Cost of Living Comparison Guide

June 11, 2015
Cost of Living

Relocating always has inherent costs. However, it is important to remember that the expense may not be a one-time occurrence. To the contrary, relocating means adjusting to an entirely new economic reality. The daily expenses in New York City are going to vary drastically from the cost of living in rural Kansas. Therefore, it is critical to compare cost of living expenses in order to be prepared.

To start thinking about the living cost comparison, consider the following tips:

1. Compare the costs before finalizing plans. Too many people consider the daily costs in context of their current job and location, which may affect what type of housing they choose. Doing a cost of living comparison before signing a lease will ensure that the rental is affordable not based on current costs but on future ones. Even after securing a job, it is crucial to know the relative cost of groceries, transportation and other necessities in order to ensure there is enough room in the budget.

2. Compare the costs city to city. It is tempting to look at state values when doing a cost of living comparison. However, most states have widely varying costs of living, which can make a state-by-state comparison less useful. For example, the cost of living in Chicago is likely to be fairly high while the cost in rural southern Illinois is probably quite low. The average cost of living in Illinois would be a middle value, which will not accurately represent most areas. Therefore, when possible, always compare the costs between cities.

3. Use a cost of living comparison calculator. The easiest way to compare expenses is to use a cost of living calculator. These calculators allow users to compare cost of living by state, city, or zip code. Simply enter the correct information into the fields and select the appropriate indicators. Then let the calculator do its work. A cost of living calculator is different than a salary calculator, which merely tells people how a salary compares to other salaries in the area. A cost of living calculator is more expansive, showing the difference in everyday costs.

4. Understand the benefits and limitations of a calculator. There are many benefits to using a cost of living calculator. By looking at the differences in daily expenses from one city to another, it is possible to gauge what lifestyle changes can be expected. In this way, it is an essential budgeting tool, allowing users to look at their projected income and accurately see how far it will stretch each paycheck. A cost of living calculator can be an important tool to use when deciding whether or not to take a job or sign a lease.

Of course, a cost of living calculator is not foolproof. The numbers are generated from generalizations, so it is important to always consider one’s standard of living when assessing the numbers. The cost of food, for example, may not include high end tastes, and the cost of electricity may not include running the air conditioner on high all summer. Therefore, always leave some room in the budget even after using the calculator.

5. Other resources. For more help, here are a few of the best online tools.

Overall, there is much to gain from using a cost of living calculator. It is always important to be prepared during a move and looking at the cost of living can be an essential part of the process. Relocating will always have its inherent costs. Be prepared for those costs and look at the cost of living today.

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