How to Balance Career Opportunity and Cost of Living (Plus: ChatGPT Ads Could Change How You Spend)

14:41Elizabeth Ayoola:Our colleague Carrie is a Spectrum customer. Shout out to our social media team. And she told us that she chose Spectrum because people online kept recommending it as a reliable and affordable option for internet and phone service.

14:53Sean Pyles:Carrie told us she was actually a little hesitant to switch at first because she'd been using a different service for a while. But after a year with Spectrum, she's had a really good experience. Her phone gets strong, reliable service, and it automatically connects to Spectrum Wi-Fi everywhere.

15:06Elizabeth Ayoola:Join the millions who rely on Spectrum Business. Visit Spectrum.com slash business to learn more. One more time, that's Spectrum.com slash business.

15:14Sean Pyles:Restrictions apply. Service is not available in all areas. This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed Sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate C. According to Indeed data, Sponsored Jobs have four times more applicants than non-sponsored jobs. So go build your dream team today with Indeed. Get a$75 Sponsored Job Credit at Indeed.com slash podcast. Terms and conditions apply.

15:48Sean Pyles:We're back and answering your money questions to help you make smarter financial decisions. This episode's question comes from a listener's email. Hi, Elizabeth and Sean. I love your podcast and was hoping that you can help me with a job dilemma I'm having. I'm in my last year of medical school, which means over the next few months, I have to rank all the hospitals I've been interviewing at for residency positions. In March, an algorithm will sort through everyone's ranks and tell me which hospital I'll be training at for the next five years. I'll be 26 when I start my training and 32 when I graduate.

16:19Sean Pyles:The starting salary for residency is about$60 ,000 to$80 ,000 and goes up every year to about$100 ,000 to$120 ,000 in the last year of training. Once I graduate, I'll make around$500 ,000 to$750 ,000. Wow, that's a lot of money, listener. Okay, my options right now can be sorted into three buckets. One, New York City. Great slash prestigious hospitals that will make it easy to find jobs in the future. Everything is very, very expensive, and I probably will not be able to save a lot or put much into retirement. 2. Other cities. Pittsburgh, Boston, Philly, Baltimore. Expensive, but less expensive than New York City.

16:59Sean Pyles:Still prestigious, and will be easy to find jobs in the future. Option 3. Long Island, Connecticut, Rhode Island. Much less expensive than a major city, and I can expect to save a ton, but hospitals aren't as prestigious. I'd still be able to find a job, but I wouldn't leave with the same set of skills as if I were to graduate from a New York City program. I'm essentially struggling with high cost of living now, but better opportunities in the future versus saving money early and good, but not great opportunities in the future. Thank you.

17:29Elizabeth Ayoola:And this episode, Sean and I are taking on this listener's question ourselves. Let's dive in, Sean.

17:36Sean Pyles:All right, Elizabeth, I don't know about you, but when I saw this listener's question come And I really related to it because I was in a similar position in my early 20s, trying to figure out how to balance living in a city that was expensive, but I thought would have good opportunities with moving to a place that was less expensive, but I wasn't really sure how it would pan out career wise for me. So how did you think about this in your early days of getting a job and making your living and finding a career, all those things?

18:03Elizabeth Ayoola:I just want to clarify that I am ecstatic for the listener, but I do not relate to making half a million to 750 at 32. I don't anticipate looking forward to that. So I'm very happy for the listener. But what I do relate with is having to choose between living in a city with a high cost of living and balancing that with the opportunities. So after graduation, I moved to Nigeria and one of the lures was the cheaper cost of living and potentially better opportunities because of less competition in the job market in Nigeria at the time. So I thought that I was going to get both a city with more easily accessible opportunities and lower costs of living relative to London, which is where I was coming from, which we know is an expensive city.

18:48Elizabeth Ayoola:Now, after spending, wow, most of my 20s in Nigeria, in retrospect, it turned out that I was living in a relatively high cost city. And the opportunities that I thought I was going to get, I didn't get. Because one, I was living in a city with a lot of nepotism and I didn't have access to those opportunities. And another thing is the Naira kept devaluing. So the value of the money kept going lower and lower. But with that said, I wouldn't change my decision because living in a big city equipped me with the transferable skills that I needed to get to where I am today. So that's something I took away from it.

