Lowest cost of living states: father and daughter holding American flags

Many of the lowest cost of living states in the U.S. are welcoming to immigrant families. But if you’re considering a move to the United States, it’s important to understand that every state within the U.S. is different. Each state is free to set its own laws, and they each have a unique culture that can affect what it’s like to live there.

Cost of living will differ depending on the state you live in. Read this guide to learn how to calculate cost of living and learn what it’s like to live in the 10 most affordable states in America.

How do you calculate cost of living?

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Average cost of living refers to how much money you need to cover living expenses in a particular area. To calculate the affordability of a state, you add up all of the expenses related to living in that area, including:

  • Home prices or average rent
  • Healthcare
  • Transportation costs
  • Taxes, such as income tax and property tax
  • Utilities
  • Food

Determining affordability with the Cost of Living Index

The Cost of Living (COL) Index adds up the average expenses of people living in a state. A score of 100 on the COL is the national average.

If a COL Index score is less than 100, it means the state is cheaper, and a score above 100 means it’s more expensive than the U.S. average. For example, at the time of this writing, Alaska’s overall cost of living score is 125.8, which means it’s 25.8% more expensive than the national average. Mississippi scores 81.1, which means it’s 18.9% cheaper than the national average.

Data from the COL will tell you how affordable a state truly is. However, it’s important to compare median household income against the cost of living in a particular state. If unemployment rates and poverty rates are high and average salaries are low, it could be difficult to support your family.

The 10 lowest cost of living states in the U.S.

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According to World Population Review, some of the most expensive states as of 2022 are Hawaii, New York, and California. In the U.S., the East Coast and West Coast tend to be more expensive, while the South and Midwest tend to be cheaper. If you want to move to an affordable area of the U.S., these are the 10 states with the lowest cost of living as of 2022.

Please note that census data is the most recent available as of July 1, 2021.

1. Arkansas

  • Population: About 3 million
  • Percent of population born in another country: 4.9%
  • Average annual salary: $42,989
  • Cost of living: 79

Did you know that Walmart has its headquarters in Bentonville, Arkansas? This Southern state has a small-town feel even in big cities like Bentonville. It also has the cheapest healthcare costs in the top 10 lowest cost of living states, with a COL Index score of 86.5.

However, according to the most recent U.S. census data, Arkansas has a 15.2% poverty rate. This indicates that the state may have issues with social and political inequality. But even so, Arkansas is renowned for its booming agricultural industry, as well as folk music, hot springs, and art scene in big cities like Little Rock.

2. Mississippi

Mississippi has the lowest housing costs in the nation, with a COL housing index score of 55.6. Thanks to its location, winters are mild in Mississippi, although the summers are hot. Mississippians are proud of their Southern heritage, from their fried catfish recipes to a storied tradition of blues music.

Although Mississippi has a low cost of living and affordable housing, it has the highest poverty rate in the U.S. at 19.79%. It also has the third-lowest high school graduation rate at 83.4%. Although the cost of living is low, high poverty and low graduation rates can lead to more crime, poor health outcomes, and financial insecurity.

Foreign-born immigrants make up just 2.3% of Mississippi’s population, so this could make it difficult to find community as an immigrant.

3. Kansas

  • Population: About 2.9 million
  • Percent of population born in another country: 7%
  • Average annual salary: $42,673
  • Cost of living: 81.3

If you want rural living with access to the big city, Kansas is famous for agriculture and Kansas City-style barbecue. Groceries are cheaper in Kansas than they are in Mississippi or Oklahoma. However, health costs are 103.4, which means you’ll pay 3.4% more than the national average for healthcare in Kansas.

With 7% of the population born outside the U.S., Kansas is one of the more immigrant-friendly U.S. states in this list.

4. Indiana

  • Population: About 6.8 million
  • Percent of population born in another country: 5.3%
  • Average annual salary: $46,913
  • Cost of living: 82.1

Indiana is a Midwestern state that’s famous for growing corn and soybeans. The state shares a border with Lake Michigan, which makes it a popular destination for watersports and swimming.

The state unemployment rate is just 2.5% on average, and the poverty rate is 11.6%. Like Iowa, Indiana is a rural state that will require a vehicle for transportation. And because it’s in the Midwest, winters in Indiana are cold. On average, the state gets 22 inches of snow a year.

5. Oklahoma

  • Population: About 3.9 million
  • Percent of population born in another country: 6%
  • Average annual salary: $50,415
  • Cost of living: 83.7

Oklahoma has a poverty rate of 14.3% and a high school graduation rate of 88.6%.

Oklahoma is a beautiful state with plenty of outdoor areas for recreation as well as urban areas, like Oklahoma City. Thirty-nine Native American tribes call Oklahoma home, and many tribal reservations include attractions like casinos, where gambling is legal.

