curtains, cleaning supplies, phone and cable service.

Lastly, consider how your move may be disruptive to your spouse. “Breaking into a new community presents … challenges both personally and professionally,” Braudis says. Lost wages for a spouse should be figured into the total cost of relocating.

When faced with the prospect of relocating for work, doing your homework before sitting down at the bargaining table will give you more confidence in negotiations and can help you ensure your new move is a step in the right direction.

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.