19:24Sean Pyles:Yeah, the nepotism issue is really big, and that's a big part of why I didn't move to New York City after graduating college. I was starting off in journalism, and I had a lot of friends who were moving to New York City, and it seemed like a good place to go for that, you know, kind of at face value. but I thought I would have a really hard time breaking in in such a large city. So I ended up moving out to the Bay Area. My twin sister was already there. And it seemed like a small enough area where I could find a ladder and climb it, although it was still quite expensive. This is part of why I ended up moving to Portland, Oregon eventually.

19:59Sean Pyles:But I did find that ladder. The ladder was called NerdWallet, and I've been here for a number of years, and it's helped me have a good career. So I think being in San Francisco was really key in my early 20s to get my career started. And then eventually, once I found my stride, I figured, hey, let me move somewhere where I can actually build the rest of the life that I want to have. And I think that's something our listeners should think about too, is that this is not a forever decision for them. Yes, they'll be there for six years, but they could move to any other place afterward.

20:25Elizabeth Ayoola:I have a question for you, Sean. But when you say living in a big city helped you to get your career started, are you referring to the job opportunities that you were able to access or the network that you was able to access?

20:37Sean Pyles:It was both, really. I was able to get some good internships early on when I was in the Bay Area. And then a guy I was dating connected me to a job that ended up helping me get my job at NerdWallet because it helped pad out my resume and give me more experience. So it was kind of all of the above, just everything that a city offers you in terms of connection and jobs. And I also just loved living in San Francisco. So that was a nice plus, too.

21:00Elizabeth Ayoola:Let's get on to the next part of the listener's question. the option of saving money early but having fewer opportunities in the future. What are your thoughts on that, Sean?

21:10Sean Pyles:I think it's a bit of a false choice here. I think our listener can save money wherever they are if they're really creative. Yes, you'll be able to save less in New York City given how expensive it is, but they don't know for sure that they will have fewer opportunities if they decide to move to the suburbs because you just never know what opportunities might come your way in the future. Yes, you may not have as many as if you're living in a big city like New York, but you just should keep your mind open to the fact that your career is going to go in all sorts of different places that you're not really going to anticipate.

21:42Elizabeth Ayoola:I love that you say that, and this might sound really woo-woo, but I was reflecting on the past decade or so of my life and the way my career has gone, and I had such a clear plan of exactly how needed to look. And I thought that I could control the outcome by a controlling the city I live in and the people that I talked to and all these things. But the truth is, sometimes opportunities are just a matter of luck. And yes, you can create your luck by putting yourself in the right place in the right time. But just like you said, you don't know where these opportunities are going to come from. So I think it's just putting one foot in front of the other and making decisions that align with what you need at the time.

22:19Sean Pyles:And I'll say, I think my experience living in Portland over the past almost eight years now shows that you can have good opportunities living in a small city, especially when you're working a job that can be done from pretty much anywhere. I've been able to have a lower cost of living, buy a house, have a dog, do all the things I wanted to do here, but I'm not living in a big media hub necessarily, except I kind of am because we're all living on the internet, which is the biggest media hub there is, right? So depending on what industry you're in, you may be able to have plenty of opportunities in a smaller city.

22:51Elizabeth Ayoola:And one more thing I will add, I'm not a medical student. I don't know exactly how it works. But one thing that I know has worked for me throughout my career is no matter how big or small the opportunity was, focusing on skill development and looking for opportunities in whatever place I'm working to develop those skills. So I know the listener was worried about maybe not getting as good opportunities in suburban areas and maybe not being able to build as many skill sets. But wherever you are, I think it's important to just make the most of what opportunities you have there to build your skills.

23:19Sean Pyles:I think that's a good point because a lot of times people may not even really have a say in where they're moving to with our listener. They can rank their top choices, but ultimately an algorithm is making the decision. And even if an algorithm isn't making the big decision for you, sometimes family circumstances might draw you back to a certain city if you're trying to help out a loved one. Or maybe you just get a job in a place that isn't your number one pick. But if you're focusing on the skills that you're building while you are wherever you are, that's the number one thing. so you can at least move forward, even if you weren't living where you ideally would want to be?

23:52Elizabeth Ayoola:So I actually did that during the early stages of my career in the U.S. I had moved from London. I only moved with, I believe it was$6 ,000. That's all I had to my name. I was doing an internship at the time that was paying me$8 an hour, and I didn't want to end up in a serious financial hole. So one of the things that I did is I moved into a room. I rented a room in a house with my son to start with, So I was able to maintain a small emergency fund and also continue to save until my income increased enough to where I was comfortable living on my own. Sometimes you have to make those short-term sacrifices.

