Expat Twitter Round-Up: 1st...   Expat Twitter Round-Up: 8th...

How to Live in a City with a High Cost of Living

03 August, 2011 08:01  Erin Erin

Couple savings © Andres Rodriguez - FotoliaWhat city takes top spot as most expensive changes frequently, but the front-runners usually go to the same few cities with occasional upsets. Everyone has different standards of living, but it is important to know what exactly you are getting into when you move to a city with a high cost of living.

Cost of Living

The definition of cost of living is the amount of money needed to sustain a certain level of living, including basic expenses such as housing, food, taxes, and healthcare. Cost of living is often used when comparing how expensive it is to live in one city versus another.

The Economist Intelligence Unit's Worldwide Cost of Living survey offers a report and analysis to compare the cost of living in 140 cities in 93 countries.

    Cities with Highest Cost of Living
  • Tokyo, Japan - Until 2006, Tokyo had been at the top of the global cost-of-living ranking for 14 uninterrupted years. Low inflation, weak consumer confidence and a declining Japanese yen reduced the cost of living with Oslo and then Paris vying for top spot, but Tokyo now has the dubious honor of being back on top.
  • Oslo, Norway - One of the many European cities in the top 10. This is despite economic weakness in the euro zone, with high-profile problems in Greece, Ireland, Portugal and Spain.
  • Osaka, Japan - Shares Tokyo's inherent costliness.
  • Paris, France
  • Zurich, Switzerland
  • Sydney, Australia - This is the culmination of a rise in the cost of living in Australian cities over the last decade and the decline of the US dollar earlier this year.
  • Melbourne, Australia
  • Frankfurt, Germany
  • Geneva, Switzerland
  • Singapore, Singapore - Singapore's has a key role as a global financial center.


The report was calculated with over 50,000 individual prices from supermarkets, domestic help, transport and utility bills—in each city. Prices gathered are then converted into a central currency (US dollars) using a prevailing exchange rate and weighted in order to achieve comparative indices. The cost-of-living index uses an identical set of weights which is internationally based and not geared towards the spending pattern of any specific nationality.

Expats Costs to Consider

Factors that concern expats include travel costs to return home, maintaining a standard of living similar to their home, differences in monetary value, consumer confidence, exchange rates of the country's currency, and housing costs. For instance, to maintain a secure household with all of the accustomed standards of living for an expat in Africa will be much more than a native. Housing costs often encompass pricey security measures, expats commonly only live in more expensive areas of the city, and higher standards result in requiring luxury housing.

    Mercer Human Resource Consulting's List of Most Expensive Expat Cities
  1. Angola, Luanda
  2. Tokyo, Japan
  3. N'Djamena, Chad
  4. Moscow, Russia
  5. Geneva, Switzerland
  6. Osaka, Japan
  7. Libreville, Gabon
  8. Zurich, Switzerland
  9. Hong Kong, Hong Kong
  10. Copenhagen, Denmark

This list does not account for cost-of-living savings accrued to local citizens through government-subsidized housing, health care, and education, differences in taxation, and many other factors irrelevant to expatriates.

How to Cope with High Cost of Living


Setting up a budget is essential to living successfully in a city with high cost of living. You must evaluate your income, estimate your debts, and establish a savings goal.

    How to Set-up a Budget
  • Gather your financial statements. This includes bank statements, investment accounts, recent utility bills and any information regarding a source of income or expense.
  • Record all of your sources of income. This includes regular paychecks, benefits from self-employment, or any other income.
  • Create a list of monthly expenses. Write down a list of all the expected expenses you plan on incurring over the course of a month. This includes a mortgage payment, car payments, auto insurance, groceries, utilities, entertainment, dry cleaning, auto insurance, retirement savings and essentially anything you spend money on.
  • Break expenses into two categories: fixed and variable. Fixed expenses are those that stay relatively the same each month and are required parts of your way of living. They included expenses such as your mortgage or rent, car payments, cable and/or internet service, trash pickup, credit card payments and so on. Variable expenses are the type that will change from month to month and include items such as groceries, gasoline, entertainment, eating out and gifts to name a few. This category will be important when making adjustments.
  • Total your monthly income and monthly expenses. If your end result shows more income than expenses you are off to a good start. This means you can prioritize this excess to areas of your budget such as retirement savings or paying more on credit cards to eliminate that debt faster. If you are showing a higher expense column than income it means some changes will have to be made.
  • Make adjustments to expenses. If you have accurately identified and listed all of your expenses the ultimate goal would be to have your income and expense columns to be equal. This means all of your income is accounted for and budgeted for a specific expense. If your expenses are higher than income you must look at your variable expenses to find areas to cut.
  • Review your budget monthly. It is important to review your budget on a regular basis to make sure you are staying on track. After the first month take a minute to sit down and compare the actual expenses versus what you had created in the budget. This will show you where you did well and where you may need to improve.

