Key Highlights
- Discover the most affordable states where the cost of living is significantly below the national average.
- Mississippi currently holds the top spot as the cheapest state to live in, with housing prices that are the lowest in the nation.
- States like Oklahoma, Kansas, and Alabama also rank high for their low cost of living and affordable housing options.
- Housing is the biggest factor driving affordability, with median home prices in these states being substantially lower.
- While household income may be lower in these areas, your dollar stretches further on daily expenses.
- Finding a balance between a low cost of living and a good quality of life is key to your search.
Introduction
Are you dreaming of a place where your paycheck goes further without sacrificing your lifestyle? The rising cost of living across the United States has many people searching for more affordable states to call home. Finding that perfect balance between low expenses and a high quality of life can feel like a challenge. This guide will walk you through the cheapest states in the U.S., exploring what makes them so affordable and helping you find a place where you can thrive financially.
States Where Your Dollar Goes the Furthest: The Cheapest Places to Live in the US
Figuring out the cheapest state to live in often comes down to the cost of living index, a tool that measures how expensive an area is compared to the national average of 100. States with an index below 100 offer a low cost of living, meaning your money has more purchasing power. The most significant factor is often affordable housing, which can drastically reduce your monthly budget.
While the median household income might be lower in these regions, the reduced costs for essentials can lead to a better quality of life. Let’s explore the top 10 states where you can get the most bang for your buck.
1. Mississippi
If you’re looking for the absolute lowest cost of living in the country, Mississippi is your answer. With a cost of living index of 87.9, overall costs are about 12% lower than the national average, making it the most affordable state.
The most significant saving comes from its housing cost, which is the lowest in the entire nation. The median home price for a single-family home is just $157,828, a fraction of what you’d pay in more expensive states. Transportation costs are also the lowest in the U.S., adding to your potential savings.
It is important to note, however, that the median household income is also lower, and the state has the highest poverty rate. A family of four requires an annual income of over $75,000 to meet their needs, which is higher than the state’s median family income.
2. Oklahoma
Oklahoma secures its spot as one of the most affordable states with a cost of living index of 85.7. This affordability is driven by exceptionally low housing prices, which are about 25% lower than what you’d find on average across the country.
You can find a great deal on affordable housing here, whether you’re looking to buy or rent. The average home price is a low $171,057, and rents average around $999 per month. Major hubs like Oklahoma City offer urban amenities without the high price tag you’d expect.
While Oklahoma offers significant savings, there is a gap between the living wage needed and the median income, which contributes to a higher-than-average poverty rate. Despite this, the state’s low costs for groceries, healthcare, and utilities make it an attractive option for budget-conscious individuals and families.
3. Kansas
The Sunflower State offers a surprisingly low cost of living, making it another top contender for affordability. With an overall cost of living index of 87.0, Kansas provides a comfortable lifestyle without the financial strain found in other parts of the country.
Housing affordability is a major draw. The average single-family home costs around $198,199, and rent for a two-bedroom apartment is just under $1,000 per month. Whether you’re drawn to the energy of Kansas City or prefer a quieter town, your housing budget will stretch much further here.
Kansas also boasts one of the lowest unemployment rates in the country, at just 2.5%. The median household income is more closely aligned with the living wage needed for a family of four, suggesting greater financial stability for its residents compared to some other low-cost states.
4. Alabama
Alabama shines as one of the cheapest states, with a cost of living index of 88.0. Residents benefit from a low cost of living across the board, but especially in housing and healthcare.
The cost of housing is particularly low, with the average single-family home selling for about $194,695. Low property taxes also contribute to its affordability, making homeownership more accessible. Additionally, healthcare costs and related insurance premiums are among the lowest in the nation, providing significant financial relief.
While Alabama has one of the higher poverty rates in the country, its low unemployment rate offers a hopeful outlook. The state’s financial benefits, including low taxes and inexpensive daily costs, make it a compelling choice for anyone looking to reduce their expenses.
5. Georgia
Georgia lands on the list of affordable states with a cost of living index of 91.3. This means the average cost of living is nearly 9% below the national average, making it a great option for families and individuals alike.
Even with major cities like Atlanta, Georgia maintains its affordability, largely due to housing expenses that are around 25% lower than the U.S. average. The state boasts high housing affordability, meaning a large percentage of residents can comfortably afford a new home. Transportation costs are also among the lowest in the country.
Despite having a low minimum wage, the median household income in Georgia is competitive for the region. The balance of urban opportunities and low living costs makes it one of the best states for families looking for affordable living options without sacrificing access to amenities.
