Menu

Should You Move to a Cheaper State?


Jan 4, 2018 | Jessica Ogilvie

Anyone who lives in an expensive city but doesn’t bring home alllll that much money has no doubt entertained the fantasy of moving to a smaller town or city (discovering a hidden gem!), a place where you could buy a house for under $200,000 or get a beer for $2, a place where you might not wake up every night in a cold sweat about what your financial life will look like when you’re 70.

These concerns are especially pressing for those of us who depend solely on ourselves to bring home the bacon: no employer safety net, no hope of a severance package should things go wrong, no benefits to fall back on in case of emergency. And if you’re just starting out as a small business owner or freelancer, those financial concerns can worry your sleep even more.

In a recent article in the Wall Street Journal, reporter Chris Kornelis profiled Morgan Roddy, 37, and Cheri Ellefson, 34, a couple who recently decided to move from Minneapolis to Muncie, IN, in order to give Roddy’s small business, Queer Chocolatier, a real chance to thrive. Ellefson told Kornelis that they knew getting the business off the ground in Minneapolis would be too difficult, “because the rent would just be too high.”

Now, the couple rents a 250-square-foot storefront above a downtown coffee shop for $250 a month. That allows them to live on Ellefson’s $65,000 yearly salary and still pay down their credit card debt, pay off their car loan, and cover their basic living expenses.

Of course, this type of maneuver might be less daunting to those who are approaching it as a couple rather than those who would be flying solo. But there are very distinct advantages for your business to kicking it off in a place where you can, you know, afford to pay rent. Here are some of the pros and cons.

Pro: Less Competition

Competition for burgeoning businesses is cutthroat in big cities. Here’s an example for you: In 2017, one trendy Los Angeles neighborhood saw no fewer than nine new coffee shops open in a single two-mile radius. Meanwhile, in small towns, you might have the benefit of being, say, the only artisanal chocolatier, or the only shop selling knitting needles handcrafted from driftwood, or the only person writing impeccable business profiles. Your name and reputation will spread more quickly than they might in a more congested market, you’ll be able to establish yourself more quickly (read: regular income), and from there, you can start thinking about broadening to bigger markets.

Con: If You Need a Side Hustle, They Might Be Few and Far Between

As you’re getting your business started, you would be wise to have a job on the side to ensure you can make ends meet. In a small town, that might be more difficult to do; there are simply fewer available jobs, and the turnover at those jobs is lower among people who don’t see themselves leaving town any time soon. You might wind up having to commute to your side hustle, leaving less time for the business you moved there to start.

Pro: It’s Not Just Housing; Everything’s Cheaper

You may have originally thought to move to a smaller city or town when you realized that, no seriously, you could buy a house for under $200,000. But housing isn’t the only thing that will cost you less in more sparsely populated areas: property taxes, child care costs, car insurance, and gas are all likely to be less expensive as well. The money you save over the long run would buy you a lot of peace of mind as you work towards getting your business off the ground.

Con: Less Public Transit

If you don’t currently own a car, you might need to get one. Smaller towns and cities might have reliable bus systems and perhaps the occasional train, but it’s unlikely that you’ll be able to rely on those to get you to and from the grocery store, the drugstore, or anywhere else that you need to go in the course of the week — never mind the office, if you do indeed have an office. You could buy yourself a beater for a reasonable price, but you’re then suddenly introducing the cost of gas, insurance, and upkeep as well. You’ll want to take a hard look at those additional expenses and make sure they don’t cancel out the gains.

The good news is, if you really are thinking about relocating for financial reasons, most of these pros and cons can be researched in advance. That means that if you think this through, you really might just save money in the long run — and give your business a better chance to succeed from the get-go. Plus, who knows; if you’ve never tried it before, maybe small-town living is for you.

Seed is available now in the US. Apply for membership.

Banking Services provided by The Bancorp Bank, Member FDIC. The Seed Visa® Business Debit Card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The opinions, findings, or perspectives expressed in this content are those of the author and do not reflect the official policy or position of The Bancorp Bank, its affiliates, or their employees.

      close