Geo-Arbitrage Relocation Calculator
Quantify the real financial impact of relocating to a cheaper city while keeping a remote job: disposable income change, relocation payback period, and your salary's true purchasing power.
When to use this tool:
- Decide whether to relocate for a remote job
- Compare disposable income across two cities
- Estimate how fast a move pays for itself
How it's Calculated
- Target Living Cost = Current Living Cost × (Target Index ÷ Current Index) — your spending rescaled to the cheaper city.
- Disposable Income Change = (Target Salary − Target Living Cost) − (Current Salary − Current Living Cost).
- Payback = One-Time Relocation Cost ÷ Monthly Disposable Gain.
- Real Income = Target Salary × (Current Index ÷ Target Index), i.e. what your new pay is worth at your old city's price level.
Key Assumptions
- Cost-of-living indices are relative numbers (e.g. Numbeo or your own basket) where a higher value means a more expensive city.
- Living costs are assumed to scale roughly with the index ratio; one-off luxuries and fixed debts are not rescaled.
- If your remote employer cuts pay for the cheaper location, enter that lower figure as the salary after the move.
Actionable Insights
- The biggest geo-arbitrage wins come from holding a high-cost-city salary while paying low-cost-city prices — disposable income, not headline salary, is what actually grows.
- A pay cut can still be worth it: dropping 15% salary to move somewhere 35% cheaper usually leaves you with more money in your pocket each month.
- Watch the payback period — high moving, deposit, and furnishing costs can take a year or more to recoup, so a short planned stay can wipe out the gain.
Frequently Asked Questions
Numbeo, Expatistan, and many salary sites publish city indices. Any consistent source works as long as you use the same scale for both cities — what matters is the ratio between them, not the absolute number.
Add up what you actually spend in a year on rent, food, transport, utilities and discretionary items. Exclude savings and one-off purchases for the cleanest comparison.
Often yes. Enter the reduced salary as 'Salary After Move'. If the city is cheaper by a larger percentage than the pay cut, your disposable income still rises.
That happens when the move does not increase your monthly disposable income, so there is nothing to recoup the relocation cost. Financially, the move does not pay for itself.
It translates your post-move salary back into the price level of your current city, so you can compare like-for-like. If it is higher than your current salary, your purchasing power improved.
Not directly. If moving changes your tax jurisdiction, adjust the salary figures to net-of-tax amounts, or treat the tax difference as part of your living cost.
Use the calculator's currency selector and convert both salary and living costs into the same currency first, so the index ratio is the only thing driving the comparison.
Worked Example: London to Lisbon, Same Salary
Priya keeps her £70,000 fully-remote salary but moves from London (index 125) to Lisbon (index 75). She currently spends £45,000 a year. Relocation costs £6,000.
- Target living cost: £45,000 × (75 ÷ 125) = £27,000
- Disposable now: £70,000 − £45,000 = £25,000
- Disposable after: £70,000 − £27,000 = £43,000
- Annual gain: +£18,000 → ~£1,500/month
- Payback: £6,000 ÷ £1,500 = 4 months
After four months the move has paid for itself, and Priya banks an extra £18k a year for the same work.
Worked Example: A 20% Pay Cut That Still Wins
Tom's employer applies a 20% location adjustment if he leaves San Francisco (index 100) for Austin (index 65). His $150,000 becomes $120,000. He currently spends $90,000/year; relocation costs $10,000.
- Target living cost: $90,000 × (65 ÷ 100) = $58,500
- Disposable now: $150,000 − $90,000 = $60,000
- Disposable after: $120,000 − $58,500 = $61,500
- Annual gain: +$1,500, plus a far lower cost base
Even with a $30k pay cut, Tom is marginally ahead in cash — and his fixed costs are dramatically lower, which de-risks his finances. The payback period here is long, so this move makes sense as a multi-year decision, not a one-year experiment.
When Geo-Arbitrage Does Not Work
If the target city is only slightly cheaper, or your employer's pay cut exceeds the cost-of-living saving, the disposable-income change turns negative and the payback period shows ∞. The headline "cheaper city" can still leave you worse off — which is exactly what this calculator is designed to catch before you sign a lease.