6. Missouri
Missouri is another excellent choice for affordable living, with a cost of living index of 88.7. Economic research consistently places it among the top 10 cheapest states, thanks to its low costs across all major spending categories.
The cost of housing is a standout feature, coming in 20% lower than the national average. A typical home in the state costs around $218,208, and cities like Kansas City offer vibrant urban life at a manageable price. Health and transportation costs are also notably low.
Missouri’s minimum wage is one of the highest among low-cost states, at $11.15 an hour, which helps bridge the gap between the median household income and the cost of living. This makes it a practical and financially sound place to put down roots.
7. Iowa
Iowa proves that you don’t have to choose between affordability and quality of life. With a cost of living index of 89.7, the state offers savings across all metrics compared to the national average.
Housing is especially affordable, with a median home value of just $183,418. Rents for a two-bedroom apartment are also very low, averaging around $895. This allows residents to achieve homeownership or save money on rent with greater ease.
What sets Iowa apart is its low poverty rate of 9.1%, which is below the national average. Combined with a low unemployment rate, Iowa presents a stable economic environment. It is a state that successfully offers both cheap living costs and a good quality of life, making it a great place to live and work.
8. Tennessee
Tennessee is one of the most popular affordable states, and for good reason. Its overall cost of living is 11% lower than the U.S. average, and it provides several financial benefits, including no state income tax on wages.
The housing cost is a major draw, sitting 21% below the national average. A typical single-family home costs around $276,963. Tennessee also has the second-lowest transportation costs and fifth-lowest healthcare costs in the nation, which helps your budget significantly.
The job market in Tennessee is strong, with one of the lowest unemployment rates in the region at 3.4%. This combination of a healthy economy, low taxes, and affordable living makes Tennessee an attractive destination for many people looking to relocate.
9. West Virginia
Nestled in the Appalachian Mountains, West Virginia offers one of the lowest costs of living in America, with a cost of living index of 84.1. This is almost 16% cheaper than the national average, providing substantial savings for residents.
Housing is remarkably inexpensive, with a typical single-family home costing only $129,103. The state also has one of the highest housing affordability ratings, with over 43% of residents able to afford a home. Transportation and healthcare costs are also among the nation’s lowest.
However, these low costs are paired with economic challenges. The median household income is significantly lower than the calculated living wage, and the state has the fourth-highest poverty rate. While West Virginia offers scenic beauty and extreme affordability, it’s important to consider the economic landscape.
10. Arkansas
Arkansas rounds out the top 10 list with an impressive cost of living index of 88.7. Your dollar simply goes further here—in fact, a dollar spent on rent in Arkansas is worth the equivalent of $1.58 in value compared to the national average.
The average housing cost is one of the biggest expenses you’ll save on when moving to this state. With low home prices and rents, you can free up a significant portion of your income for other things. Cities like Little Rock provide amenities without the high costs associated with larger metropolitan areas.
When considering a move, it’s wise to look at the living wage needed compared to typical salaries in the area. While Arkansas offers great value, ensuring the job market aligns with your financial needs is a key step in making a successful transition to this affordable new state.
Key Factors That Make a State Affordable
What exactly makes a state affordable? Economic research points to several key factors that lower the cost of living index. The biggest expense for most people is housing, so states with lower home prices and rents automatically become more affordable.
Beyond housing, factors like state and local taxes, including property taxes, play a huge role. Lower costs for everyday essentials like groceries, utilities, and transportation also contribute significantly. Understanding these components can help you evaluate which of the affordable states is the right fit for your budget.
Cost of Housing and Rent
The cost of housing is the single most significant factor behind a state’s affordability. In the most affordable states, housing prices are dramatically lower than the national average. The median home value in the U.S. is over $273,000, but in states like Mississippi and West Virginia, it’s less than $160,000.
This difference in the average home price means your mortgage payments will be much lower, freeing up hundreds or even thousands of dollars each month. The average rent for a two-bedroom apartment also varies widely. In affordable states, you can often find rentals for under $1,000 a month, compared to the national average of $1,164.
How housing costs vary:
- Mississippi: Median home price of $157,828.
- West Virginia: Median home price of $129,103.
- Oklahoma: Median home price of $171,057.
- Alabama: Median home price of $194,695.
Taxes and Financial Incentives
Many affordable states offer financial benefits in the form of low taxes, which can save you a lot of money over time. A state’s tax burden includes income, sales, and property taxes, and a lower rate in these categories enhances affordability.
For example, states like Tennessee have no state income tax on wages, which is a major financial perk. Others, like Oklahoma, don’t tax Social Security benefits, making them attractive for retirees. Low property taxes also reduce the long-term cost of homeownership.
