Now more than any time in a generation, young adults should be thinking about cost of living as they make decisions about where they should go to college and where to take a job after graduation. Nationwide, inflation rose in April at a rate of 8.3% year-over-year. And while certain inflationary pressures will likely ease in the coming months and years, economists say it may come at the cost of a worsening labor market, or even a recession.
Even if none of these outcomes materialize, cost of living issues do not go away. Because it has a direct impact on what a certain salary actually means, cost of living should always be part of the calculus in choosing where someone lives, works, and studies.
Prospective students moving away for college need to understand that wherever they move to may be more expensive than their hometown. This cost of living premium should be tacked on to their budgets, on top of tuition payments, books, supplies, and the like. A prospective student looking at different colleges may also want to keep varying costs of living when comparing how much one college charges for room and board compared to another.
Students and recent graduates considering moving for a job should also keep different costs of living top of mind. Many companies say they factor these costs into determining salaries at different offices, but there’s no guarantee that an employer is using recent or entirely correct data to make those adjustments.
Before agreeing to move, it’s important to understand what kind of lifestyle the initial salary offer will get you in that particular city. Keep in mind long-term goals such as saving, building up credit, or having money to invest, and how a higher cost of living can hurt your ability to work towards those goals.
It’s best not to make assumptions about how much life costs in certain areas. Remember there is immense variation across regions, states, and cities. A cost of living calculator is your friend here. It will tell you how cost of living inputs can detract or add to your salary.
For example, using this calculator, you can see that someone earning $50,000 in Chicago would need to earn nearly $100,000 in New York to maintain their lifestyle. Does that mean an offer for a $50,000 salary for a job in Chicago is no worse than an offer of $100,000 based in New York? The answer to that depends on the individual, the job, and the life a graduate wants to live.
A final tip: Depending on the sector and company, recruiters have been very eager to hire during the first half of 2022. Those with room to negotiate their salary and benefits package should absolutely mention cost of living (when it helps). You may or may not get a salary boost, but few prospective employers will see it as an unreasonable request. When it comes to negotiating, if cost of living is going to impact your salary negatively, it’s always worth asking.