Visual Capitalist provides a great interactive tool for your students to see the wide disparity in the cost of living as seen through rental costs:

With rental prices across the country continuing to rise from this demand, there is one question on the minds of many Americans: how and where can dollars spent on housing be stretched the furthest?

Why is this important to know? Largest cost item for young people living on their own will be that monthly rent check so they better have a realistic view of what these costs look like in their target cities.

My favorite tool has a slider bar which allows a user to select a monthly rental amount and shows how much square footage that would buy you. I know that right about now you are thinking that your rental dollar doesn’t go very far in New York City or San Francisco! (Note: This is a screenshot of only a portion of the chart):

Their other graphic shows what $1,500 buys you in terms of square footage, as represented by the size of the boxes in this chart (when you roll your cursor over the chart on the website, you see the sq. footage):

_________

Questions:

• What city would you like to live in when you are living on your own? Why?
• What kind of apartment do you think you will be able to afford once you have a full-time job?
  • Note that a common rule of thumb is that your rent should not be more than 25% of your income.
  • Average college graduate earns about $40,000 – $50,000/year if you are looking for reference point.
• Assume that you want to spend about $1,000 per month in rent, what could you afford to rent in three places you might want to live when you are living on your own.
• If you want to live in a high-cost city, what strategies can you utilize to reduce your rent cost?
• How much more apartment can you rent in the lowest cost market as compared to the highest cost market?
• Do you think higher salaries in the high-cost markets can help to cover this higher rent cost? Why or why not?
• Does this analysis change the way you are thinking about where you want to settle down?

________

For more on the cost of living, check out our Budgeting Lesson: What’s the Cost of Living?

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.