What is cost of living?
Cost of living is the standard which is determined on the basis of the basic needs that human being have. It is the standard of life which is needed by an ordinary person i.e. it is the calculation of the money which a person needs to live an ordinary life by having just basic needs of housing, clothes, food, and education.
Thus the cost of living is a standard amount of money a person needs to live a life so that we can have a comparison of the amount which is needed in different place and cities. The main aim of the calculation is directly connected to the wages, as it is used to determine the minimum wages a person shall have as the place where the cost of living is more the wage rate shall be more compared to where the cost of living is less. Here is FinanceShed briefing about the Cost of Living Index and need of it.
Cost of living and lifestyle of different places
The cost of living is also directly connected to the city population as well as the development of the place. There will be some amount which is more in some small city which will be insufficient in the city like New York.
As per the survey conducted New York is the costliest city in the United States and the second-costliest in the list is San Francisco followed by Los Angeles, Chicago, Washington. And on the global level, the costliest cities include some of the names like Hong Kong, Luanda, Tokyo, Zurich, and Singapore.
Need of cost of living index
The cost of living index is the index which is used mostly by the employers and the workforce entrants so that they can decide the wages of the labor force on the basis of the cost which is needed to be incurred by them for a living.
There are many other uses of the index such as the college students use this index to identify the place which is best suitable for them in the term of financial requirement. The cost of living is a standard for them that will provide them the cost which they will have to occur if they go for jobs in that city.
On the other hand, it is a very useful tool for the people who are already doing jobs; they can identify that whether their survival is possible if they relocate to the other place after they have been offered a job somewhere. So it is very important for the people to find an idle city for themselves as per their needs.
The cost of living index is also very much helpful to the industrialist and the businessmen as the product can be sold as per the index. The cost of some of the goods are very high there for the cost of goods sold are also very high which will be adjusted in the city which already have the high cost of living compared to the small towns. Like if you want to sell the product worth $200, you need to analyze and set up the market where the cost of living is already $10000 as no one will purchase the costly product where the cost of living will be $500- $1000.