How to use the cost of living comparison calculator
- Enter your yearly pay now.
- Enter a cost of living index for your current place and for the new place. Use any index you trust, as long as both places use the same one.
- Optionally enter a pay offer in the new place to see what it is worth where you live now.
- Read the pay that matches your buying power, the raise or cut and the offer in current-place terms.
Formula
price ratio = new index / current index
matching pay = pay x (fixed share + (1 - fixed share) x price ratio)
raise = matching pay - pay
offer in current terms = offer x (fixed share + (1 - fixed share) x current index / new index)
The fixed share is the part of your pay that does not follow local prices, such as savings. It is 0 unless you set it.
A move from index 100 to 118
A $75,000 pay at an index of 100 matches $75,000 x 1.18 = $88,500 at an index of 118. That is a raise of $13,500, or 18%. An offer of $80,000 in the new place is worth 80,000 x 100 / 118 = $67,796.61 in your current place, which is $7,203.39 less than your pay now.
If 30% of your pay does not follow prices, the matching pay is $75,000 x (0.3 + 0.7 x 1.18) = $84,450. For a move to an index of 85 the matching pay is $63,750, a cut of $11,250 that would keep your buying power the same.
What an index can and cannot say
A cost of living index is an average price level for a basket of goods, with housing usually the largest part. Your own spending may differ from the basket. If you rent a small place and rarely drive, a city with expensive housing but cheap transit may suit you better than the index suggests.
Use the index you can find for both places from the same source and year, and treat the result as a starting point for judging an offer.
What is not included
Taxes, benefits, commuting, moving costs and quality of life are not modeled. State and local taxes can change take-home pay by more than the index difference. Compare after-tax pay when you can, and add the cost of the move from the Moving Cost Calculator.
Related pay tools
Adjust old pay for inflation with the Salary Inflation Adjustment Calculator, convert wages with the Hourly to Salary Calculator, and size a raise with the Pay Raise Calculator.
Assumptions and limits
- Both indexes come from the same source and measure the same basket.
- Your spending follows the index, except for the fixed share you enter.
- Pay is compared before tax unless you enter after-tax amounts.
- The page does not know any index values. You supply them.
Frequently asked questions
How do I compare salaries between two cities?
Multiply your pay by the ratio of the new city's index to your current index. A $75,000 pay moving from an index of 100 to 118 matches $88,500.
What is a cost of living index?
It is a number that shows the price level of a place relative to another, usually built from housing, food, transport and other costs. Different sources use different baskets.
How do I know if a job offer in another city is worth it?
Enter the offer to see its value in your current place. An $80,000 offer at an index of 118 is worth $67,796.61 at an index of 100.
What does the fixed share of pay do?
It leaves part of your pay unchanged, because some spending, such as savings or a fixed loan payment, does not move with local prices. The rest scales with the price ratio.