Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
Home » HCOL VS LCOL Areas: What Is Financially Better?

HCOL VS LCOL Areas: What Is Financially Better?

Reading Time: 5 minutes

Where you live can impact many aspects of your everyday life. Many people, for example, realize that their finances will be affected. However, some fail to understand that their contentment is also among these aspects.

That’s where today’s topic comes into play. HCOL and LCOL are two acronyms that may not mean a lot to you right now, but in a paragraph or two, you will realize precisely why people should be concerned about their cost of living.


  • There are 3 types of areas that you should be aware of – low cost, medium cost, and high cost.
  • Each area comes with its own benefits and drawbacks.
  • Realistic goals and expectations are crucial to choosing the right area for you.

What Do HCOL And LCOL Mean?

To avoid any confusion that may arise from the terms HCOL and LCOL, we will look at them both in isolation and concerning one another, and a short mention of what is MCOL.

HCOL Meaning

The term HCOL means high cost of living. That is precisely why terms such as HCOL area and HCOL cities get thrown around so often. The variables considered include median home, gas, and food prices (among other factors).

As it would be near impossible to categorize cities without a frame of reference, most cost of living indices compare sets of cities. Still, some cities are so notoriously high-cost that they can be considered HCOL cities even in isolation.

One example of a HCOL city is New York, and an example of a HCOL area could be Manhattan. We’ll look into the numbers later on.

LCOL Meaning

LCOL is the opposite of HCOL, and stands for low cost of living. Likewise, in LCOL areas and cities, living costs are objectively low.

Similar to HCOL cities, some cities are known for being low-cost, even in isolation.

One such LCOL city is Mississippi, while a LCOL area can be Holmes County.

MCOL Meaning

Wherever there’s a high, there’s also a low. Naturally, there also has to be something in between. In this case, that would be MCOL, which refers to medium living costs. It would include MCOL areas that do not belong in either of the two categories mentioned before.

HCOL VS LCOL Comparison

There are numerous ways in which the terms HCOL and LCOL impact our everyday lives. Even people unaware of the terms refer to the idea of living costs.

As expected, a HCOL area can come with its benefits and drawbacks, similar to how LCOL cities can have their pros and cons. Consequently, we will be looking into what the terms HCOL and LCOL entail in practice.

HCOL – Pros and Cons

First, we’ll cover the pros and cons of living in HCOL cities. Among the most famous HCOL cities (or states) is New York. As we mentioned, a specific HCOL area within New York is Manhattan, where the cost of living index is roughly 237% above the nation’s average. Therefore, life in New York will cost more compared to other places. While you might be able to become financially independent sooner, there will be fewer opportunities to save up and invest.

You should also be aware that HCOL cities often have high unemployment rates, as is with New York’s rate of 6.6% (almost double the national 3.5%). Nevertheless, if you make a decent living, HCOL cities offer a robust lifestyle and quality infrastructure.

These pros and cons apply to numerous HCOL cities found on Mercer’s 2022 Cost of Living Ranking, such as Hong Kong (1), Zurich (2), New York (7), Tokyo (9), and Beijing (10).

LCOL – Pros and Cons

LCOL cities, on the other hand, are the exact opposite. Besides spending less money on average, you can expect to avoid many issues brought about by stressful work environments and long hours, such as depression, fatigue, diabetes, and even addiction. With the rise in remote work, you can save and invest significantly more than if you lived in a HCOL area.

There are, however, some downsides to living in a LCOL city. Local job opportunities will be rare and generally less stable than those in a HCOL area. Suddenly, even minor economic shifts can affect your everyday life.

The previously mentioned would hold for countries ranked lower on Mercer’s 2022 Cost of Living Ranking, like Calgary (141), Cairo (154), Warsaw (174), Budapest (180), and Cape Town (194).


Even in the US, HCOL and LCOL states share the same pros and cons. HCOL areas offer a more stressful way of life but more growth opportunities, while LCOL areas offer the exact opposite.

In terms of the cost of living index, Mississippi (84.5), Oklahoma (86.7), Alabama (87.1), Kansas (87.3), and Iowa (88.2) rank the lowest. These states are textbook examples of LCOL living. For them, this ranking is due to their relatively low grocery, housing, utilities, transportation, and health costs. Compared to many HCOL states, your average expenses can be over 40% lower.

On the other hand, Hawaii (186.0), the District of Columbia (153.4), Massachusetts (149.9), California (138.7), and New York (135.7) are on the top of the list. Some of their index scores, such as those related to grocery and housing, are nearly double the average 90.1.

HCOL VS LCOL: How Can You Know Which One To Choose

While HCOL and LCOL areas have benefits and drawbacks, the criteria are relatively objective. It means that the top HCOL cities are considerably more expensive than LCOL cities.

As a result, the choice of whether or not to live in a HCOL or LCOL city is quite hard to make. However, these questions can help you decide

First of all, can you work remotely? If you can, you may reap the benefits of living in a LCOL area with the salary of a person living in a HCOL area. That can ensure lots of investment opportunities that you may not have otherwise.

Second of all, do you want to live in a big city? If you wish to try your hand at life in the big city, the costs of living in a HCOL area could be more bearable. After all, no pros of living in a LCOL area are worth it if you are constantly miserable.

And finally, do you have what it takes? Living in a HCOL area takes a toll on the individual. You are constantly competing in a dynamic environment that stops for no one. It takes significant willpower, dedication, and a varied set of skills to get by.

Wrap Up

In conclusion, the choice between HCOL, MCOL, and LCOL is quite hard to make. It’s not the type of decision that is made on a whim. Judging by the variables behind the cost of living index, it’s clear that there are many factors to consider. It would be best to stay as objective as possible when making such decisions, but above all, you should carefully analyze what type of environment best fits your needs, goals, and outlook on life.

Frequently Asked Questions:

What is HCOL area?

HCOL (High Cost Of Living) areas are areas that are considered relatively expensive to live in.

What is LCOL area?

LCOL(Low Cost Of Living) areas are areas that are relatively less expensive to live in.

How much do you need to live in a HCOL area?

That would depend on how much of an HCOL area you are looking at. Your costs could reach even double the national median value.

How much do you need to live in a LCOL area?

It would depend on which LCOL area you choose to live in. The lower they are on the index, the lower the cost is.
Share on Social