Best States to Live in for Cost of Living: Affordability Across America

When considering relocating or settling down, the cost of living is a critical decision-making factor. Across the United States, the cost of living can fluctuate dramatically from state to state. This is often measured by the cost of living index, which compares the expenses of various categories such as housing, groceries, utilities, transportation, and healthcare. By assessing states based on this index, you can discern where your earnings will stretch further and what areas provide the most financial breathing room relative to the national average.

States that regularly rank favorably in terms of cost of living typically offer affordable housing options and daily expenses that lie below the national average. Your purchasing power is greater in these locales, allowing for a higher overall quality of living that might not be attainable in other states. Therefore, identifying the best states to live in for cost of living can lead to substantial savings and contribute to a higher quality of life.

Crucial to this evaluation is not only the cost of day-to-day expenses but also factors such as average income levels, economic stability, and employment opportunities. Some states boast low costs but may also have lower average incomes, which might offset the benefits of a low cost of living index. Examining the balance between earnings and expenses gives you a clearer picture of where your disposable income could yield the greatest advantage.

Understanding Cost of Living

When you evaluate the best states to live in based on the cost of living, it’s essential to understand the typical expenses you will face and how they match up against the median income.

Components of Cost of Living

The cost of living is a measure of how much it costs you to maintain a certain standard of living in a particular location. It includes a variety of expenses you’re likely to incur:

  • Housing Costs: This represents your rent or mortgage payments, property taxes, and homeowner’s insurance.
  • Transportation Costs: This covers your expenses for commuting, such as gas, vehicle maintenance, and public transportation fares.
  • Grocery Costs: These are your expenses for food and other essentials purchased at grocery stores.
  • Healthcare Costs: This includes your health insurance premiums, out-of-pocket expenses, and costs for medications and doctor visits.
  • Energy Costs: Your bills for electricity, heating, cooling, and other utilities fall into this category.

Each of these components varies from state to state, which can significantly impact your cost of living. One large piece of the budgeting puzzle not included in most cost of living analysts is state and local taxes. Taxes can quickly sway a location from being more affordable to more expensive. So remember to always check taxes in addition to the cost of living index.

Cost of Living vs. Median Income

To better understand whether a state is affordable for you:

  • Median Household Income: Check the state’s median annual household income, which provides a benchmark for the average earnings of households in the area.
  • Median Income: Reviewing this figure will help you assess how your earnings compare to others in the same state.
  • Living Wage: Instead of checking minimum wage rates, look at the living wage to better understand your spending power and quality of life.
  • State Income Tax: Factor in the percentage of your income that will go towards paying state taxes.
  • Average Cost: Averages like the Consumer Price Index can give you a sense of the general price level for goods and services in a state.

Comparing these income figures to the average and specific costs listed above can help you determine if a state falls within your personal budget.

The Most Affordable States

When you’re seeking a place with a lower cost of living, understanding the housing market, overall expenses, and economic trends in the most affordable states is crucial.

Top States for Low Cost of Living

West Virginia often ranks as one of the cheapest states to live in the United States. With a median home value that is significantly lower than the national average, your dollar stretches further here. However, you may find the state lacking in other worthwhile amenities.

  • Missouri stands out for its economic research, which aligns with affordable living, showing a cost of living that is below the national average, especially in areas such as Kansas City, where housing remains affordable.
  • Moving over to Arkansas, the low cost of living complements the scenic beauty, and it continues to attract residents looking for a balance between affordability and quality of life.
  • South Dakota offers a competitive edge with no state income tax, contributing to its status as one of the most affordable states.
  • In Oklahoma City, Oklahoma, you benefit from a housing market that boasts a median home price that leaves plenty of budget for other living expenses.

Analysis of Housing Markets in Affordable States

The housing market is a substantial factor in the overall cost of living. Affordability isn’t just about the list price of a home; it’s also about the value you get for your investment.

  • West Virginia’s housing market is an excellent example, with one of the lowest median home prices in the country, reflecting both the demand and the cost of living.
  • The housing market in South Dakota is balanced, offering good value for money with more space per dollar compared to more populous states.
  • In terms of sustainability and growth, Missouri and, specifically, Kansas City, are projected to maintain a market favorable for buyers, potentially keeping the cost of living low.

By paying attention to these states, you’re more likely to find a living situation that aligns with your financial goals without compromising on quality.

Cost of Living by Region

Your financial comfort can be significantly influenced by the region of the United States in which you choose to live. Certain areas offer a lower cost of living, allowing your budget to stretch further.

