Work Remotely? Why It May Not Be Worth It to Move to a Cheaper State

A person working at a desk at home waving to a video call.

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You may not have as much flexibility as you thought.


Important points

  • There are many benefits of working completely remotely.
  • While you might think you can take your higher salary and stretch it in a more favorable area, this plan could backfire.
  • Some employers tie salaries to the cost of living, so moving to a more affordable area may lower your salary.

In the wake of the pandemic, many people are now doing their jobs remotely — either part-time or full-time. If you’re in the latter camp, you might be able to make some cost savings in particular.

Working remotely full-time means you don’t have to spend a penny on the commute. And not only could this arrangement help you save money on things like gas and parking, but it could also result in lower car insurance premiums (insurers typically give discounts to cars that aren’t used much).

Remote working could also be a source of savings. If you’re able to take a salary in a big city and move to some random suburb, that money goes a lot further.

Or will it? While it’s easy to argue that you’ll get a lot more bang for your buck by moving to a place with a lower cost of living, you may not have the ability to bring your full salary with you. So, before making any plans to relocate, it’s important to understand your company’s remote work policies.

Moving can cost you part of your salary

Companies tend to pay salaries based on the local cost of living. If a company has offices in New York City, Chicago, and Boise, the wages it pays to workers in the first two cities can far exceed the wages its employees know in Boise. And that makes sense. But that’s something you need to consider if you’re working remotely and looking to relocate.

The salary you’re entitled to as a telecommuter may depend on whether you live in a particular metropolitan area. And if you leave that metropolitan area, your employer may have the right to adjust your salary to reflect the lower cost of living you can enjoy.

Typically, a company must make this policy clear or state somewhere that your remote salary is based on your specific location. But let’s say you live in San Francisco and make $120,000 a year. If you decide to move to a small town in Michigan where housing costs a third of what you would pay for an apartment in San Francisco, your company could reduce your wages accordingly. And as such, you may not progress financially if you take this step.

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Of course, there are reasons to move from one part of the country to another that aren’t just financial. Perhaps you’ve forced yourself to stay in San Francisco because that’s where jobs in your industry are concentrated, and you needed to be there before companies got on board with telecommuting. If moving to Michigan brings you closer to friends and family, even if it means a pay cut, it may be worth it.

The point, however, is to know what your company’s policy entails before you make a move. That way you don’t uproot yourself with the express purpose of saving money only to end up not actually saving anything.

What if your salary stays the same no matter where you go?

There are times when your business may be paying you $80,000 a year, whether you live in a major metropolitan area or in suburban Kansas. If that’s the case, you might be tempted to move for a few years to get more out of your paycheck and increase your savings.

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However, keep in mind that moving to a new part of the country can be daunting (and expensive in some cases). So before you force yourself to move to save money, you might want to think about the different ways you can increase your income while staying in place. Moving to a cheaper apartment and maintaining a more frugal lifestyle in general could mean you can stay in a city you love, even if it’s a more expensive one.

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