Cost of Living Comparison by City: Essential Insights

Accepting a new job offer or searching for a new one can be a tedious process. One of the ways to navigate through it is by taking a close look at the cost of living comparison by city. You have to take a living expense calculator to figure out the cost of living in your preferred cities. This strategy will help you know if the new wage will provide a comfortable lifestyle in the new city.

In this guide, you will discover what the cost of living is, how to calculate the cost of living between cities, and also know the importance of making such comparisons.

Table of Contents:

1. What is the Cost of Living?
2. Why is Comparing Living Expenses Between Cities Important?
3. How to Calculate the Cost of Living Between Cities?
4. How to Analyze the Cost of Living Comparison by City?
5. How to Visualize Your Data in Power BI?
6. What are the Best Practices for Comparing the Cost of Living?
7. Wrap Up

First…

What is the Cost of Living?

The cost of living is the money needed to cater for basic living expenses like food, housing, healthcare, and taxes in your desired location and in a given timeframe. Cost of living is usually used to compare how living expenses in a certain city differ from that of other cities.

If living expenses in a city are high, then the wages in the city are most likely high. This way, people living in the city will be able to afford their basic needs. To effectively manage these expenses, individuals can use a monthly budget in Excel to track and plan their finances.

Why is Comparing Living Expenses Between Cities Important?

Here are reasons why you should compare living expenses between cities.

• Salary Negotiations

The cost of living in a city is put into consideration when it comes to negotiating salaries between employers and employees. Jobs in high-cost cities come with higher salaries than similar jobs in low-cost cities. And that’s because the cost of living in high-cost cities is higher than that of low-cost cities.

• Education Choices

Families with students use cost of living comparison to identify the affordability of colleges (or universities) in different cities. This includes daily living expenses, housing, and tuition.

• Relocation Decisions

Several reasons influence your decision to move to a new city. These could be personal reasons, living conditions, or job opportunities. Employing data-driven decision-making, such as analyzing living expenses, will help you determine if your income can sustain you in the new city.

• Financial Planning

A good understanding of the living expenses in different cities will help you to plan your finances. Having this knowledge, including insights from healthcare analytics, helps when it comes to budgeting for healthcare, transportation, housing, and other living expenses. Reviewing monthly budget examples can further guide you in creating a comprehensive financial plan.

• Quality of Life

The cost of living affects the overall living standard. High living cost affects the availability of quality healthcare, affordable housing, and the overall well-being of the people living in the city.

How to Calculate the Cost of Living Between Cities?

Here’s a step-by-step process to help you calculate the cost of living between cities.

1. Identify Key Expense Categories: These could include categories like:

• • Food
  • Housing
  • Education
  • Transportation
  • Healthcare
  • Clothing
  • Childcare
  • Leisure and Entertainment
  • Taxes

2. Collect Data: Collect data on the cost of the categories identified in the first step. Reliable data sources are:

• • Real estate listings
  • City websites and local government
  • Supermarket websites
  • Transportation authorities
  • Healthcare providers
  • Tax agencies

3. Calculate Weighted Averages: Weights should be assigned to each expense category and that should be dependent on their perceived importance. For instance:

• • Housing: 35-45%
  • Food: 15-20%
  • Transportation: 10-15%
  • Healthcare: 5-10%
  • Others: assigned based on how important they are

Calculation of the weighted average cost will help you compare the overall cost of living.

How to Analyze the Cost of Living Comparison by City?

Here’s how to analyze the cost of living comparison between multiple cities.

• Identify Cost Disparities

Look out for the disparities in the cost of living between the cities. What expense categories contribute the most to the cost disparity? For instance, if housing expenses are significantly higher in one city than the other, it could be the category that contributes the most to the cost disparity.

• Consider Relative Weights

Look out for the relative weight assigned to each expense category. Categories with more importance will likely have a higher weight assigned to them.

• Evaluate the Impact on Lifestyle

How does the cost of living affect the lifestyle of the families (and individuals) moving into the city? Will a lower cost of living in a city translate to a higher standard of living? Answers to these questions will help you decide on whether to move or not.

• Factor in Income Levels

Compare the income levels to the cost of living in each city. Cities with higher incomes usually have a high cost of living. Low-income cities on the other hand, usually have low costs of living.

• Explore Non-Monetary Factors

Non-monetary factors can affect the quality of life. These factors could be job opportunities, crime rates, and climate.

• Account for Personal Circumstances

Individual circumstances influence the cost-of-living differences. For instance, young professionals may prioritize entertainment options and job opportunities, while families with children may look out for quality healthcare and education. Using healthcare data visualization can help families assess the availability and quality of healthcare services in different locations.

• Project Future Trends

Factors like housing market trend analysis, policy changes, and economic growth can impact the cost of living in the future. Anticipate these changes, and make the necessary adjustments to accommodate them when making decisions.

How to Visualize Your Data in Power BI?

Stage 1: Logging in to Power BI

• Log in to Power BI.
• Enter your email address and click the “Submit” button.

• You are redirected to your Microsoft account.
• Enter your password and click “Sign in“.

