Trying to figure out how to survive on a budget is one of most challenging things you can do.

And those in high cost of living areas can find it even more challenging, because how much everything costs can vary significant depending on where you live.

In fact, just moving from a state that levy an income tax to a state that doesn’t could save most people a few thousand dollars. I know several people who have moved to Tennessee in recent years to save money on income taxes and the savings are real.

It’s Not Just About Income Tax

Income tax isn’t the only potential savings when you move though. Cost of living play a big part in the equation as well. I actually moved to a state with higher personal income taxes almost two years ago, and I still ended up saving more money. In Idaho Falls, Idaho, my rent is half what it was when I lived outside Philadelphia (and my rental is twice the size). Food costs are lower too.

Saving money on necessities provides me with a way to do more with my money. I don’t really care that much about the tax bill. It’s not making a huge dent – at least it’s not making a big enough dent for me to want to move back to Philadelphia right now.

Don’t Get Hung Up Salary

Plus, because of the lower cost of living, I can afford to work a bit less and still have disposable income. This lowers the taxes I have to pay as well because I’m not earning as much.

We get hung up on salary too often, but let’s be real – you can probably do more with $60,000 a year in Idaho than you could with $100,000 a year in San Francisco or New York City.

Taking a pay cut doesn’t always mean enduring a drop in quality of life. Depending on where you live, a lower salary can actually mean a higher quality of life. I’m living proof of that.

I was able to cut back on work when I moved to Idaho. I get to spend more time with my son, and I have more money to travel. These are great things that improved my quality of life, even if I make less money than a few years ago.

Making Trade-Offs

Of course, the downside is that sometimes I don’t get access to the things I enjoyed before. Food, cultural experiences, and walkability are not as big a part of my life here as they were before. I have fewer opportunities for these varied experiences because these things just aren’t available where I now live.

Sometimes, the trade-offs for a lower cost of living involve giving up some aspects of life that you enjoyed before. I have other activities that help make up for it, but there are times when I miss aspects of my old living arrangement.

If you are struggling with your budget, one thing to consider is that you might be able to stretch things if you move elsewhere. You don’t have to move across the country like I did, but sometimes making a change to your living situation can help your financial situation.

David’s Note: I’ve lived in three different countries, and I totally see Miranda’s point of view. Where you decide to pay to put your mattress alone makes a huge difference in the budget because it’s a fixed expense that never goes away. On the other hand, some people I know rather live in a high cost of living area, grab that higher salary first, and then live on much less than average to bank more savings than if they were living in a lower cost of living area. I can see the beauty in this approach too since I’m a saver myself, but walking this path can be more difficult because it’ll be harder to feel comfortable when everyone around you will, unfortunately, criticize you for your spending habits and beliefs.

Another factor that’s extremely important is to look within and see how your values fit in with the surroundings. If you are trying to retire super early while living along the coast by saving a majority of your salary, know that most people around you who can afford to quit young probably didn’t get there because they saved a majority of an average salary. There will of course be some like-minded individuals wherever you live, but it’ll be harder to find true friends to spend time with.

There’s no right or wrong way to go here. Wherever you decide to live, just make sure you know exactly why you are there and not because of reasons like “well, I’ve always been here and I’m too lazy to do something to change.”

Tagged as: Budgeting, Lifestyle