How to compare the cost-of-living in different places

Put simply, the cost of living is comprised of the basic costs that come with everyday life. If you’re contemplating relocation, it’s smart to make a cost-of-living comparison a priority. Understanding how your current/potential income will support your lifestyle where you are today versus where you relocate is critical to finding the best place to live and enjoying a comfortable life.

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Top factors affecting cost of living

A mix of factors comprises the cost of living. They’re the essentials, the products, and services we all need from day to day. Since these don’t change, no matter where you are, cost-of-living comparisons are indispensable for people of all income levels when exploring new places to live.

Housing

It stands to reason that the single most valuable asset people own is the biggest factor in a cost-of-living comparison. Adding to its importance is the fact that housing prices can vary significantly from region to region, town to town. What might buy you a one-bedroom apartment in downtown San Francisco may buy you a mini-mansion outside Omaha. Property taxes and utility bills can be factored into overall housing costs or measured independently.

If you’re a renter, the same basic principles apply.

Food

If you live on seafood, a move from Florida to Wyoming may be a shock to the diet and the pocketbook. Fresh fruit and vegetables in the winter? They’ll probably cost a little more up North than down South. This is just an example of how food prices can vary from region to region.

Grocery stores are a factor too. Food deserts (locales that don’t have easy access to affordable, healthy food) are real. It’s also a reality that smaller (often more rural) grocery chains don’t have the buying power of larger ones. Those added costs trickle down to you, the consumer, and can add up over time.

Transportation

Transportation costs are affected by things like gas prices, availability and reliability of public transport, parking, tolls, and commute distance/duration. If you’re thinking of moving to a metropolis, a five-mile trip downtown may be a half-hour drive, plus time to find parking. On the other hand, a five-mile trip in a rural setting may take five minutes, with bountiful free parking no matter the destination.

If a big city is in the cards, keep in mind that many urban employers offer transportation subsidies or pre-tax options for commuters.

Healthcare

Like anything else, healthcare costs are determined by the market—supply and demand. It’s important to understand the accessibility you’ll have in your new place of residence. Your current insurer may have dramatically different prices just one state away. For example, some of the least-populous states in the U.S. (e.g., Wyoming, Nebraska, Oklahoma) have had the highest ACA (Affordable Care Act) premiums. There simply aren’t as many providers.

Taxes and fees

This is a big one. Taxes and fees are worked into the prices we pay in many different areas—fuel, property, utilities, food, etc. Local governments can have wildly different approaches to collecting tax revenues from residents. In fact, a handful of states don’t have income and/or sales taxes. Some due diligence in this area can go a long way for your budget.

Helpful cost-of-living comparison resources

You don’t have to do this on your own. There are all kinds of updated metrics and tools online that can help you customize your cost-of-living comparison. From branches of government to financial and real estate firms, there are many credible resources available.

Consumer Price Index (CPI)

The Consumer Price Index is compiled every month by the Bureau of Labor Statistics (BLS). It’s the price of a weighted average market basket of consumer goods and services purchased by households. The BLS website makes it very simple to compare the CPI and other economic factors by state or region.

Comparison tools

There’s an abundance of online tools to help with your cost-of-living comparison. They allow you to personalize factors like the ones we’ve discussed and compare locations in different ways. Find a tool you trust, or combine the outputs from a few different ones, to establish the data points and benchmarks that matter most to your move.

Family Budget Calculator

The Economic Policy Institute (EPI), a nonprofit, nonpartisan think tank, offers this free tool to help compare costs in more than 3,000 counties and 600 metro areas. Input a location and your family size and the tool will present estimated costs of the factors we’ve discussed using authoritative and current stats. There’s even a map function that compares the income needed.

If you’ve decided it’s time to move, learn how you can nail your move with a moving day checklist.