Raise your hand if you have a relocation fund in place prior to applying for an out-of-state job? Yeah… me either. I’m guilty of the “apply and figure it out later” mentality.
It’s not too late! You can learn from my mistakes, and become financially prepared to apply to those out-of-state jobs without fear of the moving costs.
The Big Financial Questions When Relocating for Work
Relocating for a job involves more than just packing up and moving. There are significant financial questions you need to address to ensure a successful transition. These include whether you will receive a relocation package, what to do with your current home, and how a move might impact your household income if you have a partner. Let’s dive into these key aspects to understand the financial landscape of a job-related move.
Is There a Relocation Package?
One of the first questions to consider is whether your potential employer offers a relocation package. Unfortunately, most job offers do not include this benefit, leaving the financial burden of the move on your shoulders. Understanding what a relocation package typically covers can help you negotiate if the option is on the table or prepare if it’s not.
Relocations package might include coverage for moving expenses, temporary housing, travel costs, and even assistance with selling your current home or finding a new one. Some packages also offer a lump sum payment to help cover various expenses.
If you are like me, and your job offer doesn’t come with a relocation package, you’ll need to budget carefully. Moving costs can add up quickly. Expenses can include hiring professional movers, renting a moving truck, purchasing packing supplies, and possibly paying for storage. You might also need to factor in the cost of temporary housing if there’s a gap between your move and when you can move into your new home.
Consider the distance of your move. Personally, I’ve paid several hundred dollars for DIY across town moves, to several several thousand for longer moves with more personal items. This cost can fluctuate based on the weight of your belongings, the distance, and additional services such as packing or storage needs.
If your new job doesn’t offer relocation assistance, you might be able to negotiate for some help: a sign-on bonus that could be used to offset moving costs, an increased amount in salary to offset the dip in your savings, or time off specifically for moving related tasks. Nothing is guaranteed, but it never hurts to ask.
Planning ahead is key. Start by getting quotes from several moving companies to understand the potential costs. Create a moving budget that includes all possible expenses, from packing supplies to travel costs. Having a rough estimate of these expenses will help ease the financial stress that comes with deciding to accept an offer that requires relocation.
Selling, Buying, or Renting a Home?
Your current living situation plays a significant role in the financial aspects of moving for a job. If you own a home, selling takes time and can be unpredictable. You’ll need to factor in the cost of real estate agent commissions, closing costs, and any repairs or upgrades needed to make it market-ready.
Depending on the housing market, it might take several months to sell your home, which can complicate your moving timeline.
For renters, the primary concern is whether you’re in the middle of a lease. Breaking a lease can be costly, often requiring you to pay a penalty or continue paying rent until a new tenant is found. Check the terms of your lease to understand the financial implications. Some leases have a buyout clause that allows you to terminate the lease early for a predetermined fee. Sometimes that fee is paying off your entire lease. Yikes.
Landlords love me because I’m a good tenant, BUT, I’ve broken every lease I have ever signed due to relocating for work. Most of the time, it’s a 60 days notice and 2 months rent. Obviously the more expensive your monthly rent, the harder that fee hits your bank account.
Before making a decision, research the housing market in your new location. If you plan to buy a new home, understand the average home prices, property taxes, and other costs associated with homeownership in that area. If you plan to rent, look at rental prices and availability. This will help you make an informed decision about what to do with your current home and how much you’ll need to budget for your new living situation.
Going From a Two Income Household to One Income?
If you have a partner, their employment situation is another critical factor to consider. Moving to a new city often means one partner will need to leave their current job, which can temporarily reduce your household income.
Before making the move, discuss your partner’s job prospects in the new location. Are there job opportunities in their field? Will they need additional training or certifications to work in the new city? Research the local job market to get a sense of how long it might take for them to find new employment.
If your partner is unable to find work immediately, you’ll need to adjust your budget to account for the loss of their income. This might mean cutting back on non-essential expenses, increasing your savings before the move, or even taking on temporary or part-time work to bridge the gap.
Planning for the possibility of reduced income involves more than just budgeting. It’s also about managing expectations and being prepared for the challenges that come with a significant change in your financial situation. Like finding housing that you would qualify for on just one income, instead of the two. This could even be a temporary decrease in housing lifestyle expectations initially. Goodbye open concept townhouse with the fenced in yard, hello early 2000’s apartment with the metal windows.
