The Rise of Geoarbitrage in a Remote Work World
By Natalia Wolting • Apr 30, 2024
The rise of remote work has opened doors for a new way of life - geoarbitrage. This concept allows telecommuters to leverage the power of location independence to stretch their income further and potentially improve their overall quality of life.
What is Geoarbitrage?
Geoarbitrage (also called geographic arbitrage) involves remote workers strategically relocating from a high-cost-of-living area to a place with much lower living expenses. By taking advantage of this geographic arbitrage between income levels and cost of living, savvy remote employees can maintain the same salary they earned back home while enjoying a drastically higher quality of life and real purchasing power in their new locale.
For example, someone earning $80,000 a year while living in an expensive city like Los Angeles or New York would likely feel cost-burdened by high rents, taxes, transportation costs and other inescapable big-city expenses. However, if that same person earned $80,000 while living in a more affordable small town, suburb, or rural community - they could easily live a more luxurious lifestyle on that same income.
The Massive Financial Benefits of Geoarbitrage
The math behind geoarbitrage is simple - the lower your cost of living, the further your income can stretch and the easier it is to bank serious savings or raise your standard of living. According to data from NerdWallet, a person earning $100,000 in San Francisco would need to earn only around $54,749 to maintain the same standard of living in Columbus, GA. That's over $45,200 in cost-of-living savings!
Even a lateral move from a big city to a moderately sized metro area can unlock massive savings potential. In another comparison, NerdWallet found that a software engineer earning $120,000 in San Francisco could maintain the same quality of life while making just over $61,000 in Tulsa, OK - amounting to around $59,000 in geographic arbitrage gains.
NerdWallet found that a software engineer earning $120,000 in San Francisco could maintain the same quality of life while making just over $61,000 in Tulsa, OK - amounting to around $59,000 in geographic arbitrage gains
The Advantages of Geoarbitrage
Beyond the obvious financial benefits, geoarbitrage offers a plethora of advantages including:
Improved Quality of Life - Lower living expenses can free up resources to pursue hobbies, travel, or simply enjoy a more relaxed pace of life.
Increased Savings and Investment Potential - Stretching your income allows you to save a larger portion of your earnings or invest more aggressively, potentially reaching financial goals faster.
Greater Freedom and Flexibility - Geoarbitrage allows you to break free from the traditional work model and design a life that aligns with your priorities.
Exposure to New Cultures - Relocating to a new country or region can broaden your horizons and provide enriching cultural experiences.
Achieve FIRE - The geoarbitrage financial strategy has allowed many remote workers to rapidly achieve FIRE (financial independence, retire early), a common goal in the personal finance community.
Planning Your Move
If the idea of geoarbitrage excites you, here are some suggestions for getting started and potential things to take into consideration:
Research Potential Locations - Explore different communities comparing factors such as cost of living, internet access, visa requirements, cultural offerings and climate.
Calculate Savings Potential - Develop a budget that compares your current living expenses to potential relocation destinations.
Assess Your Remote Work Situation - Is your current job truly location-independent? Discuss expectations with your employer if needed.
Prepare for Cultural Adjustment – If you’re considering a move to another country, it’s crucial to learn basic language skills and research local customs and traditions to ease the transition.
Build a Support Network - Connect with other remote workers or locals in your chosen location to navigate challenges and build a social network.
Research Technological Infrastructure - Reliable and high-speed internet access is essential for remote work. Make sure your chosen location has the necessary infrastructure.
Consider Time Zone Differences - Depending on your job, working across time zones might require adjustments to your schedule and communication style.
Geoarbitrage is not a one-size-fits-all solution but for those with the flexibility and desire, it can be a life-changing strategy. By carefully planning and considering the challenges and opportunities - you can leverage geoarbitrage to stretch your income further, enhance your quality of life and embark on a truly unique and rewarding adventure.
About MakeMyMove
Remote work has freed millions of Americans to live where they want, and many are making the move to places that better match their lifestyle. In turn, cities and towns across the country are offering incentives like cash, perks and programming to remote workers who move and work from their communities. At MakeMyMove, you can explore all the places, get personalized help to find the one that’s right for you, connect with locals, and access support to make your move a piece of cake.