Relocating to California can be an exciting new chapter for you and your family. In order to help you adjust to your new life, there are several things to attend to, including finding a new place to live and how you will be living your life in the new place. But the first and most important thing to attend to is building a solid financial foundation for yourself.
In the end, a thoughtful financial plan will help anyone to transition smoothly to their new home in California. Each person will have their own set of financial goals while they are adjusting to their new environment, but having a solid foundation in financial planning will help anyone to reach their goals.
Understand Your New Cost of Living
In order to make sure that you are prepared for your move to California, it is crucial to make sure that you are able to handle your new cost of living. The cost of living in California can vary greatly from place to place, especially if you are moving to a big city like Los Angeles, a coastal town like Santa Monica, or a smaller inland town like Bakersfield. Understanding your daily expenses before your move will help you get a better sense of your new cost of living and the new expenses that you will have after your move.
Housing costs are one of the biggest expenses for people who are moving to California. The cost of your new home should be within your means to pay for. You will need to compare your income to the costs of potential homes and consider a number of factors when you are searching for a place to live.
Transportation costs: These would include the costs of public transportation in the area where you will be living. If there is not enough public transportation to meet your needs, then the cost of owning and maintaining a car would be a factor in your costs. These would include the payments on the car, as well as the costs for insurance, gas, maintenance and repairs of the car.
Create a Realistic Budget for Your New Lifestyle
A budget for the relocated person can outline how they can spend money to experience the best of their new location. Your new budget will include the essential expenses for your new home such as a house payment or rent, new food costs, a new car payment, new health insurance costs, new TV costs, etc. as well as outlining your financial goals such as saving for emergencies, or for retirement and other long-term goals, or to pay off high-cost debt, or to invest.
The new budget you create for the lifestyle of your relocation will include the essential expenses as well as your financial goals. Examples of essential expenses in your relocation budget would be the cost of your new house, your daily needs like food, your mode of transportation, the cost of health insurance, as well as other regular bills you have. Your financial goals for your relocation could be to save money, to pay off certain debts, or to invest in real estate and/or in the stock market.
It’s a good idea to keep some room in your relocated spending money for unexpected, unforeseen problems. Even typical spending money can sometimes be thrown for a surprise by home repairs and other typical daily cash spending that turns out to be expensive, hundreds of dollars in a split second, home repairs and with no warning or announcement. This is just the nature of many unexpected problems, they come up when you least expect them. So plan ahead, keep a little cushion for the times that your spending money is not quite enough for whatever surprise comes your way and this can help to ensure that you are able to cover any of the unexpected, and with no prior warning, higher than expected cash expenses.
Build an Emergency Fund Before Taking on New Commitments
Make an Emergency Fund Available. Problems can develop unexpectedly for people who have recently relocated. Therefore, to deal with them when they arise, it is a good idea to have an emergency fund available. Money from this fund will be able to cover necessary expenses that arise unexpectedly, thus eliminating pressure to ask for financial help from family and friends. If necessary, the money from the fund can be deposited into the new home of the fund owner.
A good rule of thumb for an emergency fund is to save enough money to cover 3-6 months of expenses of the essential items and services that are required to maintain a good quality of life. The keyword here is required. Every person has different items that are considered required for them to have a good quality of life. And, even a small amount of money can go a long way, if it is deposited into a savings account on a regular basis.
In our efforts to settle in our new home and find our place in the community, we will likely encounter many ways to spend our money while having the best time of our lives.
Choose Banking Tools That Support Your Goals
Managing money in a new environment! There are so many tools available today to help individuals manage their finances better while living in a new environment. Everyone’s financial situation is different, therefore, everyone needs to find the best tool(s) to manage their money.
Banks with good online banking and bill pay features can help make managing money easier. Also, banks with early direct deposit can help people with a lot of expenses that occur on a regular basis. There are many features of a checking account that can help people to manage their finances.
It is also important to think about the banking that you do now at your current location and how it will affect you at your new location after you have relocated. Can you still do banking with the current bank location even though you are living in a new location?
Helping consumers to become knowledgeable about the various financial products available and make informed decisions regarding these products and services is one of the Bureau’s goals (Consumer Financial Protection Bureau).
Plan for California’s Taxes and Financial Responsibilities
Finally, California has a unique set of tax policies and other financial responsibilities. For example, in addition to the taxes that other states charge (i.e., State Income Taxes, Sales and Use Taxes, etc.), California charges various taxes, and, in some cases, there are special requirements and even additional taxes for people who work from home, especially for out of state companies, and property taxes for people who own homes in the new state of residence, for example.
This will affect how much money you can afford to spend in the new state of California. There are State Income Taxes, Sales and Use Taxes, etc. that affect spending money in the new state. There are also requirements for people who work from home (ie. for out-of-state companies). The new homeowner may also be responsible for property taxes, etc. on a home they own in the new state of residence.
Note that documents to support financial records, needed to complete tax returns accurately, must be kept throughout the entire year when they were created and/or received. Should the tax return be complex, because its preparer is self-employed, such an individual must seek the help of trained tax professionals.
Set Long-Term Financial Goals in Your New Home
Long-term goals may include planning to buy a home in your new city, retire, start up your own business or other financial goals to help you build the life you wish to lead in your new home.
In addition to being able to cover your financial necessities, it is wise to focus on achieving your other long-term financial goals as you become more financially stable in your new home. Examples of financial goals can include buying a home, paying for your children’s college education, saving for retirement, starting your own business, etc. to name a few.
Your financial goals for the future may include investing in stocks like Apple in Silicon Valley, or saving for retirement by adding to your California 401(k) or other accounts while working in industries like entertainment, or running your own home-based business, with the intent of increasing your future personal wealth for your own future, and the future of your family.
Make Financial Wellness Part of Your California Experience
After a while of having settled in the new state of California, financial stability can be reached by consistently choosing the best way to manage one’s money, by planning well and checking regularly on the way one spends money.
By utilizing the strategies outlined above, individuals will be able to pursue their goals and have the means to go out and have fun while living in California. A new beginning can be the perfect time to form better money management habits and to get a head start on managing your finances in the right way.
Creating a strong financial base of operation in your new home is half the battle in enjoying your new life in California.
