Are you moving to a new neighborhood or city for a job (federal or private sector), family, or a new adventure? There’s so much to consider, including schools, neighborhoods, and cost of living. Each decision affects your finances. Here’s a complete financial checklist for moving.
Financial Questions When Moving
Every city has its own cost of living, and it can vary dramatically within regions of the country. The East and West Coasts are traditionally more expensive than the middle of the country. Kansas City is known for its reasonable cost of living.
1. How far will your money go in the new city (determine cost of living)?
Before you do anything, determine how far your money will take you. The cost of living is a financial benchmark that will guide your other decisions.
A cost of living calculator makes determining how far your dollar will travel in your new city is easy. With Bankrate’s cost of living calculator, you can compare two cities. The calculator is a great tool for calculating your household budget, from food costs to housing.
For example, consider you’re moving from Denver, Colorado, to Kansas City, Missouri. Your salary is $50,000. In Denver, the average home price is $100,000 more than KCMO's, and rent is nearly $500 more.
That’s just housing. The price of insurance and food differ too.
While these calculators are great tools, they’re only a guide. Talk to friends, soon-to-be colleagues, or a real estate agent in the city you’re moving to. A financial advisor can also help you. Ask them about the cost of living. Most residents can tell you if a city is cheap, expensive, or average. If you're moving to Kansas City, check out the KC Ultimate Cost of Living Guide.
Consider all expenses including entertainment and costs to meet your lifestyle.
2. Do I need to adjust my budget?
Once you have estimated expenses, create a budget for the new city and potentially new job. It's a simple way to spend less money.
If you create a budget but have difficulty sticking to it, try mindful spending. It will help you visualize your expenses and spending habits to be more mindful of what you spend and when. Give mindful spending a try!
3. Rent or own?
Should you rent or buy a home? The answer depends on your circumstances, both personal and financial.
If you’re going to live in an area for a long time, buying is probably worth it. Just avoid these five home-buying mistakes.
Home prices have skyrocketed in recent years, along with interest rates, but the rates are coming down which will help fuel the real estate market.
Typically, it takes a few years to recoup home-buying costs, although there are no guarantees. The housing market always changes, and you need to prepare for that and life changes.
While banks have tighter lending restrictions, it’s still possible to buy more house than you can afford.
A home is a long-term investment, and it’s important to talk to your financial advisor about your wealth management plans. Your advisor knows your long-term and short-term financial goals so consult with him when figuring out your housing budget.
If you focus on buying a home and can’t find one, renting is always a fallback option. Rent in the area of town you think you’d like to purchase a home.
4. Where should I live?
Even though there are costs associated with a house-hunting trip, it’s a smart financial move. If you ask, some employers will give you money to offset the cost of the trip.
Call a Realtor® even if you’re undecided about renting or owning. Have them show you the town, including home options. You get a much better feel for an area when you see it in person rather than on a computer screen.
Spend a day with a Realtor®, and you’ll quickly get a feel for the city and the housing options. You’ll also know if you should rent or buy a home. They know their cities well and can tell you in minutes which neighborhoods match your lifestyle, housing needs, proximity to work and entertainment, and schools.
Schools are an important financial factor to consider. Many parents are interested in a school system’s ranking so they can avoid private or parochial school bills.
In some states, a real estate agent also helps renters. In Florida, it’s a free service for anyone looking to rent an apartment, condominium, or home.
A real estate agent is important to your financial checklist because of their valuable insight into neighborhoods. Also, where you live in a city can impact how much money you'll pay each month which will make it easier or harder to stay on budget.
5. Which movers are most reputable?
Once you know where you are moving, it’s time to start packing. Finding a moving company can be daunting, as ripoffs are plentiful in this industry.
Do your research and don't always go with the lowest option.
Ask friends for reputable moving companies, then research the company more.
Check the Better Business Bureau, Yelp, and the Federal Motor Carrier Safety Administration.
While you’re probably familiar with the BBB and Yelp, the FMCSA is a federal agency that regulates out-of-state moves and consumer complaints. A simple search reveals a mover’s safety record and customer complaints.
FMCSA regulates out-of-state moving companies. Ask the mover for their DOT number and verify it.
Check with your state attorney general for licensing requirements if your move is within the same state.
6. What's the job market like?
If you're moving for a job, this is probably the last question on your mind. However, it should be one you consider in case you lose your job at some point. You want to ensure you'll be able to find a comparable paying job in the city.
There are several federal employers and large companies in the Kansas City region. So, in a mid-sized city, employees have options that will help them financially and professionally make the next move.
Purchase moving insurance
There are lots of expenses when you’re moving. Some you can avoid. Others you can’t. Moving insurance is one you don’t want to forget. Add it to your financial checklist for moving.
If the movers damage your household items, you’ll get pennies on the dollar for your expensive electronics unless you have moving insurance.
Moving insurance is the only way to protect the investment you’ve already made in your personal goods.
Financial checklist for your next move
Moving is exciting, yet it’s stressful too. While finances are easy to overlook, especially if you’re getting a pay raise, it’s important to keep your budget in mind when you’re making decisions.
Take the time to think through everything before you move. It's easy to walk into a new city with rose-colored glasses. Everything appears great.
Every city, including my beloved Kansas City, has its pros and cons. Ask residents what those are so there are no surprises later.
While this is a great financial checklist, the Federal Motor Carrier Safety Administration also has one that protects you throughout your move.
Enjoy the Open Road on the way to your new city!
–Todd