We can’t think of another variable that is anywhere near as important as finding out the cost of living before moving to a new state, city, or town. We hear the term “cost of living” thrown around quite often, though not many people are aware of what it is exactly.
The “cost of living” is essentially the amount of money you need to sustain a specific type of lifestyle in a given environment.
Think about it. The price of goods and services are very different in Los Angeles than they are in Miami, for example. When you calculate the cost of living, you are calculating how affordable it would be for you to live in a specific area.
There are many different factors that go into calculating the cost of living, including the affordability in the housing market, transportation expenses, entertainment costs, food costs, and more. You also have to consider the fact that levels of income vary from region to region, so you must measure level of income against these expenses.
Breaking Down the Cost Of Living
- Housing: The largest bill that consumers pay on a monthly basis is for housing, according to the U.S. Bureau of Labor Statistics. No matter if that is rent or mortgage, you can be sure that the majority of your salary will be put toward your house expenses. As we know, rent prices and property taxes can vary greatly from state to state and city to city. Homeowners must also take into consideration any taxes, upgrades, and fees.
- Transportation: You must factor in transportation when breaking down the cost of living unless you are one of the few lucky people who work from home. Transportation costs include gas, parking, car repairs, tolls, etc. Next to housing expenses, transportation costs are typically the largest.
- Entertainment: Want to go out for a drink? How about a movie? Maybe a ticket to your favorite sporting event? These things add up. On average, Americans spend the same on entertainment in a year than they do on insurance.
- Food: If food costs are pretty high where you live, the weekly trips to the grocery store can add up pretty fast. American consumers spend around $6,000-8,000 per year on food. You can always cut back by eating out less and shopping at discount stores, though it is important to note that food is one of the larger costs in this equation.
Finding Comfort In Your Cost Of Living
Whatever you ultimately decide, it is important that you are comfortable with your cost of living. You don’t want to end up running yourself dry every month because you didn’t account for specific costs.
Here at NESWork, we’re all about helping our clients make the right decision when it comes to buying a home. If you’re ready to take the leap, we’re here to provide oversight along the way.