What is the Cost of Living?
A relocation offer is only good if it leaves you with more money after living costs, not just a bigger number. Housing usually drives the difference — it can double between cities while groceries barely move.
The right comparison is your annual surplus: net salary minus total spending. If the new city's surplus is smaller, the raise is an illusion.
Formula & worked example
Change in surplus = New surplus − current surplus
Worked example: earning 60,000 net with 15,000 housing and 22,000 other costs leaves a 23,000 surplus. In a city where housing is 26,000 and other costs are 20% higher, you would need 75,400 just to break even. A 78,000 offer leaves you 2,600 better off — far less than the headline 30% raise suggests.
How to use this cost of living calculator
- Use net salary figures — tax rates differ between locations.
- Research actual rents for the size of home you need, not city averages.
- Set the other-costs index: 100 means identical, 120 means 20% more expensive.
- Compare the surplus line, not the salary line.
Smart tips
- Housing is the dominant variable. Get real listings for your target neighbourhood before accepting.
- Compare take-home pay, not gross. Tax and social contributions vary enormously between countries.
- Include one-off relocation costs: deposits, furniture, visas, flights and duplicate rent.
- Factor in commuting — a cheaper suburb with an expensive commute may not save anything.
- Consider career trajectory too. A smaller surplus can still be worth it if the role compounds your earning power.
Frequently asked questions
How do I compare salaries between cities?
Compare what is left after housing and living costs, using net salary figures. The surplus, not the salary, tells you if you are better off.
What is the biggest cost of living difference?
Housing, almost always. It can vary by 200% between cities while food and transport vary far less.
Should I use gross or net salary?
Net. Tax rates differ substantially between countries and even between regions within a country.
What else should I factor into a relocation?
Relocation costs, healthcare, schooling, currency risk if you send money home, and how easily you could move back.
Want the theory behind the numbers? Read our relocation guides on the Money Blog.