Imagine this: you’ve been offered a new job with your dream company in a different city. Even better: the salary is higher. Should you make the move?
While myriad factors go into such a decision, increasingly, one of the biggest factors is not just salary, but cost of living. Your location has a major impact on earning power. As an executive recruiter, many of the job candidates with whom I work are concerned about how the cost of living in a new city will impact their quality of life. Ideally, the salary for a new job should allow you to maintain your same lifestyle in the new city. And while a higher salary may look better on paper, a higher cost of living at your new location could effectively nullify the pay bump.
Conversely, I have worked with job candidates who were willing to accept a slightly lower salary in order to relocate to a city with a much lower cost of living than their current location. Some relocated to be closer to relatives while others are sought more space for their family or a higher quality of life. In many of these cases, despite taking the lower salary, the lower cost of living balanced out the decrease and these individuals came out ahead.
Are you considering switching cities for a higher salary? Keep the following in mind:
1. A higher salary does not guarantee a bigger bank account.
A higher salary is just one part of the equation. Depending on where you move, your new location could adversely impact your buying power, even if your salary goes up. Average rent and median home prices are one factor to keep in mind when considering your buying power. Everyday costs like groceries, gas/commuting expenses, and dining out also impact your financial health. If you have children, you’ll need to consider school districts quality, the cost of private tuition (should you opt out of public schools), and enrichment activities. After you’ve run all the numbers, you may find that you’re better off keeping your same salary but switching to a city with a lower cost of living.
2. Factor in cost of living when negotiating a relocation package.
While companies still offer relocation packages, these packages are not as robust as they once were. Additionally, companies may ask you to sign an agreement that you will pay back the moving expenses if you do not remain employed with them for a set period of time. Get a moving cost estimate before accepting an offer.
3. Consider whether you will need to sell your home.
If you currently own a home, this may change your financial equation, even if you are moving to a city with a lower cost of living. Selling your house at a loss, or even in a down market, can adversely impact your financial health. In some cases, you may wish to rent out your current home while temporarily renting out an apartment or home in your new city. This minimizes your financial risk, gives the market time to recover in your home city, and – should you change your mind about the move – gives you the flexibility to return home at any time.
When deciding whether or not to relocate for a job, salary is just one factor of many. It’s equally important to understand how your new city will impact your take-home pay and quality of life. In some cases, a company may be willing to increase your salary or offer additional perks, like telecommuting, to help sweeten the deal. In others, you may find that staying put is a better option.