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Cost Of Living Comparison Calculator

Written by Mia Taylor | Edited by Michele Petry

Cost of living is the total amount of money required to live in a certain area and cover your basic necessities. Expenses typically factored into cost of living calculations include housing, food and taxes. It may also include such expenses as transportation, health care, entertainment and education. Cost of living calculators are useful in comparing the expenses associated with different cities or regions. The information can also be used to help you determine or negotiate the salary you’ll need in order to cover your basic needs in a particular city. Costs can vary dramatically from place to place — this cost of living calculator can help you understand the differences between two cities.

Data source:  ACCRA

Necessary vs discretionary spending

Necessary spending is the money used to cover basic or essential needs, such as housing and food. Necessary expenses are living costs that cannot be avoided. The term discretionary spending, on the other hand, is used to describe non-essential costs. These might include recreation, entertainment or other items consumers purchase when they have money leftover after necessary expenses are covered. Discretionary spending could also include luxury goods and travel. Discretionary spending is influenced not only by how much disposable income one has remaining after paying for essential expenses, but also by the overall economic climate. People generally feel more comfortable spending on non-essential items when broader economic conditions are positive.

Cost of living index

A cost of living index is a city-to-city comparison of the cost of living in each place, based on a variety of consumer expenses and spending categories. Typically, the index is based on expenses such as food, housing, utilities, transportation, health care and other goods. For most cost of living indexes, the number 100 is used to represent the national average cost of living. Each city or region is given a number that’s either above or below 100, which is a barometer that consumers can use to gauge how the cost of living in a particular city relates to the national average. There are various cost of living indexes available online including:

In addition, the U.S. Bureau of Labor Statistics publishes the widely referenced Consumer Price Index, or CPI. This index measures changes in prices for goods and services purchased by urban households. It also includes such consumer expenses as water and sewer service fees and sales and excise taxes. The CPI does not, however, include costs associated with income taxes or money consumers spend on investments like stocks, bonds or life insurance.

What’s included

Cost of living calculations are based on various key necessities and expenses. These include:


Housing is considered a necessity, an essential cost of living that cannot be avoided. This expense may be a mortgage or rent, and it is typically the single biggest expense for consumers. The 2020 Consumer Expenditure Survey published by the Bureau of Labor Statistics found that housing expenses accounted for 29 percent of average budgets, or about $21,409 annually. Depending on income level, some consumers spend significantly more than that.


Similar to housing, food is a basic need. It is the third largest expense category for consumers, behind housing and transportation respectively. In 2020, American households spent an average of $7,316 on food, or 10 percent of their budget, according to the Consumer Expenditure Survey. But depending on their income, American consumers may spend anywhere from about 12 percent to slightly more than 14 percent of their annual income on this category.


Lifestyle plays a significant role in cost of living expenses and includes the cost of items above and beyond necessities such as food and housing. This category of expenses could include clothing, entertainment and personal care such as haircuts and more.

Additional costs to consider

Housing, food and lifestyle expenses are merely the tip of the iceberg when it comes to the true cost of living. Health care, childcare, education, transportation and utilities are additional necessities that combine to create the overall cost of living for the average individual or family. Transportation costs are often the second largest cost for most people. Consumers spend about 14 percent of their annual budget on this necessity, which amounts to about $9,826, according to the Consumer Expenditure Survey. Health care is also one of the most significant expenses consumers face, eating up about 7 percent of a consumer’s annual budget, or about $5,177. Education costs meanwhile amount to about $1,271 annually.

How to use this data

Cost of living information can be helpful to make comparisons between two or more cities and determine how much money would be required to make ends meet. This information is important when job searching or when considering relocating or purchasing a home in a new part of the country, or even the world. The information provided by a cost of living index can help you get a realistic snapshot of living expenses and create a budget. This information can also help you determine whether or not you can afford to live in a particular location at all.


What factors should I consider before relocating?

The overall cost of living — including all the factors discussed above — should be a major consideration when contemplating relocating. It’s also important to think about related factors, such as housing availability, job opportunities and local taxes. You may also want to look into the quality of local schools and health care.

How much should I spend on necessities including housing?

A general rule of thumb is to keep your spending on necessities, such as housing and food, to no more than 50 percent of your take-home pay. This is based on the 50/30/20 budget rule, which recommends spending 50 percent of your income on basic necessities, 30 percent on discretionary items and stashing the other 20 percent away as savings.

Can I afford to move to a new city?

Using a cost of living calculator can be a helpful way to determine whether or not you can realistically afford to live in a particular city. Consider your income and expenses carefully, and also give careful thought to how you want to live. Do you enjoy eating out and nightlife? Do you want to live in the center of town or in the quiet outskirts? Do you want to own or rent? How much time and money are you willing to put into commuting? All of these factors, combined with your necessary spending costs, should factor into your decision.