In 2021, USA Today reported about 300 people a day moved from California to Texas—an 80 percent increase from nine years earlier. The main reasons for the mass exodus include: no state income tax, prices for utilities are 20 percent lower, the average home is $282,000 less, and rent is about $1,000 a month less. Depending on your circumstances, moving could save you more than $1 million. On top of this, Texas isn’t even one of the cheapest states to live in. It doesn’t even make the list of the top ten most affordable places to live in America.
As remote work and the cost of living rise, the opportunity to relocate and save thousands is now a reality for many. According to a survey from McKinsey & Company, 35 percent of employees reported they had the chance to work remotely five days a week. With a remote job, you can maintain your salary while moving to a lower-cost state. One blogger, 5am Joel, says he cut his budget by 60 percent after moving to small-town America.
Figuring out the cheapest states to live in requires looking at housing, groceries, utilities, transportation, healthcare, and other costs. If you’re serious about saving money, have flexible job terms, and want to start over new, discover the states with the lowest cost of living.
Key Takeaways
- Remote work and rising living costs have created opportunities to relocate to lower-cost states while maintaining existing salaries.
- The cost of living index is a metric used to compare expenses like housing, groceries, utilities, transportation, and healthcare across different geographic areas.
- The top 10 cheapest states to live in the U.S. include Mississippi, Oklahoma, Kansas, Missouri, Alabama, Iowa, Nebraska, West Virginia, Arkansas, and Tennessee, each offering varying pros and cons.
What Is Cost of Living?
Cost of living refers to the total amount of money required to sustain a certain standard of living, encompassing the expenses associated with basic necessities such as housing, food, transportation, healthcare, education, and other essential goods and services.
It reflects the economic reality of a specific location, considering factors like inflation, wages, taxes, and overall economic conditions.
The average cost of living for states serves as a crucial metric for comparing affordability across different regions or cities, aiding individuals and businesses in making informed financial decisions and assessing the relative value of income in relation to the expenses associated with day-to-day life.
Understanding the Cost of Living Index
The cost of living index is a numerical measurement that quantifies and compares expenses like housing, groceries, utilities, transportation, and healthcare associated with maintaining a standard of living in different geographic areas. By inputting a specific state or city, individuals can access data and calculations that compare the cost of living in that area to a national average or other locations. This offers a detailed breakdown of how expenses in each state measure up to the broader standard. As a result, people can make informed decisions about relocation, salary adjustments, budget planning, and economic policy formulation.
A value above 100 indicates that the cost of living is higher than the reference location, while a value below 100 indicates a lower cost.
The cost of living index can be found from various reputable sources, including government agencies, financial organizations, and independent research institutions. Websites like the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) often provide valuable data regarding the cost of living index. Private organizations, such as Numbeo and the Council for Community and Economic Research (C2ER), also offer comprehensive insights into these metrics.
Important
When reviewing the cost of living in the cheapest states to live in, use these cities as a reference to demonstrate the amount of savings you could potentially yield.
New York
- Cost of living index: 125.1
- Average utilities: 102.5
- Average salary: $74,870
- Average cost of home: $421,274
- Median monthly rent: $1,315
California
- Cost of living index: 134.5
- Average utilities: 124.8
- Average salary: $73,220
- Average cost of home: $762,981
- Median monthly rent: $1,315
Hawaii
- Cost of living index: 179.0
- Average utilities: 141.1
- Average salary: $61,420
- Average cost of home: $966,572
- Median monthly rent: $1,651
The Top 10 Cheapest States to Live In the United States
1. Mississippi
- Cost of living index: 85.3
- Average utilities: 86.1
- Average salary: $45,180
- Average cost of home: $171,998
- Median monthly rent: $901
Pros of Living in Mississippi
- Affordability: Mississippi has the lowest cost of living in the U.S., making it the most affordable for housing and daily expenses.
- Southern Hospitality: The state is known for its friendly and welcoming atmosphere, creating a sense of community and warmth.
- Natural Beauty: Mississippi offers diverse landscapes and outdoor activities, including forests, rivers, and the Gulf Coast.
Cons of Living in Mississippi
- Economic Challenges: Lower average incomes and limited job opportunities can present economic challenges for residents.
- Healthcare and Education Rankings: Mississippi ranks lower in healthcare quality and education, which might affect families and individuals seeking high-quality services.
- Climate and Natural Disasters: The state experiences hot and humid weather and is susceptible to hurricanes and tornadoes, posing potential risks.
2. Oklahoma
- Cost of living index: 86.0
- Average utilities: 98.2
- Average salary: $50,940
- Average cost of home: $200,203
- Median monthly rent: $818
Pros of Living in Oklahoma
- Affordable Home Price: Oklahoma generally offers affordable housing options, making it easier for residents to find a comfortable place to live.
- Strong Sense of Community: The state is known for its friendly residents and strong sense of community, contributing to a welcoming atmosphere.
