Determining the cost of living in another city, state, or country can be a long process, but it’s necessary if you want the same lifestyle you have now. You could use a cost of living calculator, but it may not be the most accurate information. These are the steps you should take to figure it out on your own.
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Calculate Household Salary
The first step of determining the cost of living between states is calculating your household salary. This is the total amount of money you bring home annually before taxes. Make sure it's before taxes, because the taxes in your new city will likely be different. While federal taxes are the same, every city and state removes a varying amount of money.
The household salary is the number you’ll need even if you plan on getting another job or living by yourself. Those that split bills between roommates need to include any money that is spent by both sides, as you may soon be responsible for all of your cost of living.
Add Expenses
The cost of living is calculated by determining how much money you need to pay all of your bills. Most people want to maintain their lifestyle, so if you earn enough money to pay $700 for rent, you won’t want to downgrade to $500 rent and a smaller place in a larger city. Unfortunately, this may be necessary depending on where you want to move.
Adding all of your expenses can be a tedious process because you need to include utilities, clothes, groceries, entertainment, and anything else on which you spend money. As you add everything together and find out the averages, try to estimate high. Averaging low could put you in a situation where you don’t have enough money for the same lifestyle.
Research Taxes of New City
Federal taxes remain the same no matter where you live, but state taxes change throughout the United States. For example, some states have a flat tax for every resident while others collect local sales taxes that adjust the median cost of goods. According to Tax Foundation, 45 states collect statewide taxes and 38 states collect local sales tax. Research the local and state taxes for the new city.
Determine Salary and Expenses of New City
Just as you did before, you need to determine the income and expenditures for the new city. Your new job may pay a different amount, which directly affects your cost of living. Additionally, paying more for goods could change your lifestyle. For example, living in New York City could easily cost you over $1,000 per month in rent for a tiny apartment. However, $1,000 monthly rent could get a nice apartment in a suburb in Georgia.
Analyze the Cost of Living
After adding everything together, your potential salary should be equal or less than your expenditures. If the pay for your new city is too low, you may need to figure out where to cut expenses. A salary that is much higher than costs allows you to live a better lifestyle or invest more into retirement.
