You may not have started 2020 thinking about a move. But like it or not, many of us have had to reconsider our life situations during the pandemic.
Maybe you are one of the lucky ones who can now work remotely, or maybe you are out of a job like millions of others. You may be wondering if it’s really worth living where you are.
Before deciding to move, you need to consider many things: the cost of living, proximity to loved ones, and whether you will need a winter coat. Here’s how to make the decision to move.
DISCOVER YOUR PRIORITIES
For some, moving home is the obvious choice, if “home” is the city you grew up in or where your family lives. For others, it can be difficult to focus on a particular place, especially if your loved ones are scattered across the country or the world.
Take the pressure off the decision – this move doesn’t have to be the last.
“Many people delay the move, even if it’s the right move to make, because we can get stuck thinking it’s a permanent move,” said Phuong Luong, certified financial planner at Just Wealth in San Francisco.
It suggests narrowing your focus to the year ahead and reflecting on your priorities.
“What’s missing where I am now? Is there anything I’ll miss from where I live now? Make a list of your responses, as this can help you narrow down the priorities you want your next venue to meet, ”says Luong.
I DO NOT RETURN TO HOME PROPERTY
Historically low mortgage rates can tempt you to relocate so you can buy your dream home. Moving to a cheaper place to buy a home can be a smart choice, but don’t rush to become a homeowner if your finances aren’t ready, warns Elaina Johannessen, program director at nonprofit LSS Financial Counseling in Minnesota. .
A budget will help you figure out what you can realistically pay for housing and is better than hearing what a lender says you can pay, he says. “If you can afford the payment but you have nothing left, it might not be the right thing to do,” he says.
Your budget takes into account needs such as housing, food, and insurance payments; factors in discretionary expenses such as cable or takeaway order; and leaves room for savings and debt repayment. (The 50/30/20 budget, which breaks down spending into these three segments, can help you get started.)
Don’t assume your salary will stay the same if your employer allows you to move, says Lazetta Rainey Braxton, certified financial planner and co-CEO of 2050 Wealth Partners, a virtual financial planning firm. You may find your pay reduced if you move from an expensive area to a cheaper one. Check with your employer before making plans.
Even if your employer allows you to relocate now, some companies aren’t sure what their plans are after the pandemic is over, says Rainey Braxton. Talk to your employer to find out if you are expected to go back eventually and if you should pay for the moving costs in that situation, he says.
FACTOR IN OTHER COSTS
Moving is not cheap. Use your budget to figure out if you have the funds to get to a new place without piling up too much debt. And make a plan to recoup your savings once you move. Ideally, you want to keep the monthly costs of housing in your new location below 28% of your gross income, leaving enough room in your budget to accumulate savings. An emergency fund of even $ 500, if you can afford it, will help you cope with surprise expenses and prevent you from accumulating more debt.
Also, be prepared to adjust your budget to take into account your new financial situation. You could save on travel and childcare costs if you get close to family and friends. But you may also have new expenses, like buying and insuring a car rather than using transportation, says Luong.
Moving to a different state affects other costs, such as how much you pay in taxes and access to health insurance options. You can use a cost of living calculator to get an idea of the costs in your new location before packing your bags.
Long-term job security is also an important factor in planning a move or buying a home. You can’t predict the future, but you have a back-up plan if you move to a city with fewer job prospects, Johannessen advises. Ask yourself what other jobs you might find in the new position if you lose your job after moving, he says.