Many people toy with the idea of relocating to save money. They don’t want to spend a fortune just trying to keep up with the cost of living.
In some cases, relocating can reduce the cost of living substantially. However, as with most economic opportunities, there are costs and benefits. In this post, we take a look at both the pros and cons of moving to a cheaper area.
Here are the pros.
Profit On Your Home
If you currently live in an expensive area, you may be able to sell at a peak and then buy a property in a cheaper location for less money. This way, you can immediately liberate a large chunk of cash. You can then put this money towards your setup costs, look for cheaper apartments for rent, or simply invest it elsewhere for a return.
Get a Bigger Space
At the same time, you may be able to get a bigger space for the amount of money that you have. For example, if your current property is 1,000 square foot, you may be able to get a larger 2,000 square foot home for the price, depending on where you go.
Low cost of living areas also tend to have lower taxes, partly because the people who already live there can’t afford to pay higher rates. In many cases, lower state and municipal taxes can save you thousands of dollars per year.
Find A New Network
More expensive cities will sometimes refer to areas as “communities,” but that’s not always the case. Rarely do people come together and trust each other. There’s so much churn that creating lasting networks is more challenging.
With cheaper areas, however, that’s not always the case. People often come together to pool their resources, creating a tight-knit community to support each other.
Of course, there are several cons as well.
Moving Is Expensive
Upping sticks and moving to a new location is not cheap. In many cases, total relocation costs will top 10 percent of the current value of your home – that’s a lot of money. It’s not something you’ll want to do often. And if you do relocate, it needs to be something that you commit to long-term.
Before the pandemic, cheaper cities were much cheaper. That’s because there weren’t so many remote workers competing for apartments and homes. Of course, things are now changing, pushing up prices. Remote workers have figured out that if they move, they can save money on rent and have a better quality of life.
Cheaper areas are often more affordable because salaries are lower. Companies can afford to pay people less money because the cost of living is lower. As someone moving to one of these areas, you need to be aware of this. Your rent might be cheaper, but you may also be bringing in less money every month so, on balance, you’re no better off than you were before.