Does it make sense to move cross-country for a job? Advisers say be careful
When the seemingly perfect job opportunity became available in Calgary, Daniel Hoang had to decide if uprooting his life for a new career across the country would drain his savings.
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The Markham, Ont.-resident was about to make one of the biggest decisions of his life — one with both financial and personal ramifications. He would be moving away from his family for the first time, saddled with new expenses and starting fresh in another city.
On the other hand, he would also be taking his “dream job” as an urban planner.
Financial advisers say it’s tricky to decide whether restarting your life in another province makes financial sense. Part of the equation involves tangible expenses that can vary by circumstance, while the rest comes down to the less quantifiable factor of emotion.
Hoang considered both, he said, before he bought a plane ticket for Calgary this month.
“I’m 25 and I think it’s a great time for me to establish my independence, live on my own and experience a new part of the country,” he said.
“It was a no brainer, professionally speaking, but there were a lot of things I had to consider.”
Hoang started by laying out a financial plan, which considered the additional expenses he would incur by living in a new place. While this might seem like an obvious step, advisers say it can also yield plenty of surprises, ranging from moving costs to vastly different local taxes.
“If you’re going to an urban centre like Toronto or Vancouver, they have a much higher cost of living than people think,” said Brett Strano, a financial adviser at Edward Jones.
Airfare is a potentially huge cost for Hoang, who said he plans to visit his family in Toronto on long weekends.
“I’m going to take a $600 hit every time I fly back,” he said.
Tourism can be another major expense, if you plan to explore your new terrain. Hoang loves snowboarding and says that he’ll be tempted to make trips to Banff in his downtime.
Other costs, like transportation, can fluctuate wildly depending on where you live, especially if you’ve only relied on public transit to get around. Buying a vehicle is more expensive than it appears at face value, once you factor in auto insurance, repairs and gasoline.
Advisers suggest making a list of your longer-term objectives that’s separate from your basic financial plan.
For example, if you’re going to rent your place of residence for now, consider whether you eventually plan to buy a home. If so, take a look at the local market to get an idea of home prices in the region.
“If you’re moving to a job that’s going to pay twice as much, that sounds really good,” said Kurt Rosentreter, a senior financial adviser at Manulife Securities.
“But if your house is going to cost you twice as much, and that’s also an important goal, is it really better?”
If you’re in a relationship, extra considerations will need to be factored in, such as how changing cities might affect your partner’s career.
When Heather Drew moved to British Columbia from Ontario for her husband’s promotion, she said it was difficult to establish her teaching career in an occupation that’s based on seniority.
Drew knew her husband’s move would be temporary and when they moved back to Ontario, she wound up starting over from the bottom of the ladder as a supply teacher.
“My husband’s raise does not come close to covering the income we lost from my salary when we moved back,” she said.
“For us, it was a choice we made based on moving back closer to home and family.”
Advisers say that if you own a home, factor in the numerous expenses you could incur from selling it, such as real estate commissions, land transfer taxes, legal fees and any temporary stay at hotels. If you’re buying another residence in your new hometown, then take into account everything from the cost of a fresh coat of paint to surprise repairs.
Also take into account more than just your base salary, because your take home pay will vary depending on where you live and how much tax you pay. Each province and territory has a different set of tax brackets.
“We think that many Canadians don’t take the time to review or totally understand their tax returns,” said Wilmot George, director of tax and estate planning at Mackenzie Investments.
“They don’t understand how their province of residence can actually impact ... the amount of tax they pay.”
Try to look further into your financial future as well and, in a basic sense, that means securing your long-term assets. Ensure your financial adviser is licensed in your new province because, without the proper certification, they won’t be able to manage your accounts.
A reconsideration of your estate planning is also essential because the legislation is provincial, which means that you’re required to revise your will to take into account the changes to your residence.
Most importantly, advisers say make sure you have emergency funds or financial support from a spouse or family before you put your plan into action.
Hoang said he won’t be in a financial rut if his plans fall apart because his family will still be in Ontario.
“If I go and I don’t like it, I can always come back and I’ll have a roof over my head,” he said.