Make Sure Your Promotion Makes Cents

Got an opportunity to make big bucks in another city?  Good for you, but be careful before signing the dotted line.  More money does not always mean more purchasing power.  Do your research--you might be surprised!

In order to compare cost of your new lifestyle to current one, you're going to need to know a few things:

1. Your current budget
2. Compare your new and current benefits
3. Estimated cost of living
4. Current and future salaries, sign-up/moving bonuses, etc.

Before you move, take a look at your current budget...the cost of doing business, the cost of being you.  Look at your regular spending habits: mortgage, groceries, utilities, entertainment, day care, auto, etc.  I like to look at this on a monthly basis, but you do what works for you. If you get a bi-weekly paycheck, maybe that makes more sense.

Now pull out your employee handbook and study up on your benefits.  Ask yourself, "are the benefits I am getting good enough? Could I do with less? If so, how much less?" These types of questions will help in evaluating your new benefits.  If your new benefit are not sufficient for you, start doing research on how you are going to make up the difference. Is it something you can buy yourself? If so, what's the cost?  

Estimate the cost of living in your new home town.  When you're in town for your interview or for an office visit, do you due diligence.  Try to get a taste for your future life. Go to the grocery store, and take a pen and paper!  Jot down the prices of a few items that you regularly buy. When you get back home determine the average cost savings/increase of groceries or other foreseeable expenditures:

Ex. % Change = (Cost in new town - Current cost)/(Current cost)

The more items you look at, the  more accurate a number you'll get. Let's say you end up with +20%.  If you are currently spending $250/mo in groceries, then you're looking at an extra $50/mo or $600 annually.  If rent/mortgage costs you $200 more each month, you're up to $3,000 each year.  Start adding up all of your expenditures (don't forget the cost of your bowling league or your commute costs), and you really might be surprised.  If you're moving away from your family and friends, are you going to be spending a few hundred bucks on flights/travel a few times each year? Are you going to have to use paid-time off?  These are all costs associated with your move and your new lifestyle.  Try to consider what your new life will be like, and generate a a fair estimate of your new cost of living (don't forget to consider your 1-time cost of moving).

Add it all up and compare.  Hopefully your new purchasing power isn't less than what you've currently got.  Obviously, there are many more factors at stake on whether or not it's a good move for you, but hopefully this will help you negotiate a higher salary or at least fiscally prepared for your new lifestyle.