Cost of living calculators ask for information about a person's income and present location, and then calculates the necessary income needed to maintain the same standard of living in another location, according to Bankrate.com and CNN Money. These calculators compare the costs of housing and associated costs, health care and living expenses, such as groceries, in different markets to determine how much money a person needs in one location compared to another location.Continue Reading
Some calculators, such as the one provided by Bankrate.com, compare the prices of various consumer goods in detail in different markets. For example, Bankrate.com reports that every consumer good, from rent to bananas, is cheaper in Amarillo, Texas, than in Abilene, Texas, but that mortgage rates average 0.30 percent higher in Amarillo, as of August 2015. CNN Money's calculator displays the percentage changes in differing markets in five macroeconomic categories: housing, utilities, groceries, transportation and health care.
The metropolitan areas that can be compared on the Bankrate.com and CNN Money calculators differ somewhat. For example, the Chapel Hill, North Carolina, area is included in the CNN Money calculator, but is not included on the Bankrate.com calculator, which instead uses the Raleigh, North Carolina, metro area.
Both CNN Money and Bankrate.com report that they use data provided by the Council for Community and Economic Research to create their interactive calculators. The Council for Community and Economic Research uses an econometric model to determine cost of living and tests its model against the 291 areas for which it collects real data, to ensure the model's validity, according to the cost of living index from the Council for Community and Economic Research.Learn more about Financial Calculations