Thinking About Moving to a New State? Consider These 5 Things That Could Affect Your Finances
Moving is never a simple thing to do. There’s the packing, storage, and transporting of everything you have from one place to the next place. Moving is that much more difficult when you’re moving between states. There are different reasons why people choose to move from one state to another. Many move for family reasons, others for lifestyle preferences, some for career reasons, and lastly, economic reasons.
No matter how you look at it or what the reason may be, moving between states can be a costly effort. Transporting your precious goods is costly, and other things could affect your finances once you get settled in your new state. Here are five things to seriously consider before moving to a different state.
1. The Job Market
Many people move to a new state because of job opportunities, but what if that is not the case for you? You may be accompanying a spouse who has a better work opportunity, or maybe you’re moving to be closer to your aging parents. Your livelihood will be crucial when you move. Your field may have limited or no options depending on where you move. If you know you’re going to have to move, start your job search early — before you move. Get familiar with the various opportunities that exist and start shopping around. If possible, see if transferring your current position to the new state can be an option until you’re able to find something else.
2. The Housing Market
Make sure to do your research on the housing market in your new state. Not all markets are the same, and moving from a 3-bedroom home from one state to another could bring sticker shock. Get familiar with the price of homes and rental costs. Check home listings online, but also try to find a reliable real estate agent who’s well-versed in the area you want to move to to help you with the best options.
3. Cost of Living
The cost of living from one state to the next can be mind-blowing. For instance, if you decide to move from Virginia to California, the first thing you should know is it will cost you way more to live in California than it did for you to live in Virginia. The cost of living also influences the job and housing markets, meaning you’ll probably earn more per hour in California, but your home will likely cost a lot more. The cost of living in your new state will be significant in determining the type of housing you can afford and even what area you decide to live in. Food, entertainment, education, healthcare costs, transportation, and more all factor into the cost of living. Consider all this as you’re looking for job opportunities and exploring mortgage and rental costs.
4. Income Taxes
Tax laws vary from state to state. How will your new state’s tax laws affect you? Nine states have no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming). States with no income tax usually find another way to generate revenue. This can be done through a state sales tax with higher gas taxes, higher property taxes, higher real estate taxes, or a combination of any of these. Research your new state to see how their taxes impact your new income.
If you have an investment portfolio, moving to a new state could impact your investment strategy. If you own tax-exempt municipal bonds from your current state, they may not be in your new state. Some state tax long-term capital gains less than ordinary income. Also, some states exempt a portion of your capital gains from income tax. You may want to consult a tax expert to know how moving to a new state will impact your investment taxes.
The Bottom Line
Moving to a new state can bring a new sense of adventure into your life. But before you embark on this new journey, research the facts to know how your new state will impact your wallet. Research job opportunities and places to live before you move. Also, be aware of how much it will cost you to live there. Know the tax implications, including how it will impact your investment portfolio.