However, Oklahoma is prone to extreme weather. It had the most severe tornadoes in the United States in 2021. If you move to Oklahoma, ensure you have access to a safe space in the event of a tornado.

6. Iowa

  • Population: About 3.1 million
  • Percent of population born in another country: 5.4%
  • Average annual salary: $44,153
  • Cost of living: 83.7

Located between Missouri and Minnesota, Iowa is a rural state in the Midwestern United States. It’s cooler than states in the South, so you get to experience all four seasons in Iowa (although this does mean winters are colder).

If you have children, Iowa ranks as one of the best states in the Midwest for education. It has the ninth-highest literacy rate in the U.S. at 92.5%.

However, because Iowa tends to be more rural, just 1.1% of the population uses mass transit. You will need a vehicle to get around more efficiently.

7. Alabama

  • Population: About 3 million
  • Percent of population born in another country: 4.9%
  • Average annual salary: $42,681
  • Cost of living: 87.5

Alabama is a southern state that’s famous for American football. It also has a surprising number of beaches, which make this state a popular summer destination. In fact, Alabama has an average 213 days of sunshine every year, so it’s perfect if you want sunny weather and mild winters.

The unemployment rate is trending downward in Alabama, too. According to the Alabama Department of Labor, it went from 3.5% in January 2021 to 2.6% in June 2022. The national unemployment rate was 3.6% as of June 2022, so Alabama is slightly better than the national average.

8. Tennessee

  • Population: About 6.9 million
  • Percent of population born in another country: 5.1%
  • Average annual salary: $47,738
  • Cost of living: 87.6

Tennessee is famous for whiskey, Dolly Parton, the Smoky Mountains, and the Nashville music scene.  It’s a surprisingly affordable state to live in. Transportation costs are some of the cheapest in the top 10 lowest cost of living states, with a COL Index of  90.2. However, Tennessee has the highest sales tax rate in the United States at 9.55%. This can make it more expensive to purchase household goods.

According to the 2022 U.S. Crime Index State Rank, the state also has the fourth-highest crime rate in the United States. At 673 incidents per 100,000 people, Tennessee has a higher violent crime rate than any other Southern state. But this is largely concentrated in big cities like Memphis, so the more rural areas of Tennessee tend to see less crime.

9. Michigan

  • Population: About 10 million
  • Percent of population born in another country: 6.9%
  • Average annual salary: $51,171
  • Cost of living: 89.6

Michigan has the same COL Index score as Arkansas, but these two states are very different. Michigan has a bigger population than many affordable states in the U.S. It’s also situated in the Great Lakes region, which means it’s much colder than states in the South.

With a 93.4 COL Index score, Michigan has some of the cheapest groceries in our top 10 list. The state also has over 110,000 inland lakes, so it’s perfect for outdoor recreation.

However, the state does have some struggling urban areas. Michigan was once an industrial hub, but when manufacturers moved out or downsized, many of its urban centers collapsed. In addition, the city of Flint made headlines for its dangerous drinking water.

But it’s looking up in some places. As of 2022, cities like Rockford, Auburn Hills, and Frankenmuth are growing fast, according to a review of the real estate market by Aceable.

Because of its proximity to the Great Lakes, Michigan is also one of the coldest states in the U.S., so you’ll need warm clothes and outerwear for the winter months.

10. Georgia

  • Population: About 10.7 million
  • Percent of population born in another country: 10.2%
  • Average annual salary: $38,649
  • Cost of living: 93.4

Georgia is the most populated state on this list of lowest cost of living states, and it also has the largest percentage of foreign-born citizens. Its big cities, like Atlanta, tend to be more diverse due to the presence of international businesses and universities — however, the cost of living is 15% higher in Atlanta than other areas of the state.

Georgia farmers also employ seasonal and migrant workers to help tend the crops and land.

Georgia utility costs are 103.2 on the COL Index, which makes its utility costs more expensive than other states on this list. With an average salary of just $38,649, Georgia has the second-lowest average pay in the United States, as of the time of this writing, according to a survey by ZipRecruiter.

The state is famous for peaches, coastal swamp habitats, hip-hop scene, successful sports teams, and much more.

Save money by living in the lowest cost of living states

Moving to the lowest cost of living states can certainly help minimize bills, but moving is a big decision. Weigh a state’s culture, educational system, and job opportunities for immigrants to decide if it’s appropriate for your family.

Start your search by looking at the 10 most affordable places to live, which includes:

  • Mississippi
  • Oklahoma
  • Kansas
  • Alabama
  • Iowa
  • Georgia
  • Indiana
  • Tennessee
  • Arkansas
  • Michigan

If you’re relocating to the United States and want to send funds back home to your family, try Remitly. We make international money transfers safe and convenient. Download the Remitly app to get started.

Further reading

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