Jun 9

Jun 9 Where you live matters! How to do some quick math to decide where to go after college

YFFIE, Manage your Money, That's Life, Real Estate, Student Life

Written By: Nick Nguyen | Read full profile

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Is it time to move? Where you live has a huge effect on how much money you take home!

As someone who grew up in Boston, went to High School in Houston, and then lived in Berkeley for college, I realized that I love the city life. It’s ironic because now I commute about 45 minutes on a good day and around 1.5-2 hours during rush hour just to get into the city for work.

One of my dreams is to have homes in all the major metropolitan cities in the world. That’s right, not just in the U.S., but EVERYWHERE! But at the end of the day, I think my home base would be somewhere with a low cost of living like Houston or at least in a state with no state income tax like Washington.

Ever wonder why so many people move to Florida to retire? Because real estate was relatively cheap, sales tax is decent, cost of living is manageable on a $30,000-50,000 salary, and there is no state income tax.

But why does income tax matter? Is it really that big of a deal?

Well let’s go back to that basic assumption that you’re fresh out of college at 22 and you snag a respectable $100,000 a year salary. That $100,000 is very different if you live in Houston vs. if you live in New York.

If you do the math, for the 2019-2020 tax filing year, we’re looking at a difference of about $8,900 just by living in another city! Again, this is meant to be a very simplified calculation with a lot of assumptions left out, but trust me - I’ve done the math and this continues to hold true even when you take into account more and more things like cost of living and opportunity costs.

But let’s say you decided to move to one of the great states in this country that don’t have state income tax. Well now you have another chunk of money at the end of the year that you can use for your big vacation, a new car, or a downpayment on a house! Or you could just invest it and try to gain at least a 3% return to beat inflation. Check out my next couple of posts on investment types and why you should open your Roth IRA today.

*Nguyening Lifestyles is not a registered financial service provider and does not give financial advice. All information in these posts are for entertainment purposes only. Nguyening Lifestyles is not liable for any actions or outcomes that transpired after your reading of the following post.

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