Cost of Living in the US - A Guide for Expats

At-A-Glance

>    Overall, the USA is the world’s 20th most expensive country to live in.

>    But many costs—most notably housing—can vary tremendously from state to state and city to city. 

>    Healthcare and education costs may cause “sticker shock.”

Comparing the Cost of Living in the U.S. to Your Home Country

America ranks 20th in CEOWorld Magazine’s 2019 rating of the most expensive countries to live in. So, if you’re from Switzerland, Iceland, or Norway (Nos. 1, 2, and 3), you might not feel a pinch. Cost of living differences start getting steeper if you’re Canadian (No. 25), Mexican (97), or Indian (No. 116).

A country-wide ranking is not altogether useful, though, since the cost of living in the U.S. varies greatly. There are several indexes and calculators online that compare the cost of living between cities across the world.

Moving to New York City? That’s the 9th most expensive city in the world, according to Mercer, a global job search firm. What about Chicago (37th)? Or Miami (44th)? Even arriving from Canada, which, nationally speaking, is nearly on par with the U.S. cost of living, a Montrealer (139th) will see a big difference. 

If you’re relocating for a job, your salary should be adjusted to compensate for the higher cost of living in the U.S., according to employee relocation experts. The U.S. Federal Reserve has a calculator that maps salaries to the cost of living in different states and cities. For example, the Fed calculator tells us that someone earning $50,000 in St. Louis, Missouri, can maintain the same standard of living as someone making $70,000 in San Francisco.

Once you’ve settled in, the good news is that U.S. inflation has been low—under 2 percent.

What You’ll Pay for Things in the U.S.

Hungry? Dinner for two will cost you 38 percent more in New York City than in Cincinnati, Ohio—$119 vs. $73. But then, seemingly inexplicable differences in pricing from place to place are a fact of life for today’s global citizen. 

Your cost of living in the U.S. will often hinge on housing costs. Wherever housing and childcare is expensive, the cost of living is higher, USA Today reports. Other than that, food, transportation, and healthcare costs tend to be relatively uniform across major cities.

Here are some of the biggest cost centers in the U.S. and how they measure up.

Housing. Typically, the largest chunk of your paycheck (25-30 percent of net income) will go toward housing. In global comparisons, U.S. housing prices fall in the middle of the pack, according to the Organization for Economic Cooperation and Development. As for variations across the country, an average two-bedroom apartment rental in Marina del Rey, California, tops the Rentonomics list at $4,719 per month, while the same space in Anniston, Alabama, averages $437. Generally, suburban housing is less expensive than city living. For instance, realtor.com estimated the average home price in the suburbs at $230,000 in 2017, compared with $431,000 for a home in a city. Of course, there are tradeoffs, such as transportation, which is comparatively cheaper in the city (unless you choose to own a car).

Food. The U.S. Department of Agriculture (USDA) reports that Americans spend just under 10 percent of their disposable income on food, whether at home or dining out. In New York City (again, the high end of the cost-of-living spectrum), a three-course meal for two people in a mid-range restaurant costs $80, and a regular cappuccino is almost $4.50, on average. A loaf of bread is nearly $4.

Transportation. Gasoline is much cheaper in the U.S. than elsewhere—77 cents per liter ($2.97 per U.S. gallon), or about half the price in the U.K., according to GlobalPetrolPrices. As for public transportation costs, U.S. cities like New York, Miami, and Chicago rank 13th, 19th, and 26th among the most expensive cities worldwide. Ride-sharing apps have driven down the cost of hailing a taxi in recent years.

Healthcare. Expatriates from countries with national health services may be well aware that the United States has a private system, instead. Still, the costs can be surprisingly high. Private health insurance for an individual averages over $440 per month, and insurance does not cover all healthcare costs.

Education. American higher education is another cause of “sticker shock” to people around the world. Tuition (not including room and board) costs an annual average of nearly $36,000 at private four-year colleges in America. By comparison, British students pay tuition of about $13,000.

Travel and Entertainment. Whether at home or on the town, entertainment can be costly, but there are often many less expensive alternatives. Streaming video can cost under $10 per month, where a full-plate cable TV service can run well over $100 and a night out at the movies could vary from $10 to $60+ depending on the town, 2D versus 3D, and the breathtaking cost of snacks! Going for dinner and a movie? The diversity of “cheap eats,” “family,” and “high-end” restaurants provide a wide range of prices. Going on a trip? Visit some of the myriad travel comparison sites on the web.

Taxes. U.S. individual income taxes fall below the average of developed nations, according to an analysis by the KPMG accounting firm. For new expats, the thing to watch out for is sales tax—it varies from place to place and is probably not included in the price of most goods and services, as it often is in other countries. You may know it as value-added tax (VAT).

The Takeaway

America’s large size and diversity require newcomers to make complex calculations to anticipate their cost of living here. On the one hand, you might be surprised at how much more things like healthcare and education cost. On the other, you can find lots of deals on travel and entertainment. Overall, you’ll find that where you choose to locate will make a big difference in how much you spend from day to day.