Cost of living (COL) measures how much it costs to maintain a standard of living in different cities, considering housing, food, transportation, healthcare, utilities, childcare, taxes, and discretionary spending. When comparing cities, COL calculators normalize these expenses to help you understand salary adjustments needed to maintain your lifestyle.
City-to-City Basket of Goods
COL comparisons use a "basket of goods" approach—a weighted set of categories representing typical household spending:
- Housing: Rent (market medians) or ownership costs (PITI estimate: Principal, Interest, Taxes, Insurance). Housing typically accounts for 30–40% of total COL.
- Utilities: Electric, gas, water, internet, phone—varies by climate, home size, and local rates.
- Groceries: Food at home; prices vary by region (e.g., fresh produce costs 20–40% more in Alaska/Hawaii).
- Transportation: Gas, insurance, car payments, maintenance, or transit fares—urban vs. suburban trade-offs.
- Healthcare: Insurance premiums, out-of-pocket costs, prescription drugs—varies by state Medicaid expansion and market competition.
- Childcare: Daycare, after-school programs—can exceed $1,500/month per child in metro areas.
- Taxes: State/local income tax, property tax, sales tax—high-tax states (CA, NY, NJ) vs. no-income-tax states (TX, FL, WA).
- Entertainment/Other: Dining out, recreation, clothing, personal care—discretionary spending that scales with local prices.
Rent vs. Own Toggle
Rent: Uses market median rent for typical apartment/house sizes in each city. Renters avoid property tax, insurance, and maintenance but face annual rent increases (3–10% in hot markets).
Own: Estimates monthly ownership costs as PITI—Principal + Interest (mortgage payment), Property Tax (~1–2% of home value annually), and Insurance (~0.5–1% annually). Ownership builds equity but requires down payment, closing costs ($5k–$15k), and ongoing maintenance (~1% of home value/year). The calculator uses property price medians and typical mortgage rates to approximate monthly costs—not a lender quote.
Household Size Scaling
COL calculations scale with number of adults and children. Housing remains relatively fixed (a family needs a 3-bedroom whether housing is cheap or expensive), but groceries, healthcare, childcare, and transportation scale per capita. For example:
- 1 adult: baseline costs
- 2 adults: +40–60% on food/healthcare; housing +20–40% (larger unit)
- 1 child: +$500–$1,500/month (childcare, food, healthcare)
- 2 children: +$1,000–$2,500/month (daycare for both or school-age care)
Tax Considerations
When the Include taxes toggle is enabled, the calculator estimates state and local income taxes plus FICA/payroll taxes (7.65% for employees) to compute the gross salary needed to maintain your after-tax purchasing power. For example, moving from Texas (no state income tax) to California (up to 13.3% state tax) requires a 10–15% higher gross salary to achieve the same take-home pay.
Sales tax is implicitly included in category prices (e.g., groceries, dining out), but property tax is only modeled in the "Own" housing option. High-property-tax states (NJ, IL, TX) can add $500–$1,500/month to ownership costs.
PPP (Purchasing Power Parity) Adjustment
PPP normalizes international comparisons by adjusting for differences in purchasing power across countries. For example, $1,000 in the U.S. might buy the same basket of goods as €850 in Germany or £750 in the UK after PPP adjustment. Enable PPP when comparing cities in different countries to account for currency strength and local price levels beyond nominal exchange rates.
Within-country comparisons (e.g., NYC vs. Dallas) don't need PPP—the calculator uses local price indices directly. PPP is most useful for cross-border relocation (e.g., San Francisco to London, or Toronto to Sydney).
Currency Selection & Conversion
The calculator supports multiple currencies (USD, EUR, GBP, CAD, AUD, etc.) and applies current exchange rates to all outputs. When comparing international cities, select the currency you're most familiar with (usually your current salary currency). Results display in that currency, making salary comparisons intuitive.
Exchange rates fluctuate daily; a 5–10% swing can significantly affect required salary estimates. For long-term planning, consider using 3-year average exchange rates instead of spot rates.