What is an LCOL area, and what does it mean?
Even if you wish to live in a mansion in LA, it is not always possible. Maybe you'll have to choose an LCOL area. Read this content to learn what it means.
It is important to know what LCOL area means before choosing your new home
Anyone who is looking for a new place to live can bump into the term LCOL area. If you have never heard of it before, it is your time to learn about it. And if you already know what it means, read to learn the pros and cons of living in one of these areas.
Choosing the place you’ll live is an important decision. More than just a home, it is a strategy and will impact your financial life too.
Many things can tell you if the place you’re going to live is good or bad for your lifestyle. And just like everything in life, there is no one size fits all kind of answer. Some people will benefit from living in an LCOL area, and some will not.
To find out if it is a good idea for you or doesn’t, read this post, and it will tell you everything you need to know about it.
LCOL area: learn what it means
LCOL is the acronym for Low Cost of Living. So, when an area is determined as LCOL, it means that the maintenance costs and basic expenses of housing are low.
Each person has an individual cost of living based on their own choices. But the cost of living to which this term refers is determined by the average price of houses, services, and products in that region.
After all, you can save up to a point. However, the average rental price per square meter and supermarket in a neighborhood are more or less the same for everyone.
You can choose not to buy too many shoes, clothes, electronics, etc. But you cannot choose not to have a house to live in, not to eat, not to use water, a cooling and heating system, etc.
But you can choose to live in an LCOL area or an area with a high cost of living. This will definitely influence your budget a lot.
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Is it better to live in an LCOL area?
Deciding to live in an LCOL area and evaluating whether it is advantageous or not is an extremely individual choice. But let’s point out some aspects to take into account.
If your goal is to minimize your housing costs as much as possible, you should look for an LCOL area.
These areas also tend to have a slower pace of life and provide a better quality of life if that’s what you’re looking for.
However, the reason for this tranquility is the fact that these areas have fewer cultural and sporting events, restaurants, shopping malls, and other urban services.
Jobs tend to be lower paying in LCOL areas. If you’re looking to increase your salary, you’ll likely have a better chance in an area with a higher cost of living.
What determines an LCOL area?
There is an index to measure the cost of living in a given region and say whether it is high or low.
On this scale, the number 100 would be the average cost. Scores above 100 indicate an area with the highest cost of living. And following logic, places with a score below 100 have a lower cost of living.
If a city has a score of 150, for example, this means that this city has a cost of living that is 50% above average. A city with a score of 80 has a cost of living that is 20% below average.
Within the same city, there will be neighborhoods with higher or lower costs of living.
This index assesses issues such as supply and demand for homes, job offers, and availability of services, among other factors.
Pros and cons of living in an LCOL area.
Let’s highlight some of the pros and cons to help you understand if it is good for you.
Pros of living in an LCOL area
Choosing the best place to live is a personal decision. You have to analyze your lifestyle and your goals to see what is right for you. These are the benefits you may find if you choose an LCOL area:
Easier to find a good house
Areas with a higher cost of living tend to be more disputed (this is what generates the highest cost). This makes it more difficult to find houses with good structures at a decent price. In an LCOL area, there is a greater supply of large houses with much more affordable prices.
Having a more relaxed lifestyle
Although this is not a rule, most LCOL areas have lower demand and are less dense. Because they have less traffic and are further away from the hustle and bustle of the main urban centers, your lifestyle can be slower and quieter.
People working from home can save money
LCOL areas tend to have lower salaries. However, if you work from a home office and don’t have to commute to work, you can take advantage of the low cost of housing to save a lot of money.
LCOL areas disadvantages
But since everything has at least two sides, there are also possible disadvantages to living in an LCOL area. We’ll highlight them for you in the following.
It can be harder to find a job that pays you more
As we mentioned above, one of the reasons that make an LCOL area to perform this way is that the offer of jobs with attractive salaries is lower. However, if a higher salary is not what you are looking for, this will not be a disadvantage for you.
Fewer entertainment options and high-performance cultural and sporting events
If you like lively clubs, concerts by famous artists, and high-performance sporting events, being in an LCOL area may distance you from your interests.
Make money using the internet and live wherever you want to
For those working online, it is easier to pick the right place to live. When you’re not attached to an office that you must commute to, you get the freedom to decide the best place to live, as long as you have an internet connection there. You’ll get independent and choose your home strategically.
The following post has some interesting ideas to make money online. Check if you can make some of these activities and start to pursue your freedom.
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