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Cost Of Living: Comparison And How To Calculate

Holly Shuffett9-minute read
October 11, 2022

There’s an endless supply of NYC and LA home tour videos online, usually showcasing loft apartments or studios – many under a mere 100 square feet. While such limited space has inspired interior design innovations, why are such tiny apartments so costly? The answer: NYC and LA have famously high costs of living. 

In this article we’ll be exploring the cost of living, or how much money you need to afford life’s necessities. Wherever you wind up, cost of living should be an essential consideration before making the leap.

Knowing how cost of living is calculated and how it varies across the U.S. can give you more insight on what life will look like in a specific area. Not to mention, how much money you’ll need to maintain your ideal standard of living. 

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What Does Cost Of Living Mean? 

The phrase “cost of living” refers to the amount of money necessary to cover living expenses in a particular area. This number typically includes housing costs, health care, food prices and taxes. Cost of living is typically used when comparing how affordable it is to live in one city versus another. 

Understanding what kind of lifestyle you can afford in a new place is vital when deciding where to move. Not only can cost of living help you narrow down your home search, but if you’re considering relocating for a job, it can give you a better idea what kind of salary you’ll need to live comfortably. 

Since cost of living has such a role in considering where to live, we’re going to help you understand how it works and what it looks like throughout the U.S.

Cost Of Living Index

A cost of living index (COLI) enables agencies to calculate variances from one place to another. The Council for Community and Economic Research (C2ER) is one such agency that collects and interprets this data, with its COLI earning recognition from the U.S. Census Bureau, the Bureau of Labor Statistics and the President’s Council of Economic Advisors.

Each quarter, C2ER tracks the cost differences between participating cities throughout the U.S. by collecting and weighting pricing data on six different categories, including food and housing. C2ER then calculates a composite score for each participating city’s cost of living. 

With a national average set at 100, each city’s index is read as a percentage of 100. This allows C2ER to show how the cost of living changes between metropolitan areas or even at the county level. Remember, when comparing any COLI data, you must use figures from the same quarter for accuracy. 

What’s Included In The Cost Of Living?

Cost of living is a complex measure because it’s made up of many different expenses with prices that range dramatically by location. It’s easiest to think about cost of living in terms of where your paycheck will be going: food, housing, utilities, transportation, health care and miscellaneous expenses. 

Let’s explore each category that makes up cost of living to give you a better idea of what’s included. Keep in mind that the following percentages are rough estimates from C2ER’s Q2 COLI. Numbers will really depend on where you live, what stage of life you’re in and the ever-changing world around us. 


  • Makes up 17.26% of your income 

When factoring food into the cost of living, we’re strictly talking about groceries. While things like dairy, meats, produce, coffee and baked goods are taken into consideration, costs associated with dining out are not included in most indices. 


  • Makes up 30.9% of your income

Most of us are all too familiar with making rent or monthly mortgage payments. Unsurprisingly, housing accounts for the largest chunk of where our salary goes, making it the primary determinant of a city’s cost of living. 

While real estate prices are always prone to highs and lows based on local trends, the costs of owning a home are steadfast. With homeowners insurance, property taxes and association fees, it’s no wonder this figure adds up fast. 


  • Makes up 10.21% of your income

Utilities go hand in hand with housing costs. What good is a home without electrical, gas or water? Utility bills will vary across renters and homeowners, but this essential expense also plays a role in determining an area’s cost of living. 


  • Makes up 7.54% of your income 

Transportation costs consist of bus, train, taxi and other public transportation fare for non-car owners. For car owners, transportations costs can include auto loan payments, gasoline, maintenance, insurance and parking. 

These costs can also depend on your lifestyle, like remote work. However, even with an increase in remote work following 2020, just last year transportation took up closer to 9% of Americans’ income. 


  • Makes up 4.42% of your income

Health care costs can include health insurance, copays, prescriptions, over-the-counter medication and any other out-of-pocket expenses necessary for taking care of yourself. 

Miscellaneous Goods And Services 

  • Makes up 29.67% of your income 

With everything that this category encompasses, it’s no surprise that it accounts for the second largest portion of our income. Miscellaneous goods and services may include clothing, toiletries, entertainment, grooming services, dry cleaning, household necessities or repairs and more. 

