How to Calculate the Costs of Relocation
Making a move may be necessary if you want to take the next step up the career ladder. Relocation can also be appealing if you're ready to make a fresh start personally or need a change of scenery.
Before you hire movers and start house or apartment hunting, it's important to take time to consider relocation costs. Here's how to make sure you're financially prepared for a move.
Start With a Relocation Costs Budget
A budget is essential for managing your day to day expenses. And you can apply the same concept when a move is in the cards. Start by dividing relocation costs into two broad categories: all the costs associated with moving; and the cost of living once you've settled into your new place.
Costs of Moving
This category covers all the expenses you may need to pay to go from Point A to Point B. That may include:
- Boxes and packing materials
- Moving van rental if you plan to move yourself
- Hiring professional movers
- Utility deposits at your new place
- Remaining utility balances at your old one
- Storage unit rental
- Professional cleaning services if you're moving out of a rental
- Driving expenses
- Airfare if relocating long-distance means flying versus driving
- Shipping fees (including fees for transporting pets and car)
- Moving insurance
- Security deposit for your new apartment if you're renting
- Temporary short-term housing if you're planning to buy
So how much should you budget for the costs of moving? The amount can vary based on the distance you're moving, how much stuff you have to move, and whether you want to go pro with a move or choose a DIY approach.
According to HomeAdvisor, the cost of moving nationwide ranges from $200 at the low end, to over $10,000 at the high end. The average cost as of February 2021 was $1,367. Comparing individual moving costs and services can help you fine-tune your budget further.
Costs of Living After You Relocate
The other side of moving is to figure out what relocation costs after the fact. The expenses you should be most concerned with here include:
- Mortgage or rent payment for your new home
- Monthly utility costs
- New furniture and home decor
- Repairs and ongoing maintenance, if you're buying a home
- Car, renter's and/or homeowner's insurance
- Property taxes
These are the most essential expenses to consider when relocating, but there are also other costs to consider. Health care, for example, is something to think about. You may be young and healthy, but if you get sick or injured, you need to know how much a doctor visit would cost if you're waiting for your insurance to kick in or you haven't met your deductible for the year.
Beyond that, think about things like dining out, entertainment, and hobbies. In a bigger city, going to a restaurant or a movie may be more expensive compared to where you're living now.
You need to consider carefully how your budget after a move may increase or decrease, and how your new income will accommodate your spending. If you're moving to an area with a higher cost of living, that may mean having to cut back on some of your non-essentials.
A tighter budget could also curtail how often you're able to travel back to your old hometown. This comes into play if you're leaving family or close friends behind, and you'd like to plan regular visits.
Calculating Relocation Return on Investment
As you assess relocation costs, remember to think about the bigger picture. Specifically, ask yourself what the return on investment is likely to be, both financially and emotionally, by moving to a new city.
Evaluate what the job market is if you're looking for a job and don't have an offer yet. Moving to a city with a larger population doesn't necessarily guarantee that job openings will be plentiful. Even if they are, you might be up against stiff competition if hundreds or even thousands of other job seekers are relocating for the same reason.
Think carefully about salary expectations as well. Looking at the median and entry-level salaries for workers in your industry in a given city can give you a better idea of where you're likely to fall on the pay scale once you get hired. Plugging your projected income into a cost of living calculator for the city you're interested in can help determine how affordable it truly is.
Finally, look past the financial considerations and think about the overall quality of life a city has to offer. Relocating—even if it means getting ahead on the job—can be extremely difficult emotionally if your quality of life suffers. While they may not impact your relocation costs budget, it's important to know if there are other people your age to create connections. Whether your new city offers the kind of hobbies and lifestyle you're seeking, can also play a big part in your decision-making. Consider your new life as a whole–job, social life, activities, even the weather, are cost factors when deciding where, and when, to move.