How to Calculate Living Away From Home Allowance

Living away from home allowance is financial support provided to students or employees who are required to live in a different location for work or education. This guide explains how to calculate this allowance, including the formula, factors to consider, and practical examples.

What is Living Away from Home Allowance?

Living away from home allowance is compensation provided to individuals who must relocate for work or education. This support typically covers additional living expenses such as housing, utilities, and transportation that exceed what would be incurred at home.

The allowance is often calculated based on the difference between the cost of living in the new location and the cost of living at the individual's home location. It may also include a per diem rate or a fixed amount per month.

How to Calculate Living Away Allowance

Calculating living away from home allowance involves comparing the cost of living in the new location with the cost at home. Here's a step-by-step approach:

Determine the monthly cost of living at home
Determine the monthly cost of living in the new location
Calculate the difference between the two costs
Adjust for any additional expenses specific to the new location
Apply any applicable tax or deduction rules

The result is the monthly living away from home allowance that should be provided.

The Formula

The basic formula for calculating living away from home allowance is:

Living Away Allowance = (Cost of Living in New Location - Cost of Living at Home) + Additional Expenses

Where:

Cost of Living in New Location = Monthly expenses in the new location
Cost of Living at Home = Monthly expenses at home
Additional Expenses = Any extra costs specific to the new location

For some organizations, the allowance may be calculated as a fixed amount per month or as a per diem rate multiplied by the number of days away.

Example Calculation

Let's calculate the living away from home allowance for a student moving from a city to a rural area.

Expense Category	City Cost ($)	Rural Cost ($)	Difference ($)
Housing	1,200	800	-400
Utilities	150	100	-50
Transportation	200	150	-50
Food	300	250	-50
Total Difference	1,850	1,300	-550

In this example, the student saves $550 per month by moving to the rural area. However, they may need additional support for other expenses. If the organization provides a $200 per month allowance for additional expenses, the total living away from home allowance would be:

Living Away Allowance = -$550 + $200 = -$350

This means the student would need to pay $350 more per month to live in the rural area. The organization might adjust the allowance to cover this shortfall.

Factors to Consider

When calculating living away from home allowance, consider these factors:

Cost of living differences between locations
Additional expenses specific to the new location
Tax implications for the allowance
Duration of the living away period
Any existing support or benefits that may offset the allowance

Note: The actual calculation may vary depending on the organization's policies and local regulations.

FAQ

What is the purpose of living away from home allowance?: The purpose is to compensate individuals for the additional living expenses incurred when living away from home for work or education.
How is living away from home allowance calculated?: It is typically calculated by comparing the cost of living in the new location with the cost at home, then adjusting for any additional expenses.
Who is eligible for living away from home allowance?: Eligibility depends on the organization's policies, but it generally includes students, employees, or individuals required to live away from home for work or education.
Are there any tax implications for living away from home allowance?: Tax implications vary by country and organization. Some allowances may be taxable income, while others may be considered non-taxable benefits.
Can living away from home allowance be adjusted based on individual circumstances?: Yes, the allowance can be adjusted based on individual needs, such as additional expenses or changes in the cost of living.