Have you ever stopped to think that after taxes (State and Federal) and land costs that there maybe some states that are less expensive places to live in, purchase goods and set up shop then others? If so, which states would those be? The Bureau Economic Analysis recently conducted a study on how far after tax dollars stretch on a state by state basis. Essentially the researchers at the foundation compared what the real purchasing power of $100 is per state. The study gets into some finer details but I really would like to take a look at the illustration below created by the National Tax Foundation based on the study’s data, as it relates to determining where the most economical places to live and practice are.
If we take a look at the Map we can see that states such as California and New York have significantly less buying power then many of the other states. The salary bases might be higher in these areas but what this study is showing is that the people who appear to be earning more might actually have less to show for it.
This study was conducted for consumer goods, it does not take into account increased taxes, quality of education, or housing which are vitally important to consider when you are trying to find a location to practice or to start your business. From our experience states such as California and Colorado tend to be very popular for medical and non medical professionals alike. Although these places might be attractive because of climate, natural resources, convenience and other factors the study shows how living in them definately puts a strain on your wallet. If you are considering these it might be beneficial to take a look at some other parts of the country just for comparison. Please keep in mind this blogpost is not to harp on the states we have listed! We in fact love visiting them and have many clients who reside in them, we are simply suggesting that in deciding to live in one of these attractive locations you must be prepared and budget accordingly for the price hikes in consumer goods. Doing this along with strict adherence to a financial plan wherever you are will provide good results and the financial indepence you are striving for.
1.) Cole, Alan. “Price Parity.” Web log post. Real Value of $100 in Each State. N.p., 14 Aug. 2014. Web.