All You Need To Know About The Cost Of Living

When you pay your monthly bills, you probably notice that certain expenses rarely change by much. This list includes things like your rent or mortgage, food, utilities, and more. These purchases are often called living expenses; they’re necessary to maintain your home and maintain our body’s good health. It’s important to be aware of your living expenses and how much you spend on them. Knowing this will make it easier for you to create a budget and live within your means.

What is the cost of living?

Karolina Grabowska/ Pexels | We’ve confused the cost of lifestyle with the cost of living

Cost of living is a way to measure how expensive it is to live in a particular place, whether it’s a country, state, or city. Cost-of-living calculations vary based on who is performing them. Still, in general, the most widely accepted cost-of-living measure is the consumer price index (CPI), a metric published by the Bureau of Labor Statistics (BLS) that calculates the change in prices for consumer goods and services.

The CPI isn’t the only cost-of-living measurement. Any number of organizations or websites could create their own cost-of-living measurements that take various goods and services into account. And there are plenty of cost-of-living calculators available online.

How to calculate the cost of living

John Coletti/ Getty Images | No man can be a good citizen unless he has a wage more than sufficient to cover the bare cost of living

To calculate the cost of living, you will need to consider the prices of necessities and how much of your budget you will need to spend on them. There will be different costs of living in different cities, and the factors you take into account for comparison will depend on your circumstances and long-term plans. For instance, you will have to include the cost of childcare if you have children and the cost of buying a house if you plan on settling permanently in the new city or town.

You can use a living expenses calculator to estimate what your cost of living budget is likely to be if you move to a different city or town. Here are some expenses you would have to factor in:

Food

Food prices, including basic staples, vary from area to area. That will affect your budget, as will your choice to cook or eat out. Cooking all your meals at home can save you a lot of money, and more so if the city you live in or are planning to move to doesn’t impose any sales tax on groceries. You can trim the budget further by deciding to eat more vegetables and by being more conscious about not wasting food.

NEOSiAM 2021/ Pexels | The cost of living hasn’t affected its popularity

Transportation

If you have your own car, you will have to factor in all the costs that come with it, such as fuel, parking, tolls, maintenance, and repairs. While commuting by public transport or carpooling can help cut costs, these options may not be available in all cities and towns. If you have to drive far to get to work or to various locations as part of your job, you will have to factor that into your expenses as well. In some cases, your employer may compensate you for these expenses.