Yesterday Jane listed the top 50 most expensive cities according to Mercer HR Consulting. I enjoy reading lists so I was glad she posted it. It also reminded me that it has been awhile since my last Consumer Expenditure Survey, so I'll post April's tomorrow. Anyway, here are the top ten most expensive cities:

1. Tokyo, Japan
2. Moscow, Russia
3. Osaka, Japan
4. Hong Kong
5. Beijing, China
6. Geneva, Switzerland
7. London, UK
8. Seoul, South Korea
9. Zurich, Switzerland
10. New York City, USA

I've lived in several of those top ten cities and if I had to rank them Zurich and London would go right at the top and Hongkong and Beijing would go right at the bottom. The problem with cost of living surveys is they don't take one crucial factor into account: TAXES. When I think about the cost of living, I think about it in terms of after-tax dollars.

Just using a rough example, say you make $100,000 in Hongkong. After tax you will take home around $85,000. In London you will take home less than $50,000. That extra $35,000 will obviously make Hongkong a much more affordable place to live. So you have to consider first what your after-tax income is and only second think about what your day-to-day expenses are.

In Hongkong we had a furnished apartment in a nice area and it cost $1300 a month. In London we have an unfurnished apartment in a rough area and it costs over $1800 a month. Plus we pay $200+ in property taxes a month here, which I wouldn't resent if the streets were clean and the schools were good, but of course they aren't. (In Zurich, the streets are clean and the schools are good at least.)

The point I'm trying to make is this: always take the results of cost of living surveys with a grain of salt because they only give you half the picture, and I would argue it's the much less important half.

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