Cost of living refers to the expenses that an individual incurs to maintain a specific standard of living including fundamental and utilitarian expenditures such as housing, food, healthcare, etc. It is a comparison of how expensive it is to reside in one city against another.
A cost of living comparison in India will include a contrast of expenses between Tier-I and Tier-II cities. It is critical for an individual to know the difference between their living costs in the current city and another one they are planning to move to. It also gives you an estimate of the income you should optimally generate in the next city compared to what you earn in your current city of residence.
Checking the cost of living is also helpful if you are going to opt for a home loan to purchase a property in a new location. It can help you have an overall idea of your income requirements to accommodate your basic expenses other than existing loan EMIs if any and etcetera financial liabilities.
Where to Check The Cost of Living?
Various companies and websites provide cost of living comparisons and how does your city stack up against other cities around the world. The comparison involves a sample quantum of goods and services respective to a particular city to calculate an average estimate the expenses you will incur as a resident. These sites provide an approximate income, either with rent or without rent, that you must earn to live either alone or with a family.
Cost of Living Index
The cost of living index compares the living expenses between two cities, especially international ones. It takes 100 as the standard rate to draw a comparison. An index higher than 100 means the cost of living is higher and vice versa.
The Economist Intelligence Unit’s Worldwide Cost of Living 2019 provides an index of the cost of living comparison of cities around the world. This report takes New York as the standard city with an index of 100.
Chennai and New Delhi rank the lowest being the cheapest cities in the world with an index of 41 and 43 respectively.
Indian Cities with the Highest Cost of Living
Various organisations conduct regular studies and research to provide the cost of living rank for cities in India.
For example, Mercer ranks Mumbai as the 55th most expensive city to live in. Mumbai is more expensive than Washington (55), Munich (57), Miami (60), Perth (61), and Frankfurt (68).
New Delhi ranks 103, Chennai 144, Bengaluru 170, and Kolkata 182 – the cheapest city in India to live in.
Cost of living comparison in India
Some companies also provide cost of living calculators and average expenses of a majority of items of every city in India.
Numbeo is one such calculator enabling you to do the same. According to this tool, you will need to earn approx. Rs. 1,637 in Mumbai if you earn Rs. 1,000 in Kolkata.
The monthly cost of living for a single person in Mumbai is Rs. 26,000 excluding rent. It goes up to Rs. 90,000, excluding rent, if the members become four.
On the other hand, the monthly cost of living for a single person in Kolkata is Rs. 21,000 excluding rent. This cost is Rs. 73,000, excluding rent, for four members.
Average price of regular items in Mumbai include:
- Rice (1kg) – Rs. 56.
- Milk (1l) – Rs. 53.
- Utility bills – Rs. 3,300.
- Price of flats per square meter inside the city – Rs. 4.9 Lakh.
- Price of flats per square meter outside the city – Rs. 1.7 Lakh.
You can opt for Home Loans from leading NBFCs and benefit from repayment tenors as high as 20 years other than loan amounts of up to Rs. 3.5 Crore.
Checking the cost of living comparison is essential to budget your move throughout the procedure. It also gives you an estimate of how much you can save every month for future engagement.