When you are looking for a place to live, you consider things like the size of the property you will need, the monthly rental charge, and its proximity to your place of work. However, you are less likely to think about some features that can either lighten the financial load or adversely affect your wallet. Read on to find out how your chosen location can affect your finances.
Basic Monthly Finances
There are several expenses you are likely to have to meet on a monthly basis, including rent, utilities, insurance, transport costs and taxes. It is a good idea to keep track of them with an itemized monthly budget so you know exactly how much you have left to spend after paying the bills. Local costs can vary a great deal in different US cities and states.
Standard of Living
If you are moving to a new location, search online for relevant financial information pertaining to the area. There are indexes online that rate the individual states’ standards of living based on typical household income level, employment and healthcare.
In recent years, Midwest states have rated well while states like New York have not done so well. The information you find can help you determine your long-term housing plans, like where you will buy or rent your home to settle into, or perhaps you are looking for somewhere that is suitable for your retirement years.
State Income Tax
One thing that affects residents in some states but not others is a state income tax. States with no income tax include Alaska, Texas, Florida, Wyoming, Nevada, South Dakota, and Washington. Watch out though, since these states do still need to collect money to maintain infrastructure. Sometimes that money is collected via higher sales or property taxes. You can use free online tax tools to see how this impacts your finances.
Insurance Costs by State
You might be surprised to learn that the cost of insurance for your car and home can vary a lot depending on where you live. Be aware that there are a number of reasons why insurance rates vary. Insurance rates are calculated based on risk factors that include local crime rates, neighborhood home values, frequency of natural disasters, etc.
Since homeowner’s insurance is essential to protect your most valuable asset, your home, you should be prepared for how much sufficient cover will actually cost you. Check out rates broken down by state to get an idea of the average home insurance cost where you intend to live.
Saving for College
If you or a family member need to attend college you will find that the cost of doing so is continuing to rise. That cost does vary by state and institution, so again some research is needed if that affects you.
Attending a college in your home state can save you having to pay high out-of-state student fees. There are also tax credits, matching savings programs, 529 savings plans, and other incentives offered by certain states. The 529 plan that might be available in your state can have a big impact on your finances since it allows you to pay for college at current tuition rates rather than future ones.
If you haven’t built up a good credit record, then borrowing money might be difficult, especially in certain states. What you might not know is that borrowing ability can depend on the state in which you live. Several states in the south are among the top ten states where it is difficult to borrow money, with Alabama and Georgia at the top of the list.
Assistance for Low Income Families
Temporary Assistance for Needy Families is a program that allows individual states to determine many aspects of how the program is run in its jurisdiction. There is no legal requirement to provide cash assistance, in fact, only one percent of the population receives cash from TANF.
If your family is in real need or you worry about what your future may hold, research the states that have more generous policies when it comes to welfare support. That is one way in which where you live can affect your ability to manage financially.
Before you pack up and move to a different state, keep in mind that they all have different taxes, programs and employment rates, and if relevant to you, don’t forget education costs. If you do your research thoroughly you can determine how your finances will be affected by your favored location.