Let’s face it: everyday life can be expensive. We’re not talking about taking extravagant trips, purchasing your children’s Christmas gifts, or even facing an emergency like a broken down car. We’re talking about everyday life.
The cost of living takes into account several necessary expenses that most of us need to live from day to day. The cost of living includes housing, food, childcare, and educational costs, transportation costs, and medical costs.
Depending on where you live in the world, your cost of living varies. Even within the United States, the cost of living varies from state to state. Living in New York City, for example, is far more expensive than living in a rural town in Nebraska. The price of a 3,000-square-feet home with an inground swimming pool in a small town may be the same price as a studio apartment in a big city. This example shows the differences in the cost of living.
Determining the states with the lowest cost of living can be difficult. This is because many different factors could be used. For example, one list may include childcare costs, while another leaves this off completely. However, there are a few reputable publications and organizations that have compiled data to find the states with the lowest cost of living.
Ten States with the Lowest Cost of Living
Mississippi has the lowest cost out of living of all 50 states. Mississippi’s cost of living index is 86.1. Mississippi has the lowest housing costs in the country, with the average home price at $128,000 ad the average rent for a two-bedroom apartment at $746 per month. With the lowest cost of living in the country comes the lowest median household income of $43,567 per year.
The state with the second-lowest cost of living is Arkansas. Arkansas has a cost of living index of 86.9, with housing, transportation, and healthcare costs all being significantly lower than the national average. To live comfortably in Arkansas, one would need to make only $44,571 for a family, which is just below the median household income of $45,726.
Oklahoma has the third-lowest cost of living in the United States. Oklahoma’s housing costs are also very low, with the average two-bedroom apartment costing $879 per month and the median home value equaling $130,001. Oklahoma also has low transportation costs, with regular gasoline costing $2.262 per gallon as of January 2020, the second-lowest in the country. The living wage in Oklahoma is $46,159 and the median household income is $51,424.
Missouri has the fourth-lowest overall cost of living. Missouri’s housing index is only 70.6, with the second-lowest average rent in the country for a two-bedroom apartment of $827 per month. Missouri has the lowest gas prices of any state, with regular gasoline costing $2.209 per gallon as of January 2020. The livable wage in Missouri for a family of four is $53,078, which would just be covered by the state’s median household income of $53,560.
5. New Mexico
New Mexico has the fifth-lowest cost of living in the United States with a cost of living index of 87.5. New Mexico’s low cost of living is greatly influenced by its low housing costs, with a median home value of $193,200 and the average rent for a two-bedroom apartment costs $847 per month. A monthly utility bill is also below-average in New Mexico. New Mexico’s median household income is $48,059.
Tennessee has the sixth-lowest cost of living in the United States. Tennessee has a livable wage of $46,785. Tennessee’s housing index is 72.5, the fifth-lowest in the country. One can expect to pay about $854 per month on average for a two-bedroom apartment with some upward variation in cities such as Chattanooga and Knoxville. Monthly utility bills and healthcare costs come out to right around the national average. The median annual income in Tennessee is $50,972.
The state with the seventh-lowest cost of living is Michigan, with an index of 89.6. The median home price in Michigan is $151,400 and the average rent for a two-bedroom apartment is $885 per month. While housing is very affordable and 70% of residents own a home, Michigan has the ninth-highest property tax rate of 1.71%. Utilities and healthcare costs are slightly below the U.S. average and grocery costs are about the same as the U.S. average. The livable wage in Michigan is $48,882 and the median household income is $54,938.
Kansas has the eighth-lowest cost of living in the U.S. Kansas is tied with Tennessee for housing costs with an index of 72.5. The median home cost in Kansas is about $137,700 and the average rent for a two-bedroom apartment is $821 per month. Kansas has relatively low transportation costs, with regular gasoline costing $2.278 per gallon as of January 2020, the third-lowest price in the U.S. The livable wage in Kansas is $48,054 and the median household income is $57,422.
Georgia ranks ninth for the lowest cost of living in the U.S. Georgia’s housing index is 72.2, with the median home price at $186,500 and the average rent for a two-bedroom apartment at $958. Rent increases significantly in cities such as Atlanta, Savannah, Augustus, and Columbus. While transportation and grocery costs are slightly below average, Georgia residents pay a slightly above average utility bill of about $126.38 on average. The livable wage in Georgia is $47,946 and the median household income is $55,679.
Alabama finishes the top ten states with the lowest cost of living. Alabama’s housing index is only 69.9. The median home price in Alabama is $129,300 and the average rent for a two-bedroom apartment is $772 per month. Alabama is one of the best states for retirement because it offers beaches, golf, and warm weather but is significantly cheaper than Florida. The livable wage in Alabama is $45,824 and the median household income is $48,486.