Fleeing the Big City? How the Move Could Impact Your Finances

City life has changed with the advent of COVID-19, and even confirmed city dwellers are seeing the appeal of wide-open spaces and smaller towns. If you feel the pull to leave, here are a few things you should think about first.

A woman wearing a mask stands on the street in New York City.
(Image credit: Getty Images)

At Lake Road Advisors, we work with many mid-career professionals who call NYC home. For those clients, 2020 has proved to be an especially taxing and stressful year as the coronavirus pandemic forced a massive deviation from normal city life — and people are questioning when (and if) things will ever return to normal.

Because of the dramatic shift COVID-19 caused in the normal workdays and lifestyle routines of New Yorkers — and residents of many other big cities, such as San Francisco — many people who previously never questioned leaving the city are now seriously considering the possibility.

If the pandemic is causing you to consider whether you should speed up some major life decisions like leaving the city, it might seem like a no-brainer to head out. But there are some financial obstacles you need to take into account before you decide to leave.

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How Leaving the City Can Impact Your Financial Life

I know from firsthand experience that leaving NYC is not an easy decision … even in the middle of major life upheaval! While I didn’t need to deal with a pandemic, I did quit the rat race back in 2012 and leave the city as part of that change.

I’m personally familiar with the ups and downs of making such a transition, and we’ve helped numerous clients through similar life changes even before COVID-19 changed the game.

If you have decided to make the move, you must have a solid understanding of your income and expenses — also known as your cash flow. You have to know every detail of what comes in, and what goes out. You should also consider how these things may change when you shift away from the city life.

Make sure you firmly understand everything there is to know about your spending, fixed and variable expenses, and future costs. If you’re with a partner, you need to include them on this review as well.

Once you start looking, you need to pay close attention to a few factors in your finances.

Changes in Income

If you’re planning on leaving NYC or any other big city, the bad news is that you’ll likely need to get used to a lower salary than what you could command back in the city.

I moved out out back in 2012. Our family’s relocation only took us four hours away, and we stayed in the state of New York — but with the differences in the economy in upstate New York versus the city, it might as well have been a different country.

I took a greater than 50% pay cut, and it hurt. Although I remained in financial services, the pivot from working with institutions to working with individuals in a small town cost me. For someone who worked on Wall Street and equated his yearly compensation to his level of success in life, it was also a hit to my ego.

In addition to the large pay cut, the structure of my comp changed. The change wasn’t inherently bad, but it forced me to confront a bad spending habit. Before leaving NYC, I received a year-end bonus. That bonus was often equal to at least half my base salary, and sometimes it matched that base pay.

Because I expected such a large bonus in December, I lived above what my base salary could really afford on its own in the other 11 months of the year. I’d accrue balances on my credit cards, reasoning that I knew I would pay it all off at the end of the year with my bonus money.

This strategy worked fine when times were good, but you should never rely on a bonus for your cash flow needs. Bonuses, as I learned the hard way in 2009, are not guaranteed. A large drop in your anticipated bonus can leave you with a pile of debt you can’t just wipe out in one payment.

Receiving such a big bonus while working my job in the city let me be lax when it came to cash flow. My behavior only changed when I left the city and took a new job — one that didn’t afford me the hope of a bonus payment to “bail me out” at the end of each year.

The Housing Situation Is Different, Too

Eventually, I adjusted to the new reality, and it helped that it wasn’t all bad news on the financial front. Reduced housing costs should help offset your drop in pay. I was able to purchase a home that was twice the size but almost half the price of my previous home in Stamford, Conn.

Other costs can be lower too. Entertainment and dining out will likely be cheaper outside of the city, and you may find you have different, lower-cost hobbies in a new location as well.

Depending on how far out of the city you move, and more importantly if you take a different job (rather than continuing to work in your current position, just remotely), you most likely will see a pay decrease. That could be offset, however, by changes in housing and lifestyle spending.

Expect Adjustments to Where Your Dollars Go

Speaking of spending, there are other ways in which that will shift upon leaving the city.

Despite moving out of the city, you may still need to commute back into it at some point in the future. Make sure you know what that expense entails. Will you need to account for hotels stays, overnight parking or other transportation? How regularly will you need to plan for these extra costs?

On the flipside, your regular, everyday transportation costs should go down overall. You probably won’t be walking as much outside the city, but without the monthly costs of the train, subway, bus and ridesharing, you may come out ahead — even if you need to buy your own car!

Food costs will probably remain relatively the same, considering that grocery stores across the country have similar prices. Local fruits and vegetables may be cheaper in some regions, but it’s not likely to be a big enough difference to seriously sway your monthly cash flow one way or the other.

The cost of eating and drinking outside the home, however, can vary greatly. A beer at the local bar may be exponentially cheaper than a cocktail at a hot spot in the city. I’ve also found that I save as much as $25 per workday; I used to buy my breakfast, lunches and coffees in the city when I went to work. Now, I usually spend $0.

Leaving the City Is a Tough Decision, So Make Sure You’re Financially Prepared

Leaving your city is a big decision, and life outside the city can look radically different. If you feel it’s the right decision for you, make sure you plan ahead and think about the financial aspects of the move.

Some costs may drop off completely, while living outside the city might introduce expenses you never even thought about before. With so many variables, mapping out the possibilities will help you better understand how your finances will be impacted by such a change — and give you a better line of sight for what to expect once you make the transition.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Paul V. Sydlansky, CFP
Founder, Lake Road Advisors, LLC

Paul Sydlansky, founder of Lake Road Advisors LLC, has worked in the financial services industry for over 20 years. Prior to founding Lake Road Advisors, Paul worked as relationship manager for a Registered Investment Adviser. Previously, Paul worked at Morgan Stanley in New York City for 13 years. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network (XYPN). In 2018 he was named to Investopedia's Top 100 Financial Advisors list.