If you’re looking for a lower cost of living, settling down in a small town or smaller city may be just the thing you need to meet your financial goals.
With some exceptions, small-town living is generally less expensive than life in a large city, allowing you to put more money towards buying a house, having kids, or saving for retirement.
Whether you’re thinking about leaving life in the big city or digging up your small-town roots for more opportunities in a large city, there are financial pros and cons to small-town living.
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1. Pro: Lower cost of living
Small towns generally have a lower cost of living when it comes to rent, home prices, groceries and other consumer goods and services.
For example, Washington, Illinois (pop.16,000), a small town in central Illinois, has a cost of living index of 84 (U.S. average is 100), according to City-Data.com. Compare that with Chicago, located a few hours away, which has a cost of living index of 106, according to the same source.
2. Con: Fewer job opportunities
One of the biggest drawbacks to living in a small town is lack of career opportunities. Rural manufacturing jobs are disappearing, and fast-growing services industries like health care and professional services positions are now concentrated mainly in urban areas, according to the Federal Reserve.
Depending on your profession, you may be able to find a great job in a small town, but you may have to commute to the nearest city (or at least a larger town) to secure a well-paying job.
3. Pro: Cheaper housing
Not all small towns have less expensive housing than a large city, but you’ll typically pay lower rent or be able to buy more house for your money in most small towns.
Those savings can allow you to contribute more to your retirement account or buy a home with twice the square footage you could afford in a big city.
4. Con: Fewer entertainment choices
In a small town, you might be able to find someone plucking a banjo in a barn or an Eagles cover band performing at the bowling alley on a Saturday night. But if you want to see your favorite big-name entertainer, you’ll probably have to travel to the nearest large city.
If the commute to the big city is long, that means you may need to add gas, dinner and hotel costs to those pricey tickets.
5. Con: You’ll need a car
In a big city such as New York, Chicago, Washington, D.C., or San Francisco, you can take mass transit to any number of places in the city, so you may not need a car.
In a small town, however, you’ll likely need a car, along with footing all the expenses that come with it such as insurance, licensing, gas, maintenance, and repairs.
Find out: 10 Simple Ways to Save Money on Cars
6. Pro: Lower auto and home insurance rates
Accident data reveals that drivers in small towns have fewer accidents than those living in large cities, so car insurance rates are often lower for residents of small towns, according to National General Insurance.
While some small towns may have high crime, most small communities have lower crime rates than large cities. If you live in a small town with a low crime rate and minimal vandalism or theft, those are factors that can result in low auto and home insurance premiums.
Finding lower car insurance rates in a small town isn’t always a given, however, especially if the small town is prone to hurricanes, floods, or other natural disasters.
7. Con: Higher airfares
Big cities typically have international airports with multiple airlines competing for passengers by offering lower fares. Small towns, on the other hand, may have only a municipal airport – or no airport at all – which means you’ll probably have to pay to book a puddle jumper to connect with a major airline at a larger airport.
If you have to drive to an airport that offers competitive fares, factor in more money to pay for gas, hotel, and other travel costs.