Trekking to a new town in pursuit of a new gig is an adventure fraught with excitement, opportunities and changes. Among the changes is likely to be a cost of living adjustment, for better or worse, depending on where you’re headed.
Before making the move, experts suggest doing some cost of living research, so neither you nor your bank account are taken by surprise.
1. Do research before you move. Compare the cost of living in your current city to what it is in the city where you’ll be moving. This will give you a good sense of what to expect, and whether you’ll be spending more or less money on food, housing and other expenses.
2. Know the difference between the Consumer Price Index and a cost-of-living index. The Bureau of Labor Statistics’ CPI is a measure of inflation that tracks price differences in goods and services over time. The ACCRA Cost of Living Index, published by The Council for Community and Economic Research, measures price differences in goods and services from place to place. Experts point to the ACCRA index as a useful way of comparing the cost of living between cities (Full disclosure: The PayScale Cost of Living Calculator utilizes ACCRA data).
3. Do a cost of living comparison between cities. Comparisons by state are not useful, experts say, because different metro areas within the same state sometimes have very different costs of living. For example, living in Manhattan is likely to cost more than living in Upstate New York.
4. Consider your standard of living. It’s important to find out how far your new salary will go to maintaining your current lifestyle, says Pamela Villarreal, a policy analyst at the National Center for Policy Analysis in Dallas. For some people, she points out, the size of a home is very important: would you be happy downsizing to smaller quarters? Sometimes people get so enthralled about moving to a new area they forget to consider the purchasing power of their new salary, she says.
Given the current turbulence in the real estate market, it makes sense to investigate relocation assistance from the company you’ll be working for, according to a story in the Courier-Post of New Jersey:
The relocation assistance can range from a couple of hundred dollars to ship your belongings to outright purchasing your home. There is no “standard” relocation package.
Last year, companies spent an average of $62,185 to relocate an existing home-owning employee and $55,165 to relocate a new hire, according to Worldwide ERC, a Washington, D.C., nonprofit that represents corporate relocation companies.
The trick is matching relocation incentives with your needs.
5. Use a cost of living calculator. Cost-of-living calculators tell you how far your salary will stretch when you’re buying goods and services in a particular place–based on your calculations, you can easily craft charts comparing one city to another.