On the path to financial independence, cost of living is an essential variable in driving one’s savings rate. Effectively, the “living wage” is the minimum amount to realistically live at your current location. Given some high costs global cities such as San Francisco, New York, Vancouver, Singapore, those who choose to remain there may find the path to FI/RE a struggle. For the United States, MIT has created a tool called the Living Wage Calculator to estimate the cost of living in the U.S. communities.
What is it?
The Living Wage Calculator isn’t really a calculator. It’s more like a database. Once you drill down and find the city of your choosing, the “calculator” displays key information regarding wages, expenses, and typical annual salaries for that region. For example, in Autauga County, Alabama, the Living Wage for 2 Adults an one child is $11.68 vs. the minimum wage of $7.25. the Living Wage estimate is driven the individual expenses, including food, child care, medical, transportation, etc.
Not so much a calculator
I am not sure why MIT called this a calculator when it’s really just a database. The tool wasn’t particularly useful but it might be for some who is interested in this type of granular data. To achieve financial independence, the key is still a high savings rate and learning to live below your means. What do you think of this tool? Please discuss below.
As usual, if you have any questions, Ask the Fellow!