Step 1: Start With Your Actual Spending
Most people make the mistake of starting a cost-of-living comparison with the destination city. Start with yourself.
Pull up 3 months of bank and credit card statements and categorize your spending into these buckets:
- Housing — rent or mortgage, renter's or homeowner's insurance, HOA fees
- Food — groceries, restaurants, delivery apps
- Transportation — car payment, insurance, gas, parking, transit passes, Uber/Lyft
- Utilities — electricity, gas, water, internet, phone
- Healthcare — premiums, copays, prescriptions, dental
- Childcare — if applicable (note: most calculators exclude this)
- Everything else — entertainment, clothing, subscriptions, personal care, gym
Add up your monthly total. This is your baseline. This is the number that needs to go into any comparison — not a generic "average household" figure.
Step 2: Understand Housing First
Housing costs account for 30–40% of most household budgets and vary more dramatically between cities than any other category. Before you even look at the comparison tool, research your specific housing situation in your destination city.
Go to Zillow, Apartments.com, or Realtor.com and search for homes or apartments that match what you actually need — not what an average household needs. Filter by bedrooms, neighborhood type, and commute to wherever you'd be working.
The difference between a studio in a central neighborhood and a 2-bedroom in the suburbs can be larger than the difference between the two cities' overall cost indices. Get real numbers, not averages.
See our full guide on why housing costs dominate every cost-of-living comparison for more context.
Step 3: Factor in State and Local Taxes
Taxes are frequently omitted from cost-of-living comparisons, but they can be decisive. Two major tax differences matter most in relocation decisions:
State Income Tax
Nine states have no income tax on wages: Alaska, Florida, Nevada, New Hampshire (wages only), South Dakota, Tennessee, Texas, Washington, and Wyoming. If you're moving from one of these states to a state with a 6–10% marginal income tax, that's a significant reduction in your take-home pay. Conversely, moving from a high-tax state to Texas or Florida can meaningfully increase your net income even if gross salaries are comparable.
Property Tax
If you're considering buying, property tax rates vary enormously. New Jersey's effective rate averages over 2%, while Hawaii and Alabama average below 0.4%. On a $400,000 home, that difference is over $6,400 per year. Read our property taxes guide for more.
Step 4: Verify Each Spending Category Locally
Once you have real housing numbers, go through your other categories and verify what they'd look like in your destination city:
- Utilities: Check your state's average electricity and gas rates at the U.S. Energy Information Administration (EIA) website. Hawaii and New England pay 2x the national average for electricity; the South and Northwest are typically cheapest.
- Food: Grocery costs tend to vary less dramatically than housing (typically within 10–20% of each other across most major metros). Restaurant costs are higher in major coastal cities.
- Transportation: If you're moving to a city where you'd sell your car and use transit, your monthly transportation cost could drop by $500–$1,000. If you're moving from walkable to car-dependent, add a full car ownership cost estimate.
- Healthcare: If your insurance is employer-provided and stays the same, this may not change. If you're self-employed or on the ACA marketplace, check premiums in your destination state — they vary significantly.
Step 5: Adjust for Income, Not Just Expenses
A complete cost-of-living comparison is really about purchasing power — not just expenses. Your income may also change if you're moving for a job:
- Does your employer pay location-adjusted salaries? Many tech companies do — they reduce pay by 10–20% for employees moving to lower-cost cities.
- Are you a remote worker with a fixed salary? If so, moving to a lower-cost city is a straightforward purchasing power gain.
- Are you job hunting in the new market? Research local salary ranges for your role — some markets pay significantly more or less for the same work.
Step 6: Use the Comparison Tool as a Sanity Check
After you've done the category-by-category work above, use our cost-of-living comparison tool to validate your estimates. If the tool says the destination city is 20% less expensive but your calculation shows 30% savings, investigate the gap — you may have overlooked a cost or made a favorable assumption about housing.
If the tool says the city is 30% more expensive but your research suggests it's only 15% more, think about why — you may be planning to move to a significantly cheaper neighborhood, or your lifestyle may differ from the average household in ways that reduce costs.
What Most People Forget
- Moving costs themselves — a cross-country move can cost $3,000–$10,000+ before you arrive
- First and last month's rent + deposit — can be $3,000–$10,000 upfront in expensive markets
- New state registration and driver's license — typically $100–$400
- Childcare costs — almost universally omitted from calculators; varies dramatically by city
- Pet deposits and fees — increasingly expensive in competitive rental markets
See our full guide on hidden relocation costs for a complete list.