If you are planning to move to the USA – it’s important you know how much a Big Mac and a slice of apple pie are going to cost you. The cost of living in the USA is a lot higher than South Africa, so if you have been offered a position in the USA, it’s essential you understand how much of your salary will go to cover your basic living costs.
Cost of living in USA: Major cities put a strain on your budget
While the cost of living in the USA varies from region to region and even city- to-city, it’s important to be aware that living in a cosmopolitan centre, irrespective of region, can work out more than 50% above the national average. While you can expect to earn more in these cities, the increase in salary is often not enough to offset the higher cost of living.
A recent analysis of the Bureau of Labour Statistics’ Consumer Price Index shows that the cost of living in America has climbed 14% over the past three years. The increase in the cost of living means that Americans need to earn more to live comfortably, but unfortunately the median household income is not keeping up with the increases in the cost of living experienced by America’s largest cities.
The analysis pointed out that San Francisco residents need the highest income to cover the cost of necessities. It also highlighted that the biggest gap between median household income and what you actually need to live comfortably is in New York. Here the average household income is only $55 191 annually, whereas the amount needed to live comfortably is $99 667.
Cost of living in the USA versus South Africa
If you want to make a direct comparison between the cost of living in the USA versus South Africa, a good website to visit is mylifeelsewhere.com. Here you will find some interesting insights including:
- The USA is 43.6% more expensive than South Africa
- You will pay 56.5% more for a basic mean with a drink at an inexpensive restaurant in the USA
- Fast food at McDonalds or similar is 82.6% more expensive in the USA!
- You will pay double for your groceries in the USA
- You will pay 14.1% more for transportation – but the good news is driving your own car is cheaper as petrol is 31% less than South Africa
- You will pay 2.9% more in the USA when you rent a 1-bedroom apartment in a downtown area compared to a similar apartment in a downtown area in South Africa
- You will pay 5 times more for childcare in the USA
- You will pay 1.6% more for clothing in the USA
Quality of life in the USA
Fortunately to compensate for the increased cost of living – your quality of life will be higher, but you must watch what you eat. In South Africa, only 28.3% of adults are obese, whereas in the USA this number is 36.2%. Despite this, the average adult lives to 80 years in the USA, whereas in South Africa the average is 64 years.
You are also 4.4 times more likely to make money in the USA and 84.1% less likely to be unemployed. If you are going to earn a top salary in the USA, the good news is that you will pay less tax as while South Africa has a top tax rate of 45%, the USA’s top tax rate is 39.6%.
If you are a South African living in the USA and would like to know more about how you can maximise your finances through financial emigration from South Africa, accessing your South African retirement annuity and our tailor-made tax solutions for South Africans around the world, contact FinGlobal today.