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Written By Candice Elliott
Even if your home country and America have a lot of similarities, one thing is sure to be very different; the cost of living. And the average monthly cost of living in the USA varies too. The average cost of living for a family of 4 in America differs from the US average cost of living for a single person.
The cost varies by location too. The cost of living in the USA for an Indian family in New York City will be different than that of an Indian family living in Indianapolis, Indiana. We’ll take a look at the US cost of living index, the average cost of living in the US per year, and some common monthly expenses in the USA.
US cost of living index
A cost of living (COL) index lets you compare living costs between areas. If a place has a COL index below 100, it’s cheaper than the national average. If it’s over 100, it’s more expensive than the national average. You can use this information to see how far your salary will go in various places.
Let’s look at our example above of New York City between Indianapolis:
NYC: 168.6
Indianapolis: 84.9
This means a salary in NYC of $50,000 would be equivalent to a salary of $20,999 in Indianapolis. The linked calculator below lets you play with salary numbers and locations.
These COLs are overall and exclude certain expenses, but you can see COLs for things like food, housing, and utilities too.
Average living expenses for a single person
Again, living expenses vary significantly by location, but we can use some average numbers. The average monthly living expenses for a single person in the USA are $3,189, which is $38,266 per year.
The average cost for a family of four is $7,095 per month, which is $85,139 per year.
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Inflation and cost of living
The cost of living for any American is impacted by inflation. Inflation is a decrease in the purchasing power of our money, as reflected in a general increase in the prices of goods and services.
Inflation can happen when prices increase due to increased production costs like raw materials and wages or an increase in demand for products and services, which means consumers are willing to pay more for them.
At the time of writing, inflation is around 7%. That means a pencil that cost $1 in 2020 would cost $1.07 today. That’s inflation at work.
Common monthly expenses in the USA
These are some common monthly expenses in America and their average costs:
Housing: $1,784
Utilities: $300
Transportation: $819
Food: $610
Food Away From Home: $198
Healthcare: $431
Health Insurance: $306
Entertainment: $243
Gas: $131
Clothing: $120
Personal Care Products and Services: $54
Education: $106
Total: $5,172
Don’t be alarmed by that number! Remember, these are averages. And some people won’t have all of these expenses. If you live in a walkable city or one with a robust public transit system, you won’t have any gas expenses, and your transportation expenses will be much lower, maybe even $0, if you walk and cycle a lot.
A combined $808 per month for food is high unless you’re a family with a few members. A single person wouldn’t need to spend nearly that much. Some employers pay all or part of their employee’s health insurance premiums, and if you don’t have children and aren’t in school yourself, you won’t have any educational expenses.
Upwardli can help
For some, the cost of living in the US is a relief! It’s much lower than it was at home. And for some, it’s an enormous change, much more costly than at home or with many new expenses. America largely does not subsidize things like health care, child care, or education as many countries do.
Whatever your situation, Upwardli can help you find the financial tools you need to succeed in the US, including credit cards, apps, savings accounts, and personal loans.
With Upwardli, you’ll get pre-approved instantly - no credit check or deposit required! Each account includes an unsecured line of credit designed to build credit fast. We report your progress to the credit bureaus to help establish your credit history.
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Candice Elliott
Candice Elliott has been a freelance writer specializing in personal finance since 2013. She learned to manage her money the hard way after moving to New York City and living paycheck to paycheck for years. She wants to help others avoid the money mistakes she made while providing easy and actionable advice in an entertaining way. Candice believes that personal finance information should be inclusive of everyone because a solid financial base is the foundation for a successful life. Candice now lives in New Orleans where she admits she spends more than she should on restaurants because the food is as good as you’ve heard.
