12 States with the Lowest Cost of Living and How They Do It
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Ever heard someone say, ‘I’m moving where my paycheck stretches farther?’ That’s the battle cry of people fed up with watching their hard earned dollars disappear in high cost states. The good news? Not everyone can afford to live in the U.S., but that doesn’t mean it’s unaffordable everywhere. Some states have found ways to make life cheaper, whether it’s cheaper housing, tax breaks or clever public policy.
So if you’re in the market for a fresh start that won’t break the bank, this list may help you along your way. These aren’t about saving money: they’re about living well on less. So pack your virtual suitcase and let’s take a look at how these states make it work.
Mississippi
Mississippi constantly remains one of the most affordable states. The standout here is housing, with its median home prices far below the national average. With relatively low utility costs, it’s a major win during those scorching Southern summers. Mississippi has a history of keeping property taxes low so that you get more bang for your buck.
Arkansas
Low housing costs and affordable healthcare are two ways that Arkansas welcomes affordable living. You’ll be surprised at housing prices whether you’re in Little Rock or one of the smaller towns like Jonesboro. Ironically, a 2024 study by the Missouri Economic Research and Information Center places Arkansas among the top states for cheapest grocery prices. There is a chance you will enjoy the occasional filet mignon dinner without guilt.
Alabama
Affordable living is the hallmark of sweet home Alabama. Cost of living here is below the national average including housing, transportation and healthcare. Alabama’s state government has chosen to keep sales taxes low for its residents so that they can enjoy life’s little pleasures without having to think twice about every purchase.
Oklahoma
Oklahoma is known as a budget friendly state for its wide open spaces and friendly people. Gas prices are often below the national average and the housing market is affordable. If you like steaks and sunsets, you are in the right place. Oklahomans enjoy the benefit of lower than average utility bills — a nice bonus when you have to keep that air conditioner running during the summer heat — because of its energy production industry.
Tennessee
No state income taxes and fairly low housing costs are a rare combination in Tennessee. Chattanooga and Knoxville are cities that provide urban amenities without the jaw dropping price tags of larger metro areas. Yes, Nashville is a pricier place to live, but it’s still cheaper than comparable cities. The reason why so many snowbirds flock here is that Tennessee is a tax friendly state for retirees, as the Tax Foundation says.
Kansas
Rolling plains and small town friendly Kansas might not scream excitement, but it’s a gem for those looking for affordable living. The housing market is nice and everyday expenses like groceries and transportation are easy on the wallet.
Kentucky
It might be world famous for its bourbon, but Kentucky’s affordability is no less famous. This is all about housing, and prices are well below national averages. Agriculture is emphasized in the state so that grocery costs are lower. And speaking of scenic beauty… Kentucky offers outdoor adventures without the price of admission. That’s nature’s gift to your bank account.
West Virginia
West Virginia is a beautiful place to live and is extremely affordable. One of the most budget friendly housing markets in the country is the state. Besides, residents enjoy lower healthcare costs than the national average. Lovers of the outdoors will find tons to do here without emptying your wallet.
Missouri
Another state where you can do well and not have to live on your savings is Missouri. St. While they may get the publicity, even in such cities as Louis or Kansas City, the cost of living here is surprisingly low. Missouri is affordable for families and individuals because of its approach to affordable healthcare and education. Transportation costs are also reasonable because of the state’s central location.
Iowa
Cornfields? Yeah, but Iowa is more than that: It’s an affordable living hub. Low unemployment and especially cheap housing makes this place appealing. Iowa ranked among the top states for affordability in 2022, according to a report from U.S. News & World Report, because of its balanced approach to taxes and public spending. Friendly neighbors and an affordable way of life is what residents often say they stay for.
Indiana
The Midwest is home to some of Indiana’s lowest housing costs. In Indianapolis or a quieter place like Fort Wayne, your money goes further. Indiana also does well when it comes to healthcare affordability. This is the type of place where you could work hard and retain enough to play on the weekend.
South Dakota
Our list is rounded out by South Dakota, where there is no personal income tax and property taxes are low. The affordable side of housing and everyday expenses also renders it a great option for those who want to breathe out financially. It also keeps utility costs low thanks to South Dakota’s investment in renewable energy. If you can save a little more, you might even be able to splurge on more than a few vacations—or at least some decent hiking boots to explore the Badlands with.
Disclaimer: This list is solely the author’s opinion based on research and publicly available information.
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