- Cultural Diversity: Oklahoma’s culture is influenced by Native American heritage and Western traditions, providing a unique blend of history and diversity.
Cons of Living in Oklahoma
- Weather Extremes: The state experiences a wide range of weather conditions, including severe storms, tornadoes, and occasional winter ice storms.
- Educational Challenges: Oklahoma’s education system has faced funding and quality challenges, potentially impacting the type of education available.
- Limited Entertainment Options: While there are cultural attractions, some areas might have fewer entertainment options compared to larger metropolitan areas.
3. Kansas
- Cost of living index: 87.7
- Average utilities: 107.5
- Average salary: $52,850
- Average cost of home: $216,131
- Median monthly rent: $863
Pros of Living in Kansas
- Affordable Cost of Living: Kansas generally offers a relatively low cost of living, providing people more opportunities to save money.
- Tight-Knit Communities: Many Kansans value close-knit communities, fostering strong bonds and a supportive environment.
- Varied Geography: Kansas features diverse landscapes, from rolling prairies to picturesque Flint Hills, offering opportunities for outdoor activities and exploration.
Cons of Living in Kansas
- Weather Extremes: The state experiences a wide range of weather, including severe storms, tornadoes, and fluctuating temperatures.
- Limited Job Opportunities: Some areas of Kansas may have fewer job opportunities compared to larger urban centers, potentially impacting career options.
- Entertainment Options: While there are cultural attractions, some parts of Kansas might have limited entertainment options.
4. Missouri
- Cost of living index: 88.4
- Average utilities: 97.7
- Average salary: $54,520
- Average cost of home: $239,343
- Median monthly rent: $843
Pros of Living in Missouri
- Affordable Housing: With a median household income of $61,043, buyers can afford good quality homes due to a reasonable average cost.
- Cultural Diversity: The state embraces cultural diversity, providing opportunities to engage with various backgrounds and traditions.
- Outdoor Recreation: Missouri’s diverse geography offers options for outdoor enthusiasts, including forests, rivers, and the Ozark Mountains.
Cons of Living in Missouri
- Weather Variability: The state experiences varying weather conditions, including hot summers, cold winters, and the potential for severe storms.
- Education Challenges: Missouri’s education system has faced challenges in terms of funding and quality, which could impact educational opportunities.
- Urban-Rural Divide: There can be a divide between urban and rural areas, with potential differences in access to resources and services.
5. Alabama
- Cost of living index: 88.8
- Average utilities: 103.6
- Average salary: $50,620
- Average cost of home: $220,419
- Median monthly rent: $811
Pros of Living in Alabama
- Affordable Cost of Living: Alabama generally offers a lower cost of living, making it easier to manage daily expenses.
- Southern Hospitality: The state is known for its warm and friendly hospitality, creating a welcoming and inviting atmosphere.
- Natural Beauty: Alabama features diverse landscapes, including beaches along the Gulf Coast and scenic mountains, providing opportunities for outdoor activities.
Cons of Living in Alabama
- Weather Extremes: The state experiences hot and humid summers and the potential for severe weather, including hurricanes and tornadoes.
- Education Challenges: Alabama’s public education system has experienced limited funding, which could impact educational opportunities.
- Limited Job Opportunities: While major cities like Huntsville or Birmingham might provide great job sources, high-paying work is limited in rural communities.
6. Iowa
- Cost of living index: 89.7
- Average utilities: 94.5
- Average salary: $53,520
- Average cost of home: $215,458
- Median monthly rent: $895
Pros of Living in Iowa
- Quality of Life: Iowa often ranks well for its quality of life, offering a balance between urban and rural living.
- Safe and Welcoming Communities: Many Iowa communities are known for their safe and welcoming atmosphere, contributing to a strong sense of community.
- Affordable Housing: Iowa generally offers affordable housing options, making it easier for residents to find suitable living spaces.
Cons of Living in Iowa
- Harsh Winters: The state experiences cold and snowy winters, which might not be appealing to those who dislike cold weather.
- Limited Diversity: Iowa has less ethnic and cultural diversity compared to some other states, which could impact access to varied cultural experiences.
- Economic Opportunities: While Iowa has a stable economy, certain areas may have limited job opportunities in specific industries.
7. Nebraska
- Cost of living index: 90.1
- Average utilities: 85.7
- Average salary: $55,070
- Average cost of home: $255,447
- Median monthly rent: $857
Pros of Living in Nebraska
- Affordable Cost of Living: Nebraska generally offers an affordable cost of living, which makes it one of the cheapest states to live in.
- Strong Communities: Nebraskans often take pride in their strong sense of community, fostering close relationships and a welcoming environment.
- Quality Education: The state has a reputation for providing quality education and has several reputable universities and colleges.