Open communication with your partner about your financial goals and concerns will help you both be better prepared for the transition.
Creating a Personal Relocation Savings Fund
Setting aside a personal relocation fund is essential for anyone considering a job-related move. This fund will cover the various costs associated with relocating, helping to ease the financial burden.
Start by evaluating your current budget to determine how much you can set aside each month for your relocation fund. Look at your income, expenses, and savings goals to identify areas where you can cut back temporarily to boost your relocation savings. The more determined you are to leave a job, or your current city, the larger your sacrifice will need to be monthly. Especially if you are actively applying. If your timeline is one to two years, small adjustments, like reducing dining out or entertainment expenses, can make a difference.
Next, calculate the estimated costs of your move based on the considerations discussed earlier. Don’t forget to include potential costs related to your partner’s job search, such as temporary unemployment.
Once you have an estimate of your total moving costs, set a savings goal and timeline. If you need to save $10,000 for your move and plan to move in a year, you’ll need to save approximately $833 per month. Automating your savings can make this process easier. Set up a dedicated savings account for your relocation fund and arrange for automatic transfers from your checking account each month.
Personally, $833/mo for a year, is a steep ask to put aside in our budget. Could we do it? Absolutely, but we would be cutting back on the “luxuries” of life in order to attain that goal. This is a sacrifice and both partners need to be on the same page in order to achieve the desired outcome.
Also, be generous with what you expect it to cost. Add a margin of error. I promise, you would rather save the 10K and only need 3K for the move, then save the 10K and actually need 15K.
Having a personal relocation fund not only ensures you’re financially prepared for the move but also gives you peace of mind. Knowing that you have the money set aside to cover moving expenses allows you to focus on the excitement of your new job and new city, rather than stressing about finances.
Don’t Overlook the Long-Term Cost of Moving
While the immediate costs of moving are significant, it’s important to consider the long-term financial implications as well. Moving across the country can have lasting effects on your finances, and it may take years to recoup the costs. My last move wasn’t even “Across” country, and due to the unforeseen circumstances, additional costs that we didn’t plan for (storage, U-Haul truck twice, PLUS Professional Movers). Everything that could go wrong, went wrong, financially cutting deep.
One of the major long-term costs is the potential difference in the cost of living between your current city and your new one. If you’re moving to a city with a higher cost of living, you’ll need to adjust your budget accordingly. This includes higher housing costs, utilities, groceries, transportation, and possibly higher taxes. All of these impacted us as well, that’s why I now make it a point to do a complete cost of living deep dive prior to accepting any role that requires relocations.
Personally, because of how often we move, we are renters. But if you’re buying a new home, the costs can be substantial. In addition to the down payment, you’ll need to budget for closing costs, moving expenses (obviously), and any necessary renovations or repairs. Home maintenance and property taxes can also add to your long-term financial burden. Renting can also be expensive, with security deposits, application fees, and higher monthly rents in certain areas.
Career-related costs should also be considered. If your new job requires additional education, training, or certification, these costs can add up. Additionally, if your partner needs to change careers or take time off to find a new job, this can have a long-term impact on your household income.
Recouping the costs of a move can take several years. It’s important to have a realistic understanding of how long it might take to recover financially and plan accordingly. Building an emergency fund, sticking to a budget, and setting long-term financial goals can help you manage the financial impact of your move and set you up for success in your new location.
Be Prepared for the Move Before Applying
Being financially prepared before applying for out-of-state jobs can make the entire process smoother and less stressful. Having all your ducks in a row ensures that you can move quickly and confidently without the pressure of figuring out how to finance the move.
Communicate openly with your family or partner about the financial implications of the move and ensure everyone is on the same page.
Having a solid financial plan in place allows you to focus on the job search itself. You can confidently apply for out-of-state roles knowing you have the financial resources to support the move. This preparedness also puts you in a stronger position to negotiate relocation assistance or other benefits with potential employers, empowering you to accept only the roles that allow you to move without the financial strain.
Being financially ready to move before applying to jobs out of state is not just about crunching numbers; it’s about setting yourself up for success in your career and personal life. By understanding and preparing for the financial implications of relocation, you can navigate the process smoothly and confidently, ensuring a positive transition to your new job and location. So, learn from my mistakes and take the time to plan ahead, budget wisely, and communicate openly with your loved ones.
Your future self will thank you for it.
BK