24:28Elizabeth Ayoola:It wasn't fun living with other people, especially coming from London where I was living alone. But having financial security at the time was more important to me.

24:36Sean Pyles:That's so important. And also kudos on having an emergency fund when you were moving like that. I think, of course, you had a son, so you were really focused on security and stability. When I moved out to the Bay Area, I think I had$300 to my name and a lot of really polite conversations with my dad to ask him to help me cover my rent for the first year. So thanks, Papa Piles, for that. I wouldn't be here where I am without that freedom, that's for sure. But having a move like this is a good time. All right, let me get Pepper. Pepper got something to say, too. Yeah, she says, you need to sacrifice this recording and take me on a walk.

25:15Sean Pyles:We'll go on a walk in a little bit, okay?

25:17Elizabeth Ayoola:Hey, Pepper Girl.

25:18Sean Pyles:She's so stinky from the rain. Go lay down, please. Thank you. Goodbye. I think something our listeners should consider is what they might be willing to sacrifice to accomplish multiple goals at once, and also how they can get creative to save some money when they are living in an expensive area. So, for example, if they really want to live in that expensive city where they think they'll have more opportunities. What can they do to still save money for retirement or build up an emergency fund? You know, maybe that means foregoing some Broadway plays when you're in New York or like you did, Elizabeth, having some roommates.

25:52Sean Pyles:Also, just try to get as creative as you can to save money while enjoying your life. I recommend everyone join their local library and see what perks that might afford them. Like in the Portland area, you can actually rent local experiences. Here you can rent going to our incredible Japanese garden, which otherwise would run you over$20 per ticket. So there are all sorts of cool benefits that help you enjoy your life and your city and also save you money.

26:18Elizabeth Ayoola:I have experienced that in two cities now, having to cut back on things to live in an expensive city. When I lived in Lagos, Nigeria, again, I did not have a car because I could not afford to have a car and also pay my rent. And I rode around on what you call an Okada. So it's essentially like a bike. It is a motorbike and it's pretty dangerous, but it would cost me maybe, I don't know, two bucks a ride versus 20 bucks a ride for an Uber, depending on where I was going. That's something I have to sacrifice.

26:46Sean Pyles:So the equivalent is like a lime scooter, basically.

26:48Elizabeth Ayoola:Yes.

26:48Sean Pyles:Which people do take all around the cities and they are super dangerous.

26:52Elizabeth Ayoola:They are. Listen, those Okadas would drive the opposite direction in traffic. Like they're very dangerous and a little ridiculous. Yes, but you know I love a good thrill. So I didn't mind. It's my thrill for the day. And then when I lived in Florida, one of the things I had to sacrifice, which I love to do, is travel. Because I couldn't afford to do it during the earlier years of living there.

27:12Sean Pyles:But hey, you saved for a few years. You avoided travel for a few years. And now look at you. You have a place that you really love that's less expensive. You have your son in a great school that he seems to like. And you can travel. You took some great trips last year.

27:26Elizabeth Ayoola:All the sacrifices were worth it is what I'm hearing you say, Sean.

27:30Sean Pyles:Well, this is also a good time for our listener to understand what kind of city they might want to live in long term because, yeah, they're going to be in this location wherever they land for six years. So they should maybe visit some of these locations ahead of time if they can in these coming months and realize, OK, is living in New York City feasible for them? For me, you know, I visited many times. I have some great friends that live there. Every time I visit, I think this is so fun. I would never want to live here. I love living in a smaller city where I can know my neighbors. I can walk down the street and I'm not like.

28:00Sean Pyles:bumping elbows with a thousand people. So think about what kind of city really resonates with your lifestyle and your values and your desired lifestyle. And just think about all of those things and how that might connect to where you might end up.

28:13Elizabeth Ayoola:So is nature important to you? Would you like to be somewhere that is central to the arts? Because that's a huge value point for you. Maybe you want to live in close proximity to family because that's important.

28:24Sean Pyles:Yeah. Or public transit. I mean, think about living in New York. You can just hop on a subway or a bus and be anywhere you want. And, you know, it might take you 30, 40 minutes, but still you don't have to get in your car, drive somewhere, look for parking. That's been the sacrifice living in Portland where the public transit infrastructure is not quite as robust as like I kind of drive everywhere, but I do love to drive. So at least that's okay.

28:44Elizabeth Ayoola:The listener also mentioned saving for retirement. I think it's a good time to talk about saving for retirement in your 20s.

