Published in: Banks | March 28, 2019

How to Prepare Financially for a Move to a New City

By:  Lyle Daly

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Get your finances ready for moving day.Bright city lights at nighttime.

Image source: Getty Images.

Moving is an exciting part of life, but it's also an experience that can cause quite a bit of trepidation. It's a major life change, especially if you'll be starting completely fresh, and it can also put a serious strain on your wallet.

In the lead-up to a move, just about everybody wonders whether they're actually ready. If you prepare for your move the right way, you can at least ensure that you're financially ready.

Research the cost of living

You need to have an accurate idea of how the cost of living in your new city compares to that of the area where you currently live. Housing tends to be people's biggest monthly cost, so you should start by figuring out what a home will cost you -- to rent, to buy, or both if you're undecided.

Make sure you also consider any new costs you'll incur after you move. For example, if you're moving from a city with bike trails and robust public transit to one with more of a car culture, then your transportation costs will likely go up.

Also make sure you investigate the state and local tax situation. In particular, look into your potential income tax, sales tax, property tax, and any local tax quirks. For example, some states tax your vehicle as property every year. In Virginia, you'll pay 5% of your vehicle's value each year just for the privilege of owning it. Before you move, make sure you won't run into any unpleasant financial surprises at tax time.

Make your budget

In this case, you'll actually need two separate budgets:

  • A budget for your move
  • A budget for the expenses you'll have in your new home

Your moving budget should include all the costs of getting you and your belongings to your destination, as well as the costs of settling into your new home. While shorter moves within the same state can usually be made for under $1,000, long-distance moves involve more and greater expenses. Moving over 1,000 miles? Even if you pack everything yourself and rent a U-Haul, your expenses will run well into four-figure territory. After all, there's the cost of packing materials, the truck rental, gas, and lodging along the way.

Getting into a new house or apartment also comes with up-front expenses that you should plan for. If you're buying a home, then getting a mortgage and sealing a deal will come with a slew of fees. If you're renting, prepare to pay the application fees, security deposit, and potentially some other fees as well.

You won't be able to make a perfectly accurate budget for life in your new city until you have a home there, but you can at least put together an estimate of what your monthly expenses will be. This will give you an idea of how far your income will go there.

Beef up your emergency fund

Everyone should have an emergency fund, and it's even more important when you're moving somewhere new. A move can throw all kinds of unexpected costs your way, and the only way to be ready for them is to have some money saved.

Three to six months' worth of living expenses is the standard recommendation for an emergency fund. When you're planning to move, it's good to err on the side of caution and go with the high end of that recommendation.

If you don't have a job lined up in your new city and you plan to look for one when you get there, you'll absolutely need at least six months' worth of expenses saved, and a full year's worth is better.

See if you need to change your banking

If you've been using a local bank or credit union, it's possible that there won't be ATMs in its network in your new city. That could mean you'd be stuck paying ATM fees every time you need to withdraw money.

Check with your bank to see if there will be ATMs you can use fee-free where you're going or if it will refund a certain amount of ATM fees per month. Otherwise, you could look at the best bank accounts and find one that will better fit your needs when you move.

Optimize your credit score

Renting or buying? Either way, your credit score will come into play.

Before you can rent an apartment, the landlord will likely run a credit check to decide whether to approve your application and to determine the amount of your deposit. If you're planning to buy a home, your credit score is a huge factor in what kind of APR you'll get from mortgage lenders.

To get your credit score as high as possible before your move, make sure you:

  • Don't miss any payment due dates.
  • Get your credit utilization (the amount of your available credit you're using) as low as you can.
  • Avoid applying for new credit.

Pay down your debt

Adjusting to a new home is challenging enough without having debt payments weighing you down. Before you move, work on getting your debt paid off or at least paid down to a manageable amount. You'll be able to relax more, and you'll minimize your monthly expenses.

If you currently have a lot of debt, you could consider balance transfer cards with 0% intro APRs or debt consolidation loans. With either of those, you can reduce the interest you're paying and cut down to one debt payment per month.

Settling into your new life

When you move to a new city, there are two paths you can choose: You can either do the financial prep work, or you can just wing it. Having tried both, I can attest that being financially ready for your move will make your life much easier.

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