The cost of living is defined as the amount of money needed to sustain a certain standard of living by affording basic needs such as housing, food, healthcare, and more. The cost of living is often used to compare how expensive it is to live in one location compared to another and is also used as a big factor for people to determine where they want to be located in addition to cultural attractions, the job market, and other factors.
The cost of living in the United States varies significantly between states. A large determining factor for the cost of living index is housing. For reference, the median rent for a two-bedroom apartment in the United States is $1,192 per month.
The cost of living index provides you with the percentage difference in the cost of living between one location and another. The percentage difference is always compared to 100; therefore, if the cost of living index is 90, it is 10% below the location it is being compared to. In this case, when comparing the cost of living index of states, 100 represents the U.S. average.
Mississippi has the lowest cost of living in the U.S. with a cost of living index of 84.5. Most notably, Mississippi’s housing index is 67.1, the lowest in the country. The average home cost in Mississippi is $128,000 and the average rent for a two-bedroom apartment is $746. The living wage in Mississippi is only $46,084 for two adults and one child.
Arkansas has the second-lowest cost of living index in the country with an index of 86.9. Housing, transportation, and healthcare are particularly lower in Arkansas than in other parts of the country. The living wage in Arkansas is only $44,571.
Oklahoma has the third-lowest cost of living index of 87. Oklahoma also has significantly lower housing costs, with the average rent for a two-bedroom apartment costing about $879 per month. The living wage in Oklahoma is $46,613.
Missouri has the fourth-lowest cost of living index of 87.1. Missouri’s housing index is 70.6, the second-lowest in the country, with average rent for a two-bedroom apartment at $827 and the average home value at about $159,000. The living wage in Missouri is $46,159.
New Mexico has the fifth-lowest cost of living index of 87.5. Housing is the biggest factor in the cost of living difference. The median home cost in New Mexico is $193,200 and the average rent for a two-bedroom apartment is $847. Albuquerque is more expensive; however, the rest of the state, especially in the southern parts, is much more affordable. The living wage in New Mexico is $48,050.
The state with the highest cost of living index is Hawaii, whose index is 192.9. This means that the cost of living in Hawaii is 92.9% higher than the U.S. average. Hawaii’s housing index is 318.6, where a two-bedroom costs about $1,895 per month and the median home value is about $660,000. Groceries are also significantly more expensive in Hawaii since it is an island and most goods need to be shipped in.
The District of Columbia has the second-highest cost of living index of 158.4. The housing index in the District of Columbia is 267 with an average rent price of a two-bedroom apartment going for $2,776 per month. The living wage in D.C. is $67,867, the highest in the country.
California has the third-highest cost of living index of 151.7. Aside from Hawaii, California has the highest transportation index of 138.9, thanks to notoriously high gas prices (the highest in the country). The housing index is 227.3 with a two-bedroom apartment running at $2,495 and even higher in cities like Los Angeles and San Francisco.
New York has the fourth-highest cost of living index in the U.S. of 139.1. The housing index in New York is 204.4. A two-bedroom unit in New York City costs $3,675 on average and in New York state, a two-bedroom unit costs about $1,528. Groceries, transportation, and utilities are all above the U.S. average as well, but not by as large of a margin. The living wage in New York is $59,128.
The fifth-highest cost of living index in the U.S. is Oregon with an index of 134.2. Oregon’s housing index is 181.8 with rent for a two-bedroom costing $1,123, which is below the U.S. median but is much higher around cities such as Portland. Oregon has some of the highest gas prices in the country, with a transportation index of 138.9. The living wage in Oregon is $51,900.