The relationship between standard of living and cost of living is that the higher the standard of living, the more expensive it will cost individuals to maintain, or even measure up to the standard. Standard of living is artificial and is predetermined or set by authorities or government as a measure of living well. Setting a standard of living allows the government to assess its developmental targets and to periodically evaluate the percentage of the population that meets the target. The society also contributes to the establishment of a standard of living through their lifestyle choices and their unquestioning acceptance of artificial standards to which they hold themselves.
In this sense, the more amenities, services, goods and other types of possessions that people feel they are entitled to, the more they will strive to attain those objects, even when they do not have the income to finance them. This type of mentality is partly intensified by the availability of credit in various forms to facilitate the attainment of such a lifestyle. The relationship between standard of living and cost of living can be seen when people choose to spend money they do not have in order to attain or maintain a standard of living to which they believe they are entitled.
Another connection between the standard of living and cost of living is that as the standard of living increases, the associated cost for sustaining it also increases, even if the income to sustain the increased expectations does not increase in a suitable manner. Sometimes, the expectations of a required standard of living traps individuals in a vicious cycle from which they may feel helpless to free themselves. For instance, the more money an individual makes, the higher the expectations of the standard of living in relation to his or her financial status. This makes the cost of living for such individuals go up even more, meaning that they have to earn more money to sustain the standard.
Comparing the cost and living standards of the past further illustrates the relationship between standard of living and cost of living. In the past, before the advent of many technological gadgets and labor-saving devices, living standards were quite simple and the cost of living was also really affordable. At that time the major desires were good housing, food, clothing and medical care. With the advent of technology, individuals must consider additions to the accepted standard of living that often include telephones, Internet, heating and cooling, vehicles and cooking, education, entertainment and vacation. All of these requirements add up and contribute to the increase in the cost of living.