Southeastern States

In the Southeastern States, you’ll find that states like Tennessee and Georgia offer affordable living, particularly in smaller cities and rural areas. The urban areas such as Atlanta, while more expensive, still tend to be more budget-friendly compared to coastal metropolises.

States such as Mississippi and Arkansas, home to the natural beauty of the Ozark Mountains, also boast some of the lowest cost of living figures in the nation.

Midwestern States

The midwestern states are known for their reasonable cost of living. States like Indiana, Ohio, and Michigan offer some of the most affordable housing in the United States, especially in rural and suburban areas. The larger cities, like Chicago in Illinois, carry a higher cost but can still be more manageable than major coastal cities.

In urban centers like Minneapolis, the cost of living remains relatively low when comparing amenities and quality of life against cities on the West Coast. However, there are still noneconomic factors to also consider, like the cold winters, which have their own unique impact on quality of life. 

Western States

The Western States present a more varied picture. The West Coast, including California, Washington, and Oregon, is known for its higher cost of living, particularly in major cities such as Los Angeles, San Francisco, and Seattle.

However, if you look inland to states like Nevada and Arizona, the cost becomes more reasonable, especially in less densely populated areas away from the major metropolitan centers.

Economic Indicators

When considering the best states to live in for cost of living, economic indicators such as unemployment rates and poverty rates are crucial. They provide insight into job opportunities and living standards that affect your quality of life.

Unemployment Rates and Job Opportunities

The unemployment rate is a significant indicator of economic health in a state. As of the latest data, states with traditionally low unemployment rates offer a robust job market. For instance, states like Nebraska and Utah consistently report unemployment rates lower than the national average, reflecting a healthy demand for labor and a variety of job opportunities across multiple sectors.

Job Opportunities:

  • Nebraska: Diverse job market with industries such as agriculture, manufacturing, and information technology.
  • Utah: Rapid growth in tech, tourism, and healthcare sectors.

Poverty Rates and Living Standards

The poverty rate, defined by the number of people living below the federal government’s poverty line, is another significant economic indicator. States with lower poverty rates typically offer a higher quality of life and better access to basic needs and services.

Living Standards:

  • High quality of life is often found in states with comprehensive social programs and economic opportunities.
  • States like New Hampshire and Minnesota exhibit lower poverty rates, meaning fewer residents live below the federally defined poverty line.

By scrutinizing these indicators, you gain a clearer understanding of the economic environment and how it might influence your cost of living in various states.

Living Expenses in Major Cities

When considering relocation, you’ll find significant differences in living expenses across major cities. Local housing prices and transportation costs will largely influence your budget.

Comparison of Metropolitan Areas

New York City is often at the top of the list for expensive metropolitan areas, with high costs of living across the board. The San Francisco metro area closely follows, known for its premium housing market and overall cost of living. Both cities see a significant variance when compared to options like Kansas City or St. Louis, where your dollar stretches further, especially in terms of real estate and day-to-day expenses.

On the other hand, San Antonio represents a middle ground, offering a more affordable cost of living than the coastal giants while still providing metropolitan amenities.

Metropolitan Area Cost of Living Index
San Francisco 112.9
New York City 100
Los Angeles 94.9
Raleigh 79
San Antonio 68.8
Cincinnati 63.7

Note: The index is relative to New York City, which is set at 100.

Housing and Transportation Costs in Cities

Your primary expense in any city will often be housing. In Los Angeles, the housing prices are high but not quite reaching the peaks of New York City or San Francisco’s real estate markets. By contrast, cities like Kansas City and St. Louis offer considerably lower housing costs, making them attractive for their affordability.

When it comes to transportation costs, if you live in a city such as New York City or San Francisco, you may rely on extensive public transportation networks, which can reduce the need for a car but still contribute significantly to monthly expenses. Conversely, in sprawling cities like Los Angeles and San Antonio, personal vehicles are often necessary, which shifts transportation costs to car payments, insurance, and fuel. As a whole, Americans spent $12,295 on average for transportation in 2022.

City Average Monthly Mortgage Cost
New York City $2,991
San Francisco $4,000+
Los Angeles $3,239
Kansas City $1,584
San Antonio $1,665
St. Louis $1,563

Mortgage data was collected using US Census Bureau data from S2506 community report

Taxes and Living Costs

When considering the best states to live in for cost of living, tax obligations play a critical role. Your financial well-being can be significantly influenced by state and property taxes, as well as the overall tax systems in place.

