Most of us have probably heard the terms standard of living and cost of living before. We often times think that they are one in the same. By thinking this way, we are only partially correct. Basically, standard of living determines our cost of living.  Think of standard as being subjective and variable.  Cost is more rigid and fixed.  Our standards determine what the total cost will be.  Living in a mansion versus a trailer have completely different standards and costs.  This is important because it sets the tone for how much we will spend every month.  Do you spend more than you make every month?  If so, you have a standard that is not supported by your income.  This is a problem that needs to be fixed fast.

Changing your standard can be very difficult because it is very emotional.  The good news is there are many ways to keep a higher standard without the additional cost.  Some quick fixes are lowering your cable, internet, and phone bill.  These quick fixes can easily save you $100 plus per month.  Need more?  Look at where you are currently living and evaluate what the cost is to live in that area.  A helpful tool is a standard of living calculator like this one from CNN Money.

Let's use Atlanta, GA as an example.  I currently live in Marietta, GA.  If my wife and I decided to move to Atlanta with an annual income of $50,000.  We would have to spend $3,348 more per year.  That is $279 more per month just to live in the city and keep the same standard of living.

When it comes to your financial health emotions and facts need to be evaluated.  If you only use one or the other, you are missing out.  Do not let your emotions rule your finances by setting an unsustainable standard.