How to Compare the Cost-of-Living In 2 Cities
Are you considering moving to a new city?
Whether you are deciding to accept a new job or just looking for a change of pace, it is wise to determine how the move will affect your wallet. Though the average rent has soared nationwide during the past year, the average rent for an apartment still differs greatly from place to place, as do the price of goods and services. There can be a dramatic difference in the cost-of-living between cities, as New York City, San Francisco, and Los Angeles top the list of the most expensive markets for renters. Because moving can alter your living expenses, you should be aware of the salary adjustment that is necessary in order to maintain your current standard of living.
So, how do you determine how your prospective city stacks up to your current home? I tested numerous Cost-of-Living and Salary Adjustment calculators to find the 3 easiest tools to find out.
I decided to compare these calculators with the assumptions that I live in Washington, DC and am considering moving to NYC and my current salary is $60,000. And here's what they had to say...
This calculator really spells it out for you. It not only compares the overall Cost-of-Living indexes, but also breaks it down in food, housing, utilities, transportation, health, and miscellaneous.
Don't worry, they don't make you interpret that for yourself. Apparently, I have to make $74,789 in NY to maintain the same standard of living as when I am making $60,000 in DC.
aka NYC is 24.6% more expensive to live in than DC
That doesn't sound too bad. Let's try another one.
Ok, this calculator looks at 3 main components
a. "Supply and Demand factors reflected on the salary ranges for a particular city,"
b. State taxes, and
c. "Regional Consumer Price Index (CPI) information."
And the survey says...
Ouch. So if I want to maintain the same standard of living and not cut into my disposable income too much, apparently i have to make $85,000 a year in NY
$85,000... hmm that's a lot higher than $75,000. If this calculator is right, NYC is looking a little more out of reach.
And DC is looking even better...though the average pay is higher here than average, the Regional CPI is actually less than the U.S. City average.
3) The Cost-of-Living Wizard
This is probably the most widely used calculator that I saw, as many sites have incorporated it into their pages. I would recommend visiting The New York Times for this tool, as they provide a lot of other useful information too.
Ok, so what does the Wizard have to say?
Apparently, the Cost-of-Living is 55% higher in NY, but at least I can expect an 11.4% higher salary.
Oh wait, apparently that's not enough of a pay raise to maintain my standard of living. I would be earning just under $67,000 a year if my salary was 11.4% higher, but they say that I would need to make $92,997 in NY to live like I do in DC on $60,000.
As I found out, there is a pretty substantial difference between these calculators. I wish I could tell you which one is the most accurate, but I have no idea. I guess the one you chose to believe depends on how much risk you are willing to take. I like the numbers from the first calculator the best, but I would rather not find out the hard way that I cannot afford living there.
The bottom line is: at least know what you are getting yourself into and how moving will affect your standard of living and disposable income level. Comparing the cost-of-living in one city to another helps you determine whether you should accept a job opportunity and lets you make a more informed decision about moving to another city.