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 considers several necessary expenses that most of us need to live from day to day. The cost of living includes housing, food, childcare, 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. 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 cheapest states to live in is complex as it requires consideration of many factors. By looking at the cost indices for Groceries, Housing, Utilities, Transportation, Health Care, and Miscellaneous costs, and overall cost of living index can be calculated for each state. The three most expensive states in the U.S. are Hawaii, the District of Columbia, and California.
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 84.8. At a housing index of 66.7, 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 $795 per month. With the lowest cost of living in the country comes the lowest median household income of $43,567 per year.
Oklahoma has the second-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.
The state with the third-lowest cost of living in Arkansas. Arkansas has a cost of living index of 87.8, with housing, transportation, and healthcare costs all being significantly lower than the national average. Arkansas's housing index is just 75.2, meaning that residents spend about $708 per month on average on rent or mortgages. 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.
Kansas has the fourth-lowest cost of living in the U.S, with a cost of living index of 87.9. The housing index in Kansas is one of the country's lowest at 71.8. The median home cost in Kansas is about $137,700, and the average rent for a two-bedroom apartment is $752 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.
With a cost of living index of 88.9, Missouri has the fifth-lowest overall cost of living. Missouri's housing index is only 71.6, meaning that in some parts of the state, residents can score a four-bedroom home for a little over $200,000. 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.
Georgia ranks sixth for the lowest cost of living in the U.S. Georgia's housing index is 71.3, 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 has the seventh-lowest cost of living in the United States. Alabama's housing index is only 70.2. 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.
8. New Mexico
New Mexico has the eighth-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.
Indiana rounds out the top ten list of states with the lowest cost of living with a cost of living index of 90.4. Indiana's housing index is one of the lowest in the U.S. at 76.5. A two-bedroom apartment costs around $750 a month, and the average home value is $169,156. Transportation costs are around the national average, and grocery costs are lower than the national average.