Cost of Living Calculator: Compare and Estimate Expenses for Financial Choices

Last Updated : Oct. 17, 2023, 11:48 a.m.

Cost of living refers to the expenditure required in a certain area to sustain life through basic necessities in a specific area of a country. The necessities include housing, food and clothing. The value of every product or service varies across the cities, states and countries. It leads to the necessity of comparing the cost to finally perform a cost of living comparison. It is possible to easily perform the comparison through the cost of living calculator.

Cost of Living Breakdown

Besides the most important cost of living components stated previously, the list may also include expenditures in entertainment, healthcare, education, transportation and others. Here’s how they affect:

Housing Cost

The housing cost involves mortgage values, rent or taxes to be paid on owning the house. It is among the largest bills paid compared to all the expenses of an individual. The value of each varies even in cities, let alone the states and countries. Additionally, the maintenance, upgrades, fees and taxes are among the spontaneous and unavoidable expenses. Managing the housing cost is effortless through the 28/36 rule. Here, 28 indicates an allowance to spend a maximum of 28% of the monthly gross income on housing. 36 indicates an allowance to spend 36% of monthly gross income on total debt. Housing includes mortgage or rent, and total debt includes housing debt along with all other debts.

Transportation

If you are not working from home, the travel expenditures will definitely be considerable enough to manage them in your budget. It is the second largest expenditure of an individual in a month. The spending goes into using public transportation, driving cars, gas, parking, motor-related costs, rentals, insurance, leases, tools and auto purchases. One of the easiest ways to manage is to ensure proximity to home and workplace.

Healthcare

The health care costs are comparatively higher in America. The health insurance companies make a lot from the individuals. Other healthcare costs, which are also high, include medical services, drugs and supplies. Thoroughly comparative information on expenses through both methods helps to make wise decisions.

Entertainment

Though not a complete necessity, it makes it challenging to live without. The expenses encompass activities such as pints of beer, box seats at baseball, movie tickets or any other places to visit. Managing them in the budget completely depends on your decision.

Food

It is a basic necessity, however manageable, depending on the choices you make. The areas with grocery costs tend to end up with more of the expenditure. Eating outside will add to the expenses. Hence, keeping aside an estimated lump sum is important to not mess up the budget or cut out the other expenses.

Miscellaneous Goods and Services

The miscellaneous goods and services include expenses on items like:

• Computers
• Appliances
• Legal advice
• Personal care products and services
• Computers
• Landscaping services
• Tobacco products
• Gym memberships
• Subscriptions
• Education costs
• Finance charges

Types of Spending

An idea about the type of spending helps you analyse your spending habits and accordingly make a decision. These are of two types: necessary and discretionary spending. The necessary spending refers to the basic or essential needs that are unavoidable. It includes housing and food, without which one can not sustain a life. Discretionary spending refers to non-essential costs. The spending here includes the usage of money in entertainment, recreation, purchases and others. These are often performed after completing the necessary expenses or after keeping aside the budget for it. These include luxury goods and travel. The positive economic conditions of the area encourage this spending.

Cost of Living Index

It is the numerical value that helps in performing a cost of living comparison. It aids in comparing the affordability at old and new areas of residence. The obtained value can be interpreted in two ways. It can either be taken as the national average as a benchmark or a base score of 100 for a specific city. The cost of living index will estimate comparing two locations will indicate the higher or lower expenditure between the two.

Using Cost of Living Calculator

Using the cost of living calculator is easier owing to the user-friendly interface. Here is the stepwise method on how to use it:

Step 1: Enter the City you are moving from

Step 2: Enter the city you are moving to

Step 3: Enter your current income

Step 4: Click on ‘Refresh Listings

You will get the results.

Let us use it to compare between different cities.

Step 1: I selected Tucson, AZ

Step 2: I selected Savannah, GA

Step 3: The entered amount in current income was $50,000

Step 4: The result was the requirement of earning $43,750. It further stated the lower cost of living in the new city, which is less by 12.50%. The estimate indicates the requirement to earn to maintain the same standard of living as previously.

Wrapping Up!

The cost of living calculator is an important tool to consider when switching or looking for new jobs in a different state from current residence. Understanding your salary requirements and negotiating the amount varies according to one’s experience level. However, knowing the estimate of the cost of living helps you place yourself in a better position during discussion. We recommend performing a cost of living comparison through a cost of living calculator to better estimate the appropriate state of living according to all the factors associated with your career and living.

Frequently Asked Questions