Cost of Living Matters to Your Finances

Brent Pittman —  01/31/2013 — 10 Comments
How much cupcake you can you buy with a dollar is determined by your cost of living and purchasing power. Credit

How much cupcake you can you buy with a dollar is determined by the cost of living and purchasing power in your city. Credit Facundo Prámparo

I recently moved from Los Angeles to Oklahoma and have noticed a huge decrease in our cost of living.

In short I’ve realized that the cost of living really matters to your personal finances.

What is Cost of Living?

The cost of living refers to the prices paid for everyday products and services for a given area. Each region, state, and city have their unique cost of living.

A dollar earned in one region won’t buy as much or could buy more in another section of the country. Purchasing power varies.

Your cost of living determines how far your dollar will go and thus directly impacts the quality of life for your family.

How Our Cost of Living Has Decreased

Upon moving, these are known cost of living decreases we’ve experienced thus far moving from California to Oklahoma:

  • We’ve saved about $750 a year in auto and renter’s insurance.
  • Our health insurance is a bit cheaper, but we’re still waiting on the underwriters final approval to determine by how much.
  • Gas. This is a significant savings in price per gallon, yet we are driving more so it probably evens out.
  • Phone- State taxes and fees are cheaper on our current phone plan by an estimated $10-$15 a month.
  • Groceries- groceries are cheaper, yet we now pay a tax on food.

Cost of Living Calculators

Before you decide to relocate, determine your cost of living using several of these calculators:

How does cost of living and purchasing power impact your finances? 

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Brent Pittman

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Brent is a financial coach and writer looking for the perfect donut. He believes personal finance should be both fun and accessible to anyone willing to learn.
  • krantcents

    I presume your income also decreased. The issue is did it decrease the same percentage as your cost of living?

    • http://www.ontargetcoach.com/ Brent Pittman

      Income is actually up at the moment.

  • http://www.moneylifeandmore.com/ Lance@MoneyLife&More

    I moved from right outside of Washington DC to the folirda panhandle and it is so much cheaper down here! I didn’t take a pay cut to move here but I may have gotten bigger raises/a promotion with a bigger raise in DC but I don’t think it could offset how much cheaper it is to live down here.

    • http://www.ontargetcoach.com/ Brent Pittman

      So would you move back to DC?

      • http://www.moneylifeandmore.com/ Lance@MoneyLife&More

        Hmmmm… I’d have to think really hard about that. OK I’m done. NO WAY EVER! I’d have to really need a job badly. That’s the only reason I’d go back to DC. Traffic is horrible, everything is insanely expensive and it is the definition of rat race. No thank you.

        Now… time for me to go look at beach front condos in Florida :)

        • http://www.ontargetcoach.com/ Brent Pittman

          Ah the good life! :0

  • http://www.lifeofasteward.com Loren Pinilis

    I have friends who live in Los Angelese, while I live in North Carolina. The difference in our cost of living is ridiculous.

    • http://www.ontargetcoach.com/ Brent Pittman

      It is almost laughable….we call the high prices our “sun tax”.

  • John@TheMoneyPrinciple

    Speak to anyone trying to live in London or the SE of England these days! Cost of living is an important consideration. There is much to be said for living in a cheaper area.

    • http://www.ontargetcoach.com/ Brent Pittman

      So what is the cheap part of the UK?