• You can choose whether to stay signed in.

• Once done, the Power BI home screen will open.

Stage 2: Creating a Data Set and Selecting the Data Set to Use in Your Chart

• Go to the left-side menu and click the “Create” button.
• Select “Paste or manually enter data“.

• We’ll use the sample data below for this example.

City	Category	Cost
Houston, TX	Apartment Rent	1352
Houston, TX	Total Energy	190.29
Houston, TX	Phone Bill	211.13
Houston, TX	Doctor Visit	93.85
Houston, TX	Dentist Visit	120.24
Houston, TX	Optometrist Visit	120.7
Houston, TX	Prescription Drug	505.78
Tampa, FL	Apartment Rent	1661
Tampa, FL	Total Energy	189.14
Tampa, FL	Phone Bill	193.94
Tampa, FL	Doctor Visit	122.6
Tampa, FL	Dentist Visit	111.7
Tampa, FL	Optometrist Visit	116.93
Tampa, FL	Prescription Drug	367.5
Columbia, SC	Apartment Rent	1154
Columbia, SC	Total Energy	290.58
Columbia, SC	Phone Bill	192.75
Columbia, SC	Doctor Visit	150
Columbia, SC	Dentist Visit	78.33
Columbia, SC	Optometrist Visit	56.9
Columbia, SC	Prescription Drug	416.3
San Francisco, CA	Apartment Rent	3830
San Francisco, CA	Total Energy	298.77
San Francisco, CA	Phone Bill	203.68
San Francisco, CA	Doctor Visit	174.63
San Francisco, CA	Dentist Visit	155.36
San Francisco, CA	Optometrist Visit	159.79
San Francisco, CA	Prescription Drug	498.84

• Paste the data table above into a “Power Query” and name it “Cost of Living Standard Analysis.” After that, choose the “Create a dataset only” option.

• Navigate to the left-side menu, and click the “Data Hub” option. The data set list will be populated by Power BI. If no data set has been created, you’ll get an error message. After that, click the “Create Report” option.

• Next, click “Get more visuals.”

• Search for ChartExpo, and choose the Comparison Bar Chart.

• Click on a comparison bar chart, and also on the “Add” option.

• You’ll see the Comparison Bar Chart displayed on the visuals list.

• Click on the Cost of Living Standards option.

• At this point, you’ll have to choose the metrics of the data. After that, add the key by clicking on the License Settings. The comparison bar chart will be displayed on your screen. To add header text, click on the General tab. You should add the header text in the Title.

• There’s the option of disabling the value in each top bar and aligning the text into the center.

• You can disable the percentage value and title case under the bar label.

• You can also add the dollar sign with values.

• The Comparison Bar Chart’s final look will be similar to the image below.

Insights

Here are three insights you can gain from the Comparison Bar Chart.

• The city with the highest average rent is San Francisco, followed by other cities like Tampa, Houston, and Columbia.
• The city with the highest average total energy cost is Columbia, followed by cities like San Francisco, Tampa, and Houston.
• The city with the highest average cost for dentist, doctor, and optometrist visits is San Francisco, while Columbia has the lowest.

What are the Best Practices for Comparing the Cost of Living?

When comparing the cost of living between different locations, it’s important to use a methodical approach to ensure accuracy and relevance. Here are some best practices to consider:

1. Define Comparison Parameters: Outline the regions (or cities) you want to compare. Also, consider the timeframe.
2. Use Reliable Data Sources: Your data should be collected from reputable sources like economic research organizations, or government agencies.
3. Standardized Currency: All expenses should be converted to a common currency.
4. Consider Local Factors: Factors like housing market dynamics, consumer preferences, and taxes should be put into consideration. Conducting consumer research can provide valuable insights into how these factors affect the overall cost of living and help in making more informed decisions.
5. Anticipate Future Trends: The economy and government policies are always changing. These changes always impact the cost of living.

FAQs

How to compare the cost of living in two cities?

The first step is to gather data on living expenses like groceries, transportation, and housing. Next, make adjustments for income and currency differences.

What state has the cheapest overall cost of living?

In the United States, Mississippi is ranked one of the lowest in cost of living. This is due to its low healthcare costs, affordable housing, and lower-than-average product prices.

What is the most accurate cost of living index?

The most accurate cost of living index is dependent on your preferences and needs. Common indexes are Numbeo, Cost-of-Living Index (COLI), and Consumer Price Index (CPI).

Wrap Up

The cost of living is the total income needed to cater for the living expenses in a specific region. Comparing living expenses between multiple cities will help you in making good budgeting and relocation decisions. It also helps you understand how strong your purchasing power is.

Expert advice is also a vital piece that comes into play when considering relocation. You need to opt for professional advice and if possible, seek personalized guidance.

One way of making this comparison is by creating compelling visuals in Power BI. By following the simple steps outlined in this guide, you’ll become proficient in using Power BI. This will, in turn, help you create interactive and engaging visualizations with time.

Now you know how to perform a cost of living comparison by city, what cities will you be comparing its cost of living?