Cost of Living

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DEFINITION of 'Cost of Living'

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.

BREAKING DOWN 'Cost of Living'

Cost of living can be a significant factor in personal wealth accumulation because a smaller salary can go further in a city where it doesn't cost a lot to get by, while a large salary can seem insufficient in an expensive city. According to Mercer's 2009 Cost of Living Survey, cities with a high cost of living as of 2009 included Tokyo, Osaka, Moscow, Geneva, Hong Kong, Zürich, Copenhagen and New York City. Other American cities with a high cost of living as of 2009 included Honolulu, Los Angeles, Washington, DC, and San Francisco.

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