Cons of Living in Nebraska
- Harsh Weather: The state experiences cold winters and hot summers, with the potential for severe weather like tornadoes and blizzards.
- Limited Entertainment: While there are cultural and recreational opportunities, some areas are rural and don’t offer much entertainment.
- Job Opportunities: Certain areas of Nebraska might have limited job opportunities in specific industries, which could affect career options.
8. West Virginia
- Cost of living index: 90.3
- Average utilities: 94.5
- Average salary: $49,170
- Average cost of home: $155,687
- Median monthly rent: $732
Pros of Living in West Virginia
- Natural Beauty: West Virginia is renowned for its stunning landscapes, including the Appalachian Mountains and picturesque valleys.
- Outdoor Recreation: The state offers abundant opportunities for outdoor activities such as hiking, fishing, and camping.
- You Can Get Paid to Move Into a Local Community: Communities like Ascend in West Virginia are willing to pay people $12,000 to move there, plus free outdoor recreation for a year.
Cons of Living in West Virginia
- Economic Challenges: The state has faced economic struggles, which can impact job opportunities and income levels.
- Limited Urban Amenities: While there are urban areas, West Virginia might have fewer amenities and entertainment options compared to larger cities.
- Healthcare and Education: The state’s healthcare and education systems have faced challenges, potentially affecting access to quality services.
9. Arkansas
- Cost of living index: 90.3
- Average utilities: 91.8
- Average salary: $48,570
- Average cost of home: $199,284
- Median monthly rent: $901
Pros of Living in Arkansas
- Affordable Cost of Living: Arkansas generally offers a lower cost of living, making it easier to manage expenses, including housing.
- Natural Beauty: The state boasts diverse landscapes, including the Ozark Mountains and the Hot Springs National Park, providing opportunities for outdoor activities.
- Southern Charm: Many Arkansans embrace Southern hospitality, contributing to a friendly and welcoming atmosphere.
Cons of Living in Arkansas
- Weather Extremes: The state experiences hot and humid summers and the potential for severe weather events like tornadoes.
- Education Challenges: Arkansas’s education system has faced funding and quality challenges, which could impact educational opportunities.
- Economic Opportunities: While the economy is diverse, certain areas of Arkansas may have limited job opportunities in certain industries.
10. Tennessee
- Cost of living index: 90.4
- Average utilities: 93.2
- Average salary: $52,820
- Average cost of home: $310,782
- Median monthly rent: $897
Pros of Living in Tennessee
- Cultural Diversity: Tennessee offers a blend of cultures, with a rich history in music (Nashville for country, Memphis for blues), arts, and southern traditions.
- Natural Beauty: The state is known for its scenic landscapes, including the Great Smoky Mountains and the Mississippi River, providing ample opportunities for outdoor recreation.
- Affordable Living: Tennessee generally provides an affordable cost of living, including reasonable housing costs.
Cons of Living in Tennessee
- Weather Variability: The state experiences varying weather conditions, including hot summers and potential for severe storms.
- Healthcare and Education: While there are quality institutions, Tennessee has faced challenges in healthcare and education quality and access.
- Economic Disparities: Certain areas might face economic challenges, with disparities in job opportunities and income levels.
Important
Keep in mind that these numbers are averages for entire states. When it comes to lowering costs, living in smaller towns will drastically decrease your cost of living.
For example, according to Zillow, the average sale price for a house in Nashville, Tennessee, is $447,910. However, in Dyersburg, Tennessee, the average median selling price for a home is $112,000. This goes to show that if you have job flexibility and are willing to move anywhere, you can save hundreds of thousands of dollars, if not potentially millions, in the long run.
- Data for the cost of living index and average utilities is from the Missouri Economic Research and Information Center.
- Average salaries for 2023 were taken from data provided by Forbes.
- Data for the average cost of homes was cited from The Motley Fool.
- Median monthly rent data was collected from World Population Review.
Trading in Big City Expenses for Small Town Savings
Relocating from a bustling metropolis like New York City, Los Angeles, or Seattle to a quaint small town or looking for one of the happiest jobs in the most affordable states to live in can yield substantial financial benefits. The transition offers a chance to escape the sky-high living costs, exorbitant rents, and inflated property prices commonly found in major cities. Just be sure that if you’re moving without a secure remote job or new career opportunity, you do more research on the unemployment rate, the median household income, and the area’s fastest-growing industries to ensure you’re not pigeonholing yourself. The last thing you want is to move to save money and end up losing it.
By embracing a more budget-friendly environment, individuals can discover a considerable reduction in everyday expenses, from housing and transportation to dining and entertainment. This significant cost differential allows for the allocation of funds toward long-term goals such as homeownership, investments, or pursuing personal passions.
Additionally, the shift to a smaller community fosters a slower-paced lifestyle, abundant natural beauty, and a strong sense of community, offering economic advantages and an improved quality of life that enhances well-being in multiple ways.
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