After you have decided between the E-2, L-1 or EB-5 visa to get you to America, the next consideration is the cost of living in the USA.

As a potential immigrant to the United States, you may be overwhelmed by the prospect of choosing a location to work or setup your business and settle down in. You should note that an international move is never easy. You’ll need to do your fair share of research to make your transition a smooth one. One of the biggest challenges to an international move is the uncertainty of expenses in your new city. How expensive will the average monthly utilities be? Can you buy groceries and household items there at a reasonable cost? How much can you expect to pay to fill your gas tank each week?

Having answers to these questions is a necessity for assurance. You do not want to be blindsided by unexpected cost of living expenses after you have made your move. Avoiding having to realize too late that you did not budget adequately to live the lifestyle that you intended.

What is cost of living (COL)?

Cost of living (COL) refers to the amount of money you will need to sustain a reasonable standard of living by affording basic expenses such as food, taxes, healthcare, transportation, and housing. The COL is dependent on the average wage of the residents in the area. If resident wages are high and basic expenses are low, the COL in that area is considered low. Basic expenses being costly in relation to the average wages in the area create a COL that is high. Rather than relying on a relative definition of high and low, many calculations are ranked on a scale ranging from 1-100. A city that scores above 75 on a ranking scale is usually considered to have a high cost of living.

Why is COL important?

The living costs associated with a city are important in determining what standard of living the average person can achieve there. The money that you make should be enough to afford you access to the basic expenses mentioned above. Your monthly income should cover your expenses with room for error. There should be space in your budget for savings and casual spending. If not, you are considered to be living ‘above your means’; simply, living a life that is not financially satisfied by your income.

The goal when you are moving to any new city is to live below your means. Do your best to ensure that your expenses do not overwhelm your income. This will help you create a budget that allows for saving, casual spending, and emergency funds.

What determines the COL in a specific city?

The factors that contribute to the cost of living in a city are varied. Is the economy thriving? Are jobs readily available? How easy is it for products to be shipped to or distributed throughout the city? Grocery stores may carry food with higher prices if these items have longer shipping times from their original location or are difficult to get. For example, if you are living in a landbound city, fresh seafood is generally going to be more expensive. Most fresh seafood has to be flown into areas it is not available in. Doing so hikes up the prices of the product.

It should also be noted that the size of the city contributes to its costs of living. Bigger cities, like Los Angeles and New York City, are notorious for being incredibly expensive places to live. Housing is usually the most expensive commodity – apartments of the same size in other cities may be up to $1000+ more in big cities. So why do people choose to move to these locations? Salaries are generally higher in cities. This is likely because the productivity of many forms of labor is higher in urban areas than elsewhere. It is sometimes considered a fair trade to deal with exorbitant housing costs for these larger salaries. Larger cities also give residents greater access to desired commodities like world-renowned restaurants, historical theaters, and a wide range of entertainment.

With that in mind, suburban living in a big city will come at a much higher price than a life in the suburbs in a smaller town. A higher salary may be attractive at first but how does it measure up to the expenses of day-to-day living?

Check out the cost of daily items in this Texas vs Florida COL comparison.

How to choose the city with the right COL

It’s impossible to properly decide on which city in the United States you should settle down without considering the cost of living. There are a few questions you should ask yourself before you make your decision.

  • Does your chosen location offer good business opportunities?
  • What are the monthly necessities for your family outside of the basics, e.g. school supplies, clothing, childcare?
  • What are schools like in your intended city? Is the public-school system acceptable or would private school be necessary?
  • What type of neighborhood would you like to live in?
  • Will you be living in rented housing or buying a home?
  • If you are buying a home, what is your budget?
  • Are you interested in renting a house or an apartment? What is the budget for this?
  • How often do you intend to spend money on non-essentials like movies, dinners, and activities?

Do your research once you have a city that you are interested in. Explore the property tax rates, the healthcare fees, and the general safety of the city. Make sure you are aware of how much basic necessities will cost each month and calculate this against your (expected) salary. You should strongly consider the financial impact if these basics require more than 60-70% of your monthly income, especially with a family.  You may be more willing to manage a high cost of living if you are on your own or moving as a couple.

Once done correctly, moving to the United States is an exciting and lifechanging venture to be proud of. Put a good deal of research into the city you’d like to settle in to be sure that making a life there is financially sustainable. Head over to this Nerdwallet Cost of Living Calculator if you’d like to explore the COLs of different cities within the United States.

If you are interested in moving to America, reach out to us and we will be happy to guide you through the process.