Cost Of Living Calculator: How To Use It And FAQs
Kevin Graham6-minute read
February 27, 2023
If you’re looking to make a big move between cities or maybe just trying to gauge how much it would cost to move out on your own, you’ll want to look at your current cost of living and compare it against the cost of living in the city you’re thinking of moving to. Our cost of living calculator can help with that and let you compare between any two cities.
Cost Of Living Calculator: Compare By City
To use our calculator, put in the city in which you currently live along with where you’re looking to move. Then input your current income before taxes. The calculator, relying on data from the Council for Community and Economic Research (C2ER), will show how much more or less you need to make to maintain your standard of living.
There are also individual breakdowns for comparisons on the cost of groceries, housing, education, transportation, health care and other miscellaneous costs to give you a better idea of where your money’s going.
What Is Cost Of Living?
You can think of cost of living as how much money you need to make to maintain your current standard of living. It’s most commonly used to compare cities and states to each other.
This can be helpful if you’re trying to determine how much home you can afford because doing a proper cost of living analysis will give you a much more holistic view of your budget than looking at home prices alone. Having this data can help you make a more informed decision about the best place to live at this point in your life.
The Cost Of Living Index
The cost of living index allows organizations and tools, like our cost of living calculator, to compare data from different cities against the national average for cost of living. This index is created by the Council for Community and Economic Research.
They assign a base city with an average cost of living an index level of 100. Every other metropolitan area is measured against that city. Those with numbers lower than 100 indicate a lower-than-average cost of living. Cities with numbers above 100 indicate a higher-than-average cost of living.
By leveraging the index, you’re able to see how far your current salary will go in different cities so you can make an informed decision about your future.
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The Factors That Go Into Cost Of Living
A good calculator will provide several different data points on the factors that go into cost of living. Here’s a list of those commonly considered:
- Housing: Housing costs are probably the biggest monthly expenses you’ll have, whether you rent or buy a home. If you’re buying, you’ll also want to consider how much you’ll need to put down for a down payment. Also remember to factor in maintenance costs of 1% – 3% per year depending on the age of the home.
- Food: Our calculator gives the cost of a sample of several food items. In addition to this, you might be able to look at restaurant menus for the types of places you normally go and gauge the cost of eating out.
- Transportation: The calculator gives an average cost of gas and a tire rotation. If you’re living near a city, public transport might provide an additional option.
- Health care: Our calculator gives costs for doctor, dental and optometrist visits as well as the cost of ibuprofen and a sample prescription. You can also do research on health insurance offered by potential employers as well as the cost of the hospital and urgent care visits.
- Utilities: Unless this is included in your rent, you’ll have to budget for this. Our calculator includes the cost of phone service, but it’s a good idea to also consider the cost of water, electricity, gas and cable/internet.
- Taxes: If you own your home, you’ll pay local real estate taxes. These fund city services as well as road repair and area public schools. If moving between states, also consider state income and local sales taxes.
- Education: If you’re sending your children to private school, you’ll need to factor in the cost of tuition, activities and uniforms. Even if your children go to public school, there are usually activity fees, field trips and fundraisers to budget for.
- Child care: If you work full time, you’ll need to consider the cost of daycare for young children.
- Entertainment: Do you like going to sporting events, the movies or maybe the opera? You can factor this cost in your budget by looking up prices for individual events in the area that you might be interested in and comparing them to your current area.
- Miscellaneous: Our calculator includes price comparisons for everything from a haircut or beauty salon appointments to toothpaste, shampoo and dry cleaning. Be sure to price compare through the internet to better judge the cost of goods and services you regularly use.
How To Calculate Cost Of Living
Using a cost of living calculator is the easiest way to help you estimate your costs based on location. However, if you want to crunch the numbers by hand, there’s a simple formula that you can use as long as you have access to the cost of living index rating for each city you’re considering.
[City X Index Value – City Y Index Value) / City Y Index Value] ✕ 100
To start, you’ll subtract the cost of living index value for your current city from the city you’re thinking of moving to. Then, divide the difference by the cost of living index for your current city. Once you have this number, multiply it by 100 to get a percentage. This final percentage shows you how much you’ll need to increase your salary or how much less you’ll need to maintain your current standard of living in the new location.
Cost Of Living FAQs
Now that we’ve gone over the base functionality of the calculator, how it works and where the data is from, let’s run through some of the questions you might have.
Are cost of living calculators accurate?
Cost of living calculators are reasonably accurate. As with any of these calculators, it all depends on the underlying data and the accuracy of any assumptions in the formula. The actual data for our calculator is updated on a quarterly basis for each of the 265 metropolitan areas included.
The goods, services and other living expenses used are standardized so that there’s an apples-to-apples comparison for each metro area.
How can I decide if a city is affordable or too expensive?
Use a cost of living calculator to see how far your current salary will go in each city you’re considering. Once you have this cost of living comparison, look at the percentage to see how much more affordable or more expensive each location is. Ideally, you’ll want to move to a new city that’s less expensive or on par with your current location.
What’s the national average cost of living?
While this is one of the most obvious questions you might have after reading this article, it’s not possible to give a true or accurate national average for cost of living. This is because your cost is going to depend heavily on your lifestyle and habits.
What you can get is median household income: The median household income in the U.S., according to the most recent Census Bureau data, is $70,784.
Which states have the highest cost of living?
The rankings for the next two sections are from World Population Review and compared against a baseline of 100 in order to get the percentage above or below the national average. Here are the highest cost of living states:
- Hawaii: 93% higher than the nationwide average
- New York: 48% above the national average
- California: 42% higher than the U.S. average
Which states have the lowest cost of living?
On the low side, here are the states to look at:
- Mississippi: 16% below the national average
- Kansas: 13.5% under the U.S. average
- Alabama: 12% below the nationwide average
Which cities have the highest cost of living?
For the cost of living in cities, we can use the same ACCRA Cost of Living Index used in our calculator. The national average is 100 and cities are listed above or below that again. Here the metro areas with the highest cost of living:
- New York (Manhattan): 137% higher than the national average
- Honolulu, Hawaii: 92.7% higher than the national average
- San Francisco, California: 84% higher than the U.S. average
Which cities have the lowest cost of living?
Here are the cities with the lowest cost of living:
- Kalamazoo, Michigan: 26% under the national average
- Harlingen, Texas: 23% below the U.S. average
- Muskogee, Oklahoma: 22.7% below the nationwide average
The Bottom Line: Calculating Cost Of Living Is A Must Before You Move
Having a calculator that shows you how far a salary would go in a move is incredibly useful when it comes to comparing your options. Before your move, take a minute to sit down and do the math. If you decide the move is right and you need to buy a home, don’t wait. Start the mortgage approval process with Rocket Mortgage®.
Take the first step toward the right mortgage.
Apply online for expert recommendations with real interest rates and payments.
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