How important is location to your job choice?

We all want to make lots of money. Once we’re out in the real world and no longer have grades or teachers to tell us how we’re doing, money is the easiest yardstick to measure our level of success in the world.  With that in mind, most of us tend to gravitate towards jobs that pay the most, often without considering other factors, especially location.

Cost of Living

This is really the biggest and most unappreciated factor when most people apply for a job, especially right out of college.  We’re so used to living in dorms or apartments near campus that we rarely research fully ahead of time, and often end up quite surprised when it comes time to actually signing a lease.  Many of my friends got jobs in New York and Silicon Valley after graduating, and ended up having to spend upwards of $3000 a month.  This is fairly close to the median rent of the two cities, while Washington D.C., L.A., and Seattle are all around or just under $2000.  Over the course of the year that adds up to nearly $12,000, which on a pre-tax basis would be roughly $16k, all for choosing to live in a 1 bedroom outside of the two most expensive cities in the US.

It doesn’t just end there.  School, local taxes, food, transportation, all add into the equation as well.  Especially when looking at staying in a city long-term, the expenses start to add up and can outweigh the benefits of a higher salary.  Ahead of any big decision it’s well worth researching a loose budget to see if it’s really worth taking the higher paying job.

Earning Potential

Earning potential is the one area where cities like NYC and SF come out way ahead. Using jobs in banking as an example, it’s not uncommon for a 2nd year associate to make $200k, with managing directors making upwards of $500k.  Without being based in a big metropolis it’s extremely tough to make that sort of money, and if you’re able to live simply then it can be worth it.  This is where lifestyle inflation comes into play, and it becomes extremely important to stay away from a “keeping up with the Jones’s” mentality.

For anyone looking at job prospects, it’s worth doing research around what their trajectory is going forward.  What sort of money could I be making in two years? In five years? In 10 years?  Glassdoor offers a good ballpark estimate to see what you can expect as you move through the ranks at the company, and would be a good starting point to figure out where you’ll be going forward.

Quality of Life

Quality of life can mean different things to different people.  If you’re an avid surfer and love getting to the beach every day, then you’re going to have a pretty tough time living in downtown Manhattan.  Conversely, if you live off the energy of the city and love to go out and make lots of connections, then Manhattan may be perfect for you.  Beyond just geographic differences, it’s worth having an idea of what sort of quality of life you’ll be facing in the company that you choose as well.

In my experience, banking typically requires an average of 11-12 hours a day of most employees depending on the division, with some divisions as bad as 14+ hours a day.  It’s up to you to decide what sort of hours you’re comfortable working, and only you can know what’s best for you.

What did I do?

I chose a city that is typically thought of as one of the most expensive in the world (Tokyo), but was also able to join an industry where my starting salary was higher than most.  I lived with my parents for two years while paying off school loans, and since then I’ve been careful to limit my lifestyle inflation while still allowing myself some luxuries like a car and a trainer at the gym.  While I wouldn’t say my quality of life is as good as someone living in say, San Diego, I will say that the balance of high starting salary, earning potential, and overall cost of living were enough to balance that out.

Ultimately, it all comes down to you weighing the options and fully figuring out what the best job is for you going forward.  Worst case, there are always other jobs out there as well, but here on the Millennial Plan we like to go into things eyes wide open, fully prepared for what is to come.


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