28:51Sean Pyles:Saving as early as you can is really important. And I'll give you an example with some numbers that lays this out. So if you start saving at 26, you save$500 a month, retire at 67, and you have a pre-retirement rate of return of 6%. At your retirement age, you'll have just under $1.3 million. Now take those same figures, but you start to save at 32 when our listener says that they'll be done with their residency. At their retirement age, they will only have around $850 ,000. So that's a difference of around half a million dollars in those six years of saving.

29:30Elizabeth Ayoola:And that's a lot of money that I could do a lot of things with. And by the way, we use NerdWallet's retirement calculator to get these numbers. So highly recommend playing with those to see what your own retirement savings could potentially look like. That is a hobby of mine that I enjoy doing.

29:45Sean Pyles:And that's why you're a nerd, Elizabeth, because you enjoy playing with the retirement calculator.

29:49Elizabeth Ayoola:I do. I do. I really do.

29:51Sean Pyles:But a big thing that our listeners should be considering too, is that they're in a really different situation from most people because they may be making$500 ,000 to$750 ,000 a year once they're post their residency, which you mentioned earlier, Elizabeth. So that does slightly change the calculus here. Yes, we want people to be saving as much as they can for as long as they can, but they might have the opportunity to backload all of their savings and catch up for those six years that they weren't able to save as much, which might make the difference in how much they can save in each location less of an important factor compared with the lifestyle question of where they would want to live and what kind of life living in that kind of city would afford them.

30:30Elizabeth Ayoola:Maybe the listener in the next couple of years will be a fire disciple and they'll decide to do coast fire or something and save a whole chunk of their salary for early retirement because that is a lot of money depending on their debt and their expenses, they might have a lot of wiggle room to save.

30:45Sean Pyles:I would love to talk with this listener in six years after they finish their residency and see how much or how little they're attempted by lifestyle creep. Because going from making$100 ,000 to$750 ,000 a year would make me want to buy a brand new house with cash and maybe a really nice car and maybe a nice handbag too. Let's talk about it, Sean.

31:07Elizabeth Ayoola:So, NerdWallet, if you are listening, if you happen to increase our salary to$500 or$750K, what's the first thing you do, Sean?

31:15Sean Pyles:You know, I actually think that would be a great experiment for the company to run to see how we can embody this lifestyle change on the podcast just to inform our listeners. So, let's take note of that and talk about it with our manager.

31:26Elizabeth Ayoola:We need a case study.

31:28Sean Pyles:If I got that amount of money, I would buy a new house. where my partner and I live in Portland is a sweet, cute little home, but it's a little small and we would love just maybe one more bedroom. So I think that would be top of my list is a new, bigger home. What about you?

31:44Elizabeth Ayoola:Bigger home sounds lovely. You know, I'm a forever renter, but I would buy a house if I got that kind of salary increase. I would.

31:51Sean Pyles:Yeah.

31:51Elizabeth Ayoola:And I'd be able to comfortably pay for the repairs and still have lots left over.

31:56Sean Pyles:That's really it, because part of why owning a home is annoying is because you have to repair things yourself, But if you have enough money, you just throw it at people who fix the problems for you.

32:04Elizabeth Ayoola:One downside, though, Sean, is that you might be on the show yourself more because I'd be on vacation a lot. The same.

32:11Sean Pyles:Okay, well, maybe at that point we'll have AI-generated robot versions of ourselves that we can have.

32:15Elizabeth Ayoola:Now you're taking it too far. You're taking it too far. Okay, sorry, sorry, sorry.

32:18Sean Pyles:We'll never do that. We are all human authenticity here on Smart Money. Okay, well, I got to ask you, Elizabeth. Of these three options that we've been discussing with our listener, which one would you choose and why?

32:28Elizabeth Ayoola:The honest answer is I would choose option number one. And that's because I have an unhealthy relationship with New York. I'm obsessed. And if I could live in New York in my early 20s and live out my sex in the city dreams, I'd absolutely take the opportunity. And I also would choose that option because I am a pretty good saver. And I know that once I got to that 500 or 750K mark, I would save a ton of money and I'd still be on track for retirement.

32:57Sean Pyles:And I'm sure you'd be able to still find ways to save when you're making less because$100 ,000,$120 ,000, it's not a lot in New York City, especially. I mean, in their early years, they said they'll be making closer to maybe$60 ,000 to$80 ,000. So that's going to be pretty lean in New York City. But if you are frugal enough and you're creative enough, you can still tuck something away.