How To Calculate Cost Of Living 

Luckily, there are plenty of cost of living calculators available online that let you compare two different locations with ease. 

For those interested in doing the calculation, not to worry. The cost of living formula is also relatively simple:

[(City B – City A)/City A] x 100

Let’s say you currently live in City A, which has an index of 90.9, and want to move to City B, which has an index of 115.1. To compare the cost of living between these two cities, you would complete the following steps:

  • Subtract the index of your current city from the index of the city you want to move to: 115.1 - 90.9 = 24.2
  • Divide the resulting difference by the index of your current city: 24.2 ÷ 90.9 = 0.266   
  • Multiply the resulting quotient by 100 to get the percentage: 0.266 x 100 = 26.6%

So, to maintain your current standard of living after moving from City A to City B, you would need about a 27% increase in your income.

Cost Of Living Comparison 

When deciding where to move, it’s important to understand how much house you can afford. For the same price, you’ll be able to snag a lot more square footage in a Midwest suburb than you would in, say, Manhattan. 

Since the affordability of different U.S. cities will vary, we recommend using our cost of living calculator or the cost of living formula to gain some perspective. Cities with higher costs can affect your quality of life. Things like affording everyday expenses and meeting long-term financial goals may be easier to achieve in areas with a lower cost of living. 

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Cities With The Lowest Cost Of Living

Remember, the benchmark for comparing different costs of living is an average of 100. Cities under 100 are below average in costs, making them a less expensive place to settle down. Here are a few of the most affordable places to live right now, according to C2ER’s Q2 COLI. 

Kalamazoo, Michigan

Kalamazoo, Michigan.
  • Cost of living index: 75.6 
  • Groceries: 79.9
  • Housing: 49.0 
  • Utilities: 94.2
  • Transportation: 93.9 
  • Health care: 99.7
  • Miscellaneous: 86.0 

With a composite cost of living almost 25% below the national average, Kalamazoo is one of our most affordable cities to put down roots. Located in the heart of the Mitten State, if downtown Kalamazoo isn’t enough to satisfy your appetite for fun, you’re just a 2-hour drive from downtown Detroit and just an hour away from Lake Michigan beaches. 

Check out Kalamazoo, Michigan, homes for sale or Kalamazoo, Michigan, market trends today. 

Muskogee, Oklahoma

Muskogee, Oklahoma.
  • Cost of living index: 76.5
  • Groceries: 90.8
  • Housing: 55.6
  • Utilities: 93.1
  • Transportation: 80.5 
  • Health care: 79.8
  • Miscellaneous: 82.6

Located along the Arkansas River, Muskogee is a great option for families searching for an affordable place to call home. Muskogee offers a variety of educational and childcare options - including award-winning public schools and three private schools to choose from. Favorite activities amongst residents include golfing, exploring nature trails and splashing around the River Country Water Park. 

Check out Muskogee, Oklahoma, homes for sale or Muskogee, Oklahoma, trend reports today. 

Harlingen, Texas

Harlingen, Texas.
  • Cost of living index: 77.0
  • Groceries: 79.1
  • Housing: 59.2
  • Utilities: 109.2
  • Transportation: 94.6 
  • Health care: 82.1
  • Miscellaneous: 78.1

Less than an hour drive from South Padre Island, Harlingen offers easy transportation to the Texas coast for dolphin watching, surfing and other water activities. And with a cost of living 23% lower than the national average, this affordable city is a perfect place to settle down. 

Check out Harlingen, Texas, homes for sale today. 

Cities With The Highest Cost Of Living

We may not actively seek out the priciest place to live, but sometimes the most expensive places make up for it with other valuable characteristics. Whether it’s the opportunity of a particular industry – like film and tech in Los Angeles or finance in NYC – the walkability or the bustling nightlife, you might feel called to a larger city. Just be sure to understand the costs before taking the leap. 

With the benchmark cost of living an average of 100, cities above 100 have higher living costs than the national average. Here are some of the most expensive places to live right now, according to C2ER’s Q2 COLI. 

