A higher salary in a new city can leave you worse off. The only honest comparison is between what you keep after tax and what you must spend to live there.
Compare take-home pay first
Put the new salary and your current salary into the right calculators, one for each place. Differences in income tax between states, or between countries, can change the result noticeably. Look at the yearly net figure and the monthly one.
Then compare the cost of living
A raise of 10 percent is cancelled out by housing that costs 25 percent more. Compare these in particular:
- Rent or mortgage: usually the largest difference between places.
- Transport: do you need a car, and what do fuel and insurance cost?
- Groceries, utilities and eating out.
- Healthcare, including insurance premiums and what the employer pays.
- Childcare and schools.
- Local taxes: sales tax, property tax, council tax.
Count the one-off costs
Moving costs money: removal or shipping, deposits, overlapping rent, travel for viewings, new furniture and sometimes a gap in income. Some employers pay a relocation allowance, which may be taxable, so ask whether it is paid gross or net. Divide the total one-off costs by the yearly gain to see how long the move takes to pay off.
Moving between countries
A move between countries adds more layers: visas, how your pension carries over, whether you will pay tax in two places for part of a year, and exchange rates. Our calculators cover the UK, Australia, New Zealand and the United States, but the rules for people who move are special. Check the official guidance of both countries and consider a cross-border adviser.
The things that do not fit in a spreadsheet
Distance from family and friends, the climate, the work culture, and the opportunities for your partner are real. Put money in one column and life in another, and let both decide.
A quick method
Write down the net yearly pay and the yearly costs for each place. Subtract costs from pay. Compare the two results. If the new place is ahead by enough to cover the move within a couple of years, and the non-money factors work for you, it is likely a good move.
Calculators for this guide
More tips
- How to Read a Payslip, Line by Line
- Hourly, Weekly, Monthly or Yearly: Converting Pay Without Mistakes
- Marginal and Effective Tax Rates: Why a Pay Rise Never Costs You Money
- Retirement Contributions and Take-Home Pay: Before Tax or After?
- How to Compare Two Job Offers Properly
- Why Your Real Payslip May Differ From an Online Estimate
- Bonuses and Overtime: Why They Seem to Be Taxed More
- How to Build a Budget From Your Take-Home Pay
- States With No Income Tax: What That Does and Does Not Mean
- Self-Employed? How Much Should You Set Aside for Tax
- Asking for a Raise: Using Take-Home Numbers to Plan the Conversation
- Student Loan Repayments and Your Take-Home Pay
- A Yearly Tax Check-Up in Thirty Minutes
- All tips and guides
These guides are general information and estimates to help you plan. They are not tax advice. Rules and rates change, so check the official tax authority for your country.