March 11, 20247-minute read
Author: Kevin Graham
Share:
Thinking of moving to a new city? Before you order that moving truck and start filling boxes with sweatshirts, dinner plates and books, you should determine how much more, or less, it might cost you to live in your new neighborhood. Maybe homes cost tens of thousands of dollars more in the city in which you want to live. Maybe the town you are dreaming of settling in lacks public transportation, meaning that you’ll have to spend big dollars for a new car. Or maybe your new community boasts lower-cost housing, grocery stores with less expensive produce and an affordable commuter train. Depending on the cost of living in your new community, you might have to budget more for your monthly expenses. But even if your new city is less expensive, it’s important to determine how your monthly spending might change after your move.
What Is Cost Of Living?
Think of cost of living as how much money you'll need to make – and spend each month – to maintain your current standard of living in whatever location you move to. People most commonly use cost of living to compare how expensive it is to live in one city or state versus another. Say homes cost an average of $300,000 in the city in which you live now, and you want to move to a suburban area in which homes cost an average of $370,000. The cost of living in the community in which you want to live will probably be higher than in the one in which you currently reside. Say gas costs $3.50 a gallon where you live now but just $3 in the community in which you want to live. If you drive often, you might lower your cost of living by moving to a community where it costs less to fill up your tank. Knowing an area’s cost of living is helpful if you’re trying to determine how much home you can afford. That’s because doing a proper cost-of-living analysis will give you a more accurate view of your budget than will looking at the cost of homes only. If homes are more expensive in the area in which you want to live but everything else is cheaper, your cost of living might not increase that much, and you might not have to tweak your monthly spending budget by much, either. Knowing the cost of living in an area can help you make the best financial decision when determining where to move. Fortunately, you can quickly determine the cost of living in different cities across the United States by using a cost-of-living calculator located on this page. Just enter the city in which you live, the city to which you want to move and your current pretax household income. We can then tell you how much or less you might spend in your new locale. Trying to determine the cost of living in a community? These are the factors that you should consider when trying to calculate how much more or less you might spend in your new hometown.The Factors That Go Into Cost Of Living
Find out how much you can afford.
Your approval amount will give you an idea of the closing costs you’ll pay.
See What I Can Afford
The Cost-Of-Living Index
The Council for Community and Economic Research (C2ER) has created its own cost-of-living index. With the information from the council's index, organizations, government bodies, lenders and other institutions, can compare cost-of-living data from different cities against a national average, which helps consumers determine which cities or areas are more or less expensive places to live. The C2ER assigns 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. Cost-of-living calculators can help you determine how far your current salary will go in different cities so you can make an informed decision about your future.
How To Calculate Cost Of Living
In order to calculate the average cost of living in a certain area, add up the average costs of several living expenses in that area. This includes everything from housing, food, utilities, transportation and anything else that you’ll have to pay on a regular basis. Using a cost-of-living calculator is the easiest way to estimate whether it's more or less expensive to live in a particular city or area. But if you want to crunch the numbers by hand, there’s a simple formula that you can use if 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 1. Subtract: Start by subtracting the cost-of-living index value of your current city from the city you’re thinking of moving to. 2. Divide: Next, divide the difference by the cost-of-living index of your current city. 3. Multiply: Once you have this number, multiply it by 100 to get a percentage. 4. Assess: This final percentage shows you how much you’ll need to increase your salary or income by or how much less income you’ll need to maintain your current standard of living in your new location.
Cost-Of-Living Calculations: Comparing Costs
It’s helpful to know the average costs of different goods and services across the country when determining whether an area in which you want to move has a higher or lower cost of living. The table below lists several key costs and how high they tend to be on average in the United States.
Cost Of Living Factors To Consider | National Average Cost |
Housing | The median existing-home sales price was $387,600 in November of 2023, according to the National Association of REALTORS®. |
Transportation | Households spent an average of $12,295 on transportation costs in 2022, according to the Bureau of Transportation Statistics. |
Sales taxes | The Tax Foundation reported that as of July 1, 2023, California charged the highest state sales tax of 7.25%. Some states, such as Delaware and New Hampshire, charge no sales taxes. |
Food | The U.S. Department of Agriculture reported that in 2022, households earning the lowest incomes spent an average of $5,080 on food each year, while those with the highest incomes spent an average of $15,713 on food each year. |
Utilities | The U.S. government's EnergyStar program estimates that the average annual energy bill for a typical single-family home is $2,060. |
See What You Qualify For
Congratulations! Based on the information you have provided, you are eligible to continue your home loan process online with Rocket Mortgage.
If a sign-in page does not automatically pop up in a new tab, click here
Cost Of Living FAQs
Questions about the cost of living where you live or where you are planning to move? Here are the answers to some of the more common. Cost-of-living calculators are reasonably accurate. It all depends on the underlying data and the accuracy of any assumptions in the formulas that calculators use. Of course, your specific cost of living will depend on your lifestyle. The easiest way is to rely on a cost-of-living calculator. The data powering these types of calculators typically focus on the costs of essential items such as housing, rent, food, transportation, health care and other factors. Just enter the city where you are living and the area you want to move to calculate your new possible cost of living. The calculator will tell you how much more or less you’ll need to make to maintain your standard of living in the community in which you want to live. Several daily living expenses determine how much it costs to live in a community. These include the costs of housing, food, transportation, education, health care, utilities, taxes, child care, entertainment and other miscellaneous costs. The best time to use a cost-of-living calculator is when you’re ready to move. You can use these calculators to help determine whether you’ll need more income to move to a certain city. You can also use these calculators to find a community in which daily expenses cost less, letting you stretch your dollars.Are cost-of-living calculators accurate?
How do I do a cost-of-living comparison?
What does ‘cost of living’ include?
When should I use a cost-of-living calculator?
The Bottom Line: Use A Cost-Of-Living Calculator Before You Move
Want to make sure that you can afford your dream city or town? Don’t forget to plug your new destination’s information into a cost-of-living calculator. And once you’ve found the neighborhoods you want to live in, you can start the mortgage process with us.