New York City, New York 

New York, New York.
  • Cost of living index: 237.7
  • Groceries: 135.7
  • Housing: 476.6
  • Utilities: 103.0
  • Transportation: 124.2 
  • Health care: 108.7
  • Miscellaneous: 142.6

The Big Apple. The City That Never Sleeps. The Empire State. With diverse populations, job opportunities and entertainment, it’s no surprise that this city is endlessly talked about. Picnic in Central Park, explore the famous Strand Bookstore with a coffee in hand or catch a show on Broadway. Whatever your interests are, there’s no shortage of things to do in this big city. 

Check out New York, New York, homes for sale or New York, New York, trend reports today. 

San Francisco, California 

San Francisco, California.
  • Cost of living index: 183.6
  • Groceries: 132.6
  • Housing: 304.1
  • Utilities: 134.0
  • Transportation: 142.5 
  • Health care: 128.5
  • Miscellaneous: 123.4

Best known for its steep streets, streetcars and the iconic Golden Gate Bridge, San Francisco has a lot to offer. Which is perhaps why it’s one of the most populated cities in the U.S. – with housing expenses that triple the national average. But with a booming economy and plentiful job opportunities from Silicon Valley, the Fog City could be the right fit for you if you can comfortably afford it. 

Check out San Francisco, California, homes for sale or San Francisco, California, trend reports today. 

Los Angeles, California 

Los Angeles, California.
  • Cost of living index: 155.1
  • Groceries: 113.0
  • Housing: 241.9
  • Utilities: 109.1
  • Transportation: 127.5 
  • Health care: 112.3
  • Miscellaneous: 118.4


Dreamers flock to Los Angeles: aspiring actors, writers and directors, tech start-ups and the recent influx of influencers. Everyone’s in LA lately. And despite the costly prices, many seem to think it’s well worth it. From year-round sunny weather and celebrity sightings to the happening food scene, there’s a lot to love about the City of Angels. 

Check out Los Angeles, California, homes for sale or Los Angeles, California, trend reports today. 

Cost Of Living FAQs 

What is a cost of living calculator? 

A cost of living calculator calculates the affordability of different cities using a cost of living index. This can give you a better idea of how much more expensive, or inexpensive, a different city is compared to your current area. 

How accurate is the cost of living index? 

The C2ER Cost of Living Index provides a reasonably accurate measure of cost of living differences among urban areas. Items included in their COLI are carefully weighted to accurately reflect consumer expenditures and are based on government survey data. You can find more on C2ER’s methodology here

What costs should I consider when relocating? 

Relocating, especially if you plan to move out of state, has plenty of costs beyond the purchase price of a new home. In addition to comparing your current city and a new city’s cost of living, here are some other expenses you should consider: 

  • Hiring a real estate agent local to the area you’re interested in 
  • Moving truck rental or interstate movers 
  • Temporary housing, as needed
  • Travel arrangements

What is the average cost of living in the US? 

The C2ER cost of living average is 100, with figures above or below representing a city as more expensive or less expensive, respectively. 

How much should I be spending on housing? 

Housing expenses vary not just by state, but by city. The most important thing when it comes to buying a home is to stay within your own budget. Homeownership is no small feat, so before beginning your home search, consider using a home affordability calculator or researching the 28/36 mortgage-to-income ratio rule to see how it can work for you. 

The Bottom Line

Cost of living refers to the amount of money required to afford necessary expenses like housing, food and health care to maintain a particular standard of living. Cost of living is considered relative to average incomes and may be used as a metric when comparing the livability of different cities.

Understanding cost of living can help you prepare for moving or purchasing a house in another city by helping you understand everyday expenses and housing costs of the new location. If you’re relocating for a job, it can also help you determine how much salary to request by comparing your current city and your new city. 

Try doing your own comparison with our cost of living calculator or find a real estate agent to learn more about costs in your future location.

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Holly Shuffett

Holly Shuffett is a staff writer who writes with a focus on homeownership and personal finance. She has a B.A. in public relations from Oakland University and enjoys creative writing and reading in her free time.