To get started, here is a very basic budget template to start with.


Housing is almost always the largest allocation of your budget. If you are needing to cut back on expenses, these is the area in which a change can make the biggest impact. Consider downsizing, living in less desirable (but still safe) neighborhoods, or moving outside the limits. In many places, housing costs can drop dramatically moving outside of the downtown area. Another benefit of living in lower costs area is that costs in groceries, parking, utilities etc. are also lower.

Utility bills are another area of easier saving. Monitor you use and looks for areas of saving. Instead of turning up the air conditioning automatically, open a window. Cut a 20 min shower down to 15. Replacing appliances with energy efficient models can be a large saver.


Another major factor in your budget is your choice of transportation. Owning a personal vehicle is obviously the most expensive option, but may be necessary depending on your area and lifestyle. Consider your commute when looking at housing. Choosing somewhere that allows you to use public transportation or a short commute can make a difference. Also consider your public transportation options. There are often significant savings for monthly or yearly passes, and discounts for seniors and students.


The easiest way to minimize the cost of eating in a city with a high cost of living is to eat at home. Cooking at home is usually healthier and more economical. Look for savings at super markets, frequent discount grocers or places that sell in bulk, buy fresh vegetables and fruits from local markets, and buy things that are in season.


When creating a budget, cutting out entertainment costs sounds a lot easier than it is. It is vital to most people's happiness to go, out, socialize, and be entertained. Again, students and seniors are often afforded discounts at museums, cinemas, and theaters. Never be afraid to ask. There are also combination tickets that can offer savings for a group of sites. Another option are last-minute tickets. Operas, theaters and other performance based venues may offer low-cost tickets shortly before show time. Movie theaters also offer low cost showings either for the first show of the day, of on a specific day of the week. Identify your favorite form of entertainment and inquire directly.

Don't forget the amount of free events in almost every city. Museums may offer free hours, art gallery openings even offer wine and snacks, and parks are a great way to spend an afternoon.

    Free Things to do in any City
  • Check out the community calendar - Every city offers a variety of events to participate in. These may be classes, seminars, athletics, etc.
  • Meet your neighbors. Make an effort to introduce yourself to your neighbors, especially if you are an expat. They can be a wonderful window into happenings in the area, and at the very least someone to protect and secure the neighborhood.
  • Learn a foreign language. Especially if you are somewhere that the dominant language is not your own, learning a new language takes time and practice but is free. Every interaction can be a learning experience. You can also participate in a language exchange and maybe even make a new friend.
  • Have a picnic. Whether on your own or with friends, go through your pantry and put together a picnic to enjoy in an are of the city you haven't spent time. Pair a meal with a walk and do some exploring.
  • Volunteer. Not only will you be doing something good for others and/or the community, you could gain valuable skills and make friends and contacts. Check out EasyExpat City guides, job listings, or find out more about WWOOF.
  • Start a blog. As an expat or traveler, you already have a topic you are an expert on and can talk about. As long as you have an internet connection (or access to an area with WiFi) you can create a blog to catalog your adventures and connect with others.


Request your own copy of the report: Worldwide Cost of Living


Add this RSS to Yahoo!    Add this RSS to Google    Add this RSS to Netvibes    Add this RSS feed to your favorites on Technorati

         EasyExpat on

great help [Reply]

for us who parents never bothered doing budgetting themselves, let alone teaching us this stuff.. its very helpful.

dj     13 Aug 2011, 02:46