Why Cost of Living Matters
Cost of Living is a hidden cost that must be considered when comparing employment opportunities across the United States. The cost of living reflects most monthly expense, including food, utilities, transportation, and health care. However, the biggest factor in calculating cost of living is housing. Since everyone needs a place to live close to where they work, the housing situation can varies greatly between locations. Moving from one city to the next in order to get a raise can actually cost more money that the raise is worth.
Let’s see what your money will buy you in different cities. There are many cost of living calculators out there; this one uses data from bestplaces.net. Also, I included data from realtor.org showing the median home prices in the different cities. The base salaries we will use in this case is $60,000/year, and we use a 20% down payment on a 5.25%, 30-year loan to calculate the payment.
|City, State||Median Home Price||Mortgage on Median Home||Cost of Living||Equivalent salary|
|New York, NY||$404,000||$2,677.08||159||$95,400|
If a person making $57,000 we to move to Madison for a $62,000 salary, he would actually be economically worse off than if he were to stay. Similarly, he would be worse off if he moved to New York for an $80,000 salary. Other reasons come into factor when comparing employment options across cities. However, cost of living is a major factor to consider.