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Before You Move, Consider This: Where You Choose to Live Has a Surprising Impact on How Rich You Feel

Cost of living matters: a six-figure salary in San Francisco might not make up for the fact you can only buy a walk-in closet for less than half a million. Before you move to a new city, here are seven financial factors to consider.

Moving to a new city? Be sure to consider financial factors, not just emotional ones.Over the summer, I traveled to Bend, Ore. with my wife and kids to scout it out as a possible place to live. I had lots of good reasons for doing this, starting with the weather: In Chicago, we’re slogging through another horrid winter. Bend, by contrast, is high desert country: toasty summers, mild winters, sunshine all the time. Did I mention the microbreweries? Bend has only 82,000 people and 11 craft breweries. Cheers!

But on the economic front, Bend, Ore. has much going for it, too. Entrepreneur magazine named Bend “the next big city for entrepreneurship,” and there’s lots of buzz in areas such as high tech. Plus it’s in Oregon, which has no sales tax.

There’s an argument to be made for putting your quality of life first when deciding where to live. But you also need to check out the issues that will impact your wallet. That’s because where you decide to live is one of the largest factors in determining how much money you can save — and how wealthy you’ll feel.

If you’re about to move, or thinking about it, here are some things to consider:

1. The cost of living, and the cost of housing

Last summer, I was presented with a tentative salary figure for a job in San Francisco. The number had six digits in it, and I began to do the Snoopy dance. Then I took a look at what houses sold for in the San Francisco area, and determined I could only afford to live in a walk-in closet.

The dot-com boom has turned the Silicon Valley into a wealthy nation unto itself, with an economy that makes New York City look cheap. So do your homework: Can you afford the place you’re moving to, and can you afford the housing? Even if a house or apartment is expensive, you might get away with it if you can walk, bike, or make use of public transit, which brings us to…

2. Transportation

In Chicago, the public transit system is solid enough that you can get by without a car. And without a car, you eliminate a whole host of carrying costs: repairs, maintenance, car payments, gasoline, city permits, parking, car insurance, and much more. Chicago’s mayor Rahm Emanuel is also trying to turn Chicago into a biking town, with new bike rental stations within the city limits. If you can live somewhere where a car isn’t needed, you open up a lot of breathing room in your budget.

By my conservative estimate, going without a car—even if it’s paid for—will save you a minimum of $2,400 a year. Gas, insurance and maintenance alone will cost you at least that much, but if you’re carrying around a $500 car payment to boot, going car-free could save close to $10,000 a year.

3. Taxes

Seven states don’t have income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two more — Tennessee and New Hampshire — only charge income tax on dividends and interest from investments.

By contrast, in Illinois, the state income tax is 5 percent, meaning that a person making $50,000 a year can expect to fork over $2,500 in state taxes. Ouch.

But if you’re not relocating to a state without taxes, at least you can hope for a state without sales tax. Those states are Alaska (again!), Montana, New Hampshire, Delaware and Oregon. Before you start counting your tax savings, however, consider that a state without sales and/or income taxes will likely make up some of the difference in other ways — like property taxes. Go figure.

4. Entertainment

Let’s face it: Some places are simply more exciting to live than others. When we compiled our Young, Broke and Single list last June, we looked at entertainment — specifically cheap beer and cheap thrills — as two worthy variables. Maybe you can afford to live in Fargo, N.D., but what’s the nightlife like? (For all I know, it’s great.)

Moving somewhere that’s cheap is one thing. But sooner or later, you’ll itch for something to do, and somewhere in town to go. Consider that one of the towns on our list, Austin, Texas (number one) is the home to world-famous music and arts festivals and has more than 530 bars and restaurants, one for every 1,500 people in town.

5. Your cash buffer

No matter how well you scout out a new place, you may not know how much money you’ll need until you spend a few months there. Wherever practical, bring enough cash to get by for three to six months without a paycheck. That may sound like a high threshold, but keep in mind two things. First, you can always build a buffer (as I did before moving to Chicago) by selling possessions you won’t need. (A fur coat in Miami? Bah.)

