What Are the Cheapest States to Live In?

The term “cost of living” describes the financial burden of maintaining a certain standard of living in a particular area. It encompasses expenses for fundamental necessities and services, varying significantly across different locations. The “cheapest” place to live is not a singular answer; it depends on a combination of factors and individual financial situations. Various categories of expenditures collectively contribute to the overall cost of living, influencing the income required to cover daily expenses.

Key Factors Influencing Cost of Living

Housing typically represents the most substantial component of living expenses for most individuals and families. This category includes both rental costs and expenses associated with homeownership, such as mortgage payments, property taxes, and home insurance. The average home value in the United States was around $369,147 in mid-2025, with average rent around $2,069 per month. Differences in home prices and rental rates between areas can dramatically impact overall affordability.

Utility costs are another important factor, covering essential services like electricity, natural gas, water, internet, and waste removal. The average American household pays approximately $469 per month for utilities, with electricity and internet often being the largest portions. These expenses can fluctuate based on climate, home size, and local utility rates. States with extreme temperatures might incur higher heating or cooling costs.

Groceries and food expenses play a considerable role in the cost of living. The average monthly grocery bill for a single person can range from $238 to $434, while a household might spend around $504 per month. Food costs are influenced by local agricultural production, transportation networks, and the prevalence of various retail options, leading to regional variations in prices.

Transportation expenditures, including fuel, vehicle maintenance, public transit fares, and car insurance, represent the second-largest household expense after housing. In 2023, U.S. households spent an average of $13,174 annually on transportation. The availability and efficiency of public transportation systems, as well as the necessity of private vehicle ownership, heavily influence these costs.

Healthcare expenses, encompassing insurance premiums, deductibles, co-payments, and prescription medications, are a significant financial burden. In 2023, health expenditures per person in the U.S. were approximately $13,432. These costs vary by individual health needs, age, and the specific healthcare market within a state.

Miscellaneous goods and services cover a broad array of daily expenses, such as clothing, personal care products, entertainment, and educational costs. These expenditures contribute to the overall financial outlay and reflect the general price levels for non-essential items and leisure activities within a given area. The average household spending on entertainment was $303 per month in 2023.

States Generally Considered Most Affordable

Several states consistently rank among those with the lowest costs of living, primarily due to more affordable housing markets and lower general expenses. These states offer a financial advantage for residents seeking to maximize their purchasing power. While specific rankings can vary depending on the data sources and metrics used, certain states frequently appear on lists of the most affordable places to reside.

Mississippi is often cited as having one of the lowest costs of living in the United States, with an index of 83.3 (16.7% cheaper than the national average). This is largely driven by its significantly lower housing costs, which are about 33.7% below the national average, with a median single-family home priced around $140,818. Utilities in Mississippi are also slightly below the national average, contributing to the state’s overall affordability.

Arkansas consistently appears on lists of affordable states, with its cost of living approximately 4% lower than the national average. Housing costs in Arkansas are notably lower, about 22% below the national average, and utility costs are also 8% lower. The state’s overall affordability extends to groceries and transportation, making it an attractive option for those seeking reduced living expenses.

Oklahoma offers a notably low cost of living, with an index around 85.7 to 86. This affordability is largely due to housing prices being 24% lower than the national average, and utility costs also being below average. Additionally, Oklahoma has some of the lowest food and beverage costs in the country, further enhancing its appeal for budget-conscious individuals.

Missouri provides a balanced cost of living, with an index around 88.0 to 88.7 (10-12% cheaper than the national average). Housing costs are about 18% lower than the national average, and utilities are also slightly reduced. The overall effect of lower expenses across major spending areas positions Missouri as a financially manageable place to live.

Alabama is frequently recognized for its low cost of living, with an index of 87.9 (12.1% lower than the national average). The state’s average housing costs are a significant 29% lower than the rest of the country, with a median single-family house selling for about $170,184. While utilities are near the national average, Alabama’s lower housing, health, and transportation costs contribute to its overall affordability.

Kansas offers a lower cost of living, with an index around 86.5 to 87.0, placing it significantly below the national average. Housing is especially affordable, with costs around 32% lower than the national average, and groceries are also typically less expensive. The state’s overall lower expenses across various categories contribute to a more manageable financial landscape for residents.

Beyond the Numbers: Other Financial Considerations

While a low cost of living index can indicate general affordability, other financial considerations significantly impact an individual’s true financial well-being in a given state. These factors, which are not always captured in basic cost-of-living calculations, can profoundly influence net income and overall expenses. Understanding these nuances is important for a comprehensive financial assessment.

State and local taxes represent a substantial financial consideration that varies widely across the United States. Income tax rates, sales tax rates, and property tax burdens differ significantly by jurisdiction, directly affecting a household’s disposable income and overall purchasing power. Some states have no state income tax, while others might rely heavily on sales or property taxes to generate revenue, shifting the tax burden to different areas of spending or asset ownership.

Average income levels and the strength of the job market are also critical. A state with a low cost of living might concurrently have lower average wages or fewer job opportunities in certain sectors, potentially offsetting the perceived affordability. It is important to assess whether available jobs align with an individual’s skills and career goals, and if the potential income can adequately cover expenses, even if those expenses are lower than the national average. A robust job market with competitive wages can provide greater financial stability, even in areas with moderately higher living costs.

Insurance costs, beyond basic health insurance premiums, can differ substantially by state. For example, auto insurance rates are influenced by factors such as population density, accident rates, and state-specific regulations. Home insurance costs can vary due to climate risks, such as susceptibility to natural disasters, and local construction costs. These varying insurance expenses can add unexpected layers to a household budget, depending on the state of residence.

Other less obvious, or “hidden,” costs can accumulate and affect overall affordability. These might include professional licensing fees required for certain occupations, annual vehicle registration fees, or specific state-mandated expenses like environmental surcharges or unique local taxes. While individually small, these recurring fees can add up over time, impacting a household’s discretionary income. These considerations highlight that a holistic view of financial implications extends beyond just basic expenses.