Impact of State and Property Taxes

State and property taxes directly affect your disposable income. For example, states like South Dakota and New Hampshire boast no state income tax, which can result in more money in your pocket. However, it’s essential to consider property tax rates as well. New Hampshire has higher property taxes, which could offset some of the benefits of no state income tax. South Dakota offers a more balanced approach with moderate property tax rates.

  • South Dakota:
    • State Income Tax: 0%
    • Average Property Tax Rate: 1.18%
  • New Hampshire:
    • State Income Tax: 0%
    • Average Property Tax Rate: 1.96%

Tax rates can vary considerably, so assessing both state income and property taxes will give you a clearer picture of your potential financial commitments.

Understanding State Tax Systems

Your overall financial health is influenced by the complexity and the specifics of a state’s tax system. States with low taxes typically have less extensive public services, which may affect your lifestyle. It’s crucial to evaluate not just the rates but also what they fund. For example, while some states may not levy a personal income tax, they might have higher sales or property taxes to compensate for the budget shortfall.

Here’s a comparison of tax elements between South Dakota and New Hampshire to illustrate this point:

  • Sales Tax:
    • South Dakota: 4.5% (state level, local taxes may vary)
    • New Hampshire: 0% (no sales tax)

Understanding these systems can lead to informed decisions about where to live based on how state taxes affect your income and property investments. Researching the nuances of each state’s tax code is an essential step in evaluating overall living costs.

Determining the Best Place to Live

When you choose your new home, you must consider both the current cost of living and how it may change in the future.

Quality of Life Factors

Personal preferences often influence your perception of a good place to live, yet there are universal factors affecting the quality of life for everyone. Housing costs are paramount; states such as New Jersey are known for their higher cost of living, largely due to expensive housing. Apart from housing, evaluate the presence of amenities such as national parks and cultural offerings, which can greatly enrich the day-to-day experience. For instance, if you enjoy the outdoors, states with ample green space may be a great place for you.

On the other hand, states like New Mexico offer a unique blend of culture, natural beauty, and typically lower housing costs, which can translate to a good place to find a balance between affordability and lifestyle.

Factor Consideration
Housing Costs Compare median home prices and rents.
Amenities Look for parks, museums, and recreational areas.
Accessibility Evaluate the ease of transportation and infrastructure.
Job Opportunities Consider employment rates and potential for economic growth.


Future Trends in Cost of Living

When considering future trends, you should be aware that a currently affordable state can become more expensive. Economic growth can lead to a high cost of living over time, so it’s important to assess the economic trajectory of an area.

Be aware of upcoming infrastructure projects, as they can signal a region’s potential for growth – sometimes making what is now an affordable area a higher cost place in the future. Additionally, states like the Show-Me State (Missouri) may offer sustained affordability and investment in local economies, which can be indicators of a stable future cost of living.

Trend Potential Impact on Cost of Living
Economic Growth May lead to higher housing costs and cost of living.
Infrastructure Upcoming projects can signal change in cost of living.
Job Market Shifts Growth or decline in job opportunities can affect living costs.

Remember to analyze current statistics and economic forecasts to gauge how these factors might shift over time, which will affect your cost of living in any new home you’re considering.


When considering your cost of living, varying factors influence how far your dollar stretches. According to the U.S. Bureau of Labor Statistics, mortgage payments and healthcare expenses significantly impact the average American household.

In states like North Dakota and North Carolina, you’ll find that your overall cost may be more forgiving, as these regions have reported lower average prices in recent years. Particularly, North Dakota boasts considerable savings on housing and utility costs.

Little Rock, for instance, offers a unique balance of affordability with a vibrant city life. Your mortgage payments could be substantially lower than in more expensive metro areas.

Health insurance remains a critical factor, with an average cost of health care that can vary widely. States often providing more competitive rates can increase the amount of money staying in your pocket after monthly expenses.

Moreover, states with a lower cost of living can directly affect the value and longevity of your Social Security benefits. You may find that your benefits cover more of your needs where the living expenses are less.

Remember, the goal is to align your lifestyle with a location that ensures financial comfort and security. Always cross-check recent data and consult professionals before making any major relocation decision.

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Marly is a lifestyle writer and creator of, a site dedicated to helping readers improve their health, wealth, mindset, and overall happiness. When she’s not writing, you’ll find her listening to audiobooks while gardening, visiting with family, or traveling.