The second is that when entrepreneurs strike out on their own, especially in a bootstrap scenario, they’re told to have much more money in the bank: six months to one year’s worth of paychecks. You don’t want to move to a new place on a shoestring if you can help it.

6. Employment picture

If you just landed a job that’s calling you to a new city you might think, “why does this apply to me?”

But what if the job doesn’t work out?

You want to move to a city or town that has a vibrant enough economy to cushion you. Bismarck, N.D., has an astonishingly low employment rate of 2.1 percent, according to the U.S. Bureau of Labor Statistics. It’s also cold, expensive, and way out of the way. But if you lose a job there, you won’t be out of a job for long. They’re hiring in insurance, restaurants, retail — even manufacturing — with much of the action fueled by an oil boom and a thriving agricultural industry.

7. Opportunity

A job is a job, and Bismarck’s got plenty. But what if you’re trying to build a business? A dream?

Certain cities are imbued with entrepreneurial spirit. Bend, Ore. hopes to follow in the steps of Boulder, Colo. as a high-tech hotbed. Forty years ago, the late Steve Jobs and Bill Gates grew up in two cities (Cupertino, Calif. and Seattle, Wash.) that were light years ahead in computer technology. We tend to look at Jobs and Gates as self-made geniuses — but both men acknowledge that location played an indispensable role in their careers.

So ask yourself: What do you dream of doing, and where is it happening?

Parting shot: Moving … and what moves you

In the end, where you move to is highly personal: you lead with your head, but you follow your heart. You can crunch the numbers, determined that they’re stacked against you, and still make the jump anyway. When I first moved to Chicago, I had only a temporary full-time job. It was an expensive city. I had full-time offers elsewhere. My older brother, an accountant by trade, told me I was making a mistake.

And yet I chose Chicago because the city reeled me in like a great big fish, what with all of its culture, great live music, incredible restaurants and vibrant youth culture. As it turned out, my happiness secured my financial security: I worked so hard at my new job that the temporary post turned into a permanent one, and thus began my career at the Chicago Tribune. (It also helped that I met my future wife two months after arriving here.)

I sacrificed to make it work. I sold my car. I ate out of boxes and cans to afford an apartment that was walking distance to my job. But I didn’t go in blind. I knew what it would take to make the adventure work financially, and did it.

Now perhaps it’s your turn. Whether you’re thinking of Palo Alto or Portland, Maine — or maybe even Bend, Oregon, which I highly recommend — take some measure of the move in dollars and cents. If you’ve fallen in love with a certain city, the numbers may not sway your final decision. But at least they’ll give you some sense of what it will take to your adventure last.

Published or updated on January 29, 2014

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About Lou Carlozo

Based in Chicago, Lou Carlozo is a personal finance contributor for Reuters Money, a columnist with, and a former managing editor at AOL's Contact him with story ideas for Money Under 30 at, or follow him via LinkedIn and Twitter (@LouCarlozo63).


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  1. Jonathan says:

    NO! DO NOT MOVE TO AUSTIN!! There are already far too many (Californians) moving here! Our traffic is almost as bad as Chicago, our cost of living is skyrocketing, and all of the cool things to do are becoming miserable because there are so many people. Move to Portland.

  2. Olivia says:

    It’s quite funny because, growing up in the Bay Area, I consider Chicago to be so affordable! That, as well as the proximity to my alma mater and college friends, were key factors in my decision to move to Chicago following college. I also appreciate the relatively reliable CTA as it allows me to save so much money by not having a car with its maintenance, insurance, gas expenditures, etc.

    Although with the weather of recent, I have to admit I’m missing the mild Northern California winters!

  3. Mark Ross says:

    Great list of factors that one should consider when choosing a place to settle. I think the status of the neighborhood, and the opportunities available in that place are the ones that would affect my decision the most when it comes to choosing a place to live.

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