Cost of Living: How to Choose a City

Moving is exciting (and sometimes a bit scary), so choosing where to move can be an interesting but sometimes daunting task. When deciding on a new city, there are a number of factors to consider. One of the most important considerations you should focus on is cost of living. But assessing a city’s living costs is a bit more complicated than simply checking out real estate prices.

Here are three of the most critical cost of living concerns to review to help you decide where the best place for you and your family might be.

1. Research Housing Costs

Housing is a major monthly expense that can determine where you and your family are able to live. Whether you pay rent or a mortgage, the cost of housing takes up a significant amount of income. Like most things, housing costs are a function of supply and demand. There are huge differences in rental markets and home purchase prices across the country. Generally, homes on the coasts and near major cities are more expensive than more rural areas in the South and the Midwest.

2. Find Out About Taxes

Taxes vary by state, county and even municipality, and trying to understand the way in which all these regulations mix together is enough to make anyone’s head spin. The two major taxes to consider are state income taxes and sales taxes. There are seven states with no state income tax: Florida, Texas, Nevada, South Dakota, Wyoming, Washington and Alaska. In other states, the income tax rate varies.

Sales tax also varies by state and municipality. For example, in Illinois, the state sales tax is 6.25 percent and certain counties also have their own sales tax, which can bring the total up to 10 percent. The amount and types of things you normally buy will determine how strong of an impact sales tax rates might have on your cost of living. When choosing a place to live, it is a good idea to look at both the sales tax and the state income tax together to get an idea of the full tax burden that would be placed on you.

3. Other Incidentals

The cost of food, transportation, health care and utilities are key items to consider when choosing where to live. There are many online calculators that can help you compare the cost of living between two cities at any given level of salary to give you a good starting point for your analysis. So when you find a big disparity in the cost of housing, you’ll want to do a bit more digging. For example, a city like Chicago has a wide range of housing costs across different neighborhoods, so you’ll want to do a comparison with an equivalent area of a different city to understand more completely the reasons for the costs in each neighborhood.

There’s a lot to consider when deciding where to live. Things like lifestyle opportunities and being close to friends and family are really vital aspects of choosing a great and affordable place for you and your family to live. But the cost of living should be near the top of that list, as well. Although it may take some time to truly understand the financial ins and outs of the area you’re considering, by giving yourself as clear a picture as possible about what living there will look like, you should be able to find the city that’s just right for you and your family.

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