33:18Elizabeth Ayoola:And the listener has time on their hands, right? If they're tucking something away, even if it's a minimal amount, it's still going to compound over time and it's better than saving nothing at all.

33:27Sean Pyles:Well, me, I would probably go with option two because, as I said, New York City is a little bit too big of a city for me to live in. I would do exactly what I did all over again, living in San Francisco and in Oakland, being able to find my career opportunities. And, you know, I'll be honest here, I actually saved very little money before I got my job at NerdWallet. But hey, I had a wonderful time living in the city that gave me the lifestyle that I wanted. Hey, guys, can I pop in here? Yes, everyone listening, this is our producer, Tess, who we call on from time to time to impart career wisdom because she literally wrote a book on how to navigate your career.

34:01You didn't call on me this time, but I'm just bopping in anyway.

34:04Sean Pyles:We always love to have you here. So what would you do, Tess? Well, you know, I'm not even going to talk about what I would do, but as the resident old person. You said it. Old and fabulous. I've been around for a while. And I just kind of want to say to our listener and frankly, even to you guys that, you know, these decisions that you make at the earlier stages of your life, they are not the entire determinants of how your life is going to go. They're just not. And so I would encourage the listener kind of not to imbue them with so much importance that you worry about how it's going to affect you 20 years down the line, 30 years down the line, you will find out pretty quickly that life, it just doesn't work that way.

34:53What is the phrase? We plan, God laughs.

34:57Sean Pyles:Yes. You know, whether you're religious or not, you kind of get the idea there. Life is going to just toss all kinds of curves at you. So, you know, if you don't make the correct decision now, correct in quotes. Yeah. It will in all likelihood turn out completely fine. That reminds me of a piece of advice I've heard where it's not necessarily about the decision that you make, but what you do with that decision. So you can always learn from a quote unquote wrong decision or one that doesn't make you as happy as you thought and choose differently next time. I just feel like this question comes up so much with people, particularly in their 20s.

35:34And you don't have really perspective on it because you're so young. And I would say, particularly this listener, they're becoming a doctor, which is completely amazing and admirable everywhere you go, right? So it doesn't really, really matter. And you're still going to get the skills that you need no matter where you go. So I would just say don't worry about whether this turns out exactly the way you want it to because nothing in life is going to be that way. And all of this is going to change.

36:08Sean Pyles:And hey, our listener is at least thinking about these things. They're looking down the road to see how their decisions now might pan out in the future, which is more than I could say for myself at this time. So good for them for even thinking about retirement savings at this early age. Certainly thinking about retirement savings is always a must if you can. But this notion that where you live, what school you go to, all of that is going to determine the rest of your life. It's just not true. Yeah. Thus endeth the lesson. I'll turn it back over to you guys. Thanks, Tess.

36:44Elizabeth Ayoola:Thank you, Tess. Just to end on that beautiful note from Tess, who would have thought that I would go from a call center job, from living in Lagos, from living in all these different places in the world, to the Smart Money podcast? I never envisioned being a podcast co-host or even working in personal finance. So that is just a testament to how life does not always go how you plan, but it still can turn out beautiful.

37:10Sean Pyles:Elizabeth, I didn't know that you worked at a call center. I did, too, in the summers over college. And I think that in some ways that job really primed me for what I'm doing now and what you're doing now. Absolutely. It teaches you how to talk to anyone. Yeah, and have a good conversation. So here you go. Every little step along the way, as crazy as it was, as wild as those rides you had on that sketchy little motorbike in Lagos were, it got you to where you are now. So that's beautiful.

37:34Elizabeth Ayoola:Virtual group hug.

37:36Sean Pyles:Yeah. All right. Well, listener, let us know where you land. We'd love to continue this conversation with you. And that's all we have for this episode. Remember that we're here to answer your money questions. So turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com.

37:58Elizabeth Ayoola:We want you to join us next time to hear us take on a number of your questions about retirement account rollovers. When are they a good idea? When are you okay leaving your retirement money where it is? We're going to help you answer that. Follow Smart Money on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.

38:20Sean Pyles:Here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

38:30Elizabeth Ayoola:This episode was produced by Tess Viglin and Anna Helhosky. Hilary Georgie helped with editing. Nick Carissimi mixed our audio. And a big thank you to NerdWallet's editors for all their help.

38:41Sean Pyles:And with that said, until next time, turn to the nerds.

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