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When it comes to the cost of living in a city, there's much more than initially meets the eye.
Let's start with this: The average American household earned $63,784 in 2013 before taxes. On average, expenditures totaled $51,100 -- meaning that after taxes, there was little left for savings. Honestly, though, this doesn't tell us anything.
Everyone knows that the cost of living varies by a large margin depending on where you live. But here's the hitch: Almost everything we think we know about our cost of living is plainly wrong.
Let me explain.
Washington, D.C., is crazy expensive
You've no doubt heard that places like Washington, D.C., San Francisco, and New York City are very expensive to live in. That's true, especially when it comes to housing, where these three are the most expensive.
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The Bureau of Labor Statistics' annual Consumer Expenditure Survey proves this out. Broken out across the 18 major cities covered in the survey, D.C. is by far the most expensive, while Miami is the cheapest. Hover over each bar to get specific data for housing, transportation, and all "other" costs.
Simply looking at this data, we would say that if one wishes to become financially independent or retire early, they should avoid cities like D.C. and San Francisco -- and instead aim to live in places like Miami, Atlanta, or Phoenix.
But there's a huge piece of this puzzle missing.
Don't ignore the difference in income
That huge piece is how much the average household brings in during the course of a year. As you might expect, these figures vary by a large margins as well.
Here's how it plays out, while leaving the order of the cities presented -- from lowest to highest expenditures -- exactly the same as above.
Source: BLS, Consumer Expenditure Survey
Not surprisingly, cities like D.C. and San Francisco have some of the highest incomes. But the most important observation that one should take away from this is the fact that incomes don't vary uniformly across the cities as you move from left to right.
In other words, even though the average Seattle household spends much more than the average Houston household, they both pull in about the same amount of money per year. That's a big deal, because it means that the household in Houston has a much better chance of saving money, investing the difference, and enjoying financial security than the average Seattle household.
Washington, D.C., is actually crazy cheap!
The best way to account for this lack of uniform variance is to figure out how much pretax income is used for the average household's annual expenses. By doing this, we can see which cities are actually cheap when taking both income and expenses into consideration.
The results are quite surprising.
Source: BLS, Consumer Expenditure Survey, author's calculations
In the perfect world, we'd be able to see how expenditures compare to after tax income, but the survey does not do that. It should be noted, however, that payments to Social Security are included in annual expenditures.
It's easy to try and explain away the outliers. Detroit has lost huge swaths of its population in recent years, leading to the wealthy have an outsized effect on the "average" household. Phoenix, on the other hand, is a popular destination for both retirees and immigrants, leading to the lower average income.
Beyond these two, however, there are some surprising results. Minneapolis, Baltimore, San Francisco, and -- more than any other city -- Washington, D.C., are far more affordable than they're often given credit for. Los Angeles and Philadelphia, on the other hand, put the average household in much more of a financial pinch than one might expect.
Of course, there are much bigger considerations to think about when deciding where to live -- a potential job location, the climate, and where your family and friends reside, to name a few. But if you're looking for a place with a low cost of living, the results above could help you make a more informed decision.
And even if you aren't prone to move, checking to see if you come in above the average for income, and below the average for expenditures, can help you gauge how you're faring against your peers in trying to sock away money for retirement.
If you've fallen behind in this regard, don't miss our report below.
The article Heres the Average Urban Americans Cost of Living: How Do You Compare? originally appeared on Fool.com.
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