Look for these tax incentives when comparing states:
- No state income tax: Tennessee is a prime example.
- Low property taxes: Alabama and West Virginia offer some of the lowest rates.
- No tax on Social Security: Oklahoma and other states provide this benefit for retirees.
Utilities, Groceries, and Transportation Costs
Beyond housing and taxes, your daily expenses for utilities, groceries, and transportation add up quickly. The average household in the U.S. spends over $370 a month on utilities, but in states like West Virginia and Mississippi, this cost is noticeably lower.
Similarly, transportation costs, which include gas and vehicle maintenance, are the second-largest expense for most Americans. States like Mississippi and Tennessee have the lowest transportation costs in the country. Lower prices for groceries also help your dollar stretch further on a day-to-day basis.
Key daily expenses to consider:
- Utility Costs: Lower in Mississippi, West Virginia, and Georgia.
- Transportation Costs: Lowest in Mississippi and Tennessee.
- Groceries: Significantly cheaper in states like Kansas and Indiana.
Comparing Cost of Living: Cheapest States vs. National Average
To truly appreciate the savings, it’s helpful to compare the cost of living index in the cheapest states to the national average, which is set at 100. A state with an index of 85 is 15% cheaper than the U.S. average. This difference is most apparent in the lowest cost of living categories like housing but extends to nearly every aspect of your budget. While the median household income may be lower, the increased purchasing power can offset this.
Here’s a quick look at how some of the most affordable states stack up against the national average across different expense categories.
| State | Overall Index | Housing Index | Groceries Index | Utilities Index |
|---|---|---|---|---|
| National Average | 100 | 100 | 100 | 100 |
| Mississippi | 83.3 | 66.3 | 92.2 | 90.4 |
| Kansas | 86.5 | 72.6 | 91.7 | 100.2 |
| Alabama | 87.9 | 70.1 | 98.2 | 100.7 |
| Oklahoma | 87.9 | 74.7 | 94.5 | 95.1 |
Median Home Prices and Rental Rates
The difference in housing costs is where you’ll see the most dramatic savings. The national median home price for a single-family home is $273,992. In contrast, the median price in many of the cheapest states is well below $200,000.
For example, the average housing cost in West Virginia is just $129,103, while in Mississippi it’s $157,828. This stark difference makes homeownership a much more attainable goal for many people. If you can buy a home for half the national median price, your financial stability and ability to build wealth improve significantly.
The same trend applies to rental rates. The national average rent for a two-bedroom apartment is $1,164 per month. In states like Iowa and Arkansas, you can find similar accommodations for under $900 a month, leaving more money in your pocket at the end of each month.
Average Salary Needs in Low-Cost States
When evaluating an affordable state, it’s crucial to compare the cost of living with the average salary. The “living wage” is the amount of income a family needs to cover all their basic necessities. In many low-cost states, the median household income falls short of this living wage.
For instance, in Mississippi, the median family income is around $45,000, while the calculated living wage for a family of four is over $75,000. This disparity highlights why some affordable states also have high poverty rates. A low cost of living index is a huge plus, but it’s only one part of the equation.
However, in other states like Kansas, the median household income is much closer to the living wage, suggesting a more balanced economy. Before moving, research the job market in your field to ensure your potential salary can comfortably support the local cost of living.
Conclusion
In summary, finding a state where your dollar stretches the furthest can significantly enhance your quality of life and financial stability. The states highlighted—Mississippi, Oklahoma, Kansas, and others—offer not only affordable living but also a variety of amenities that cater to different lifestyles. It’s essential to consider factors like housing costs, taxes, and everyday expenses when evaluating these locations. Remember, moving to a more affordable state doesn’t have to mean sacrificing quality; many of these places provide a welcoming community and access to essential services. If you’re considering making a change, feel free to reach out for a free consultation to explore your options further!
Frequently Asked Questions
Are there affordable states with good quality of life and amenities?
Yes, many affordable states offer a great quality of life with plenty of amenities. States like Iowa and Kansas have a cost of living well below the national average but also boast low unemployment, good schools, and safe communities, proving you don’t have to sacrifice your lifestyle for savings.
What should families consider when moving to a cheap state?
Families should look beyond just affordable housing. Consider the local job market, the quality of schools, and healthcare costs. While low everyday expenses are a plus, ensuring a good quality of life with access to parks, community activities, and family-friendly amenities is just as important for a successful move.
Do the cheapest states offer additional financial benefits like low taxes?
Many do. In addition to a low cost of living, states like Tennessee offer the financial benefit of no income tax on wages. Others, like Alabama and West Virginia, have some of the lowest property taxes in the country, which can significantly boost your household income over the long term.