Cheapest states to live in 2020

Cheapest States to Live In 2022 – Top 5 States Where Your Dollar Will Go Further

  • October 20, 2022
  • 16 min read
  • Read Icon309249 reads

What is the cheapest state to live in? In this article, you’ll find out. We’re listing the cheapest states to live in the U.S. and their respective average household income, wage per hour, and living costs.

Have you considered moving to a state where your dollar will stretch further?
Deciding where to live has generally been based on our social circles or employment opportunities.

Well, that’s not necessarily a bad idea. The cost of living in the most expensive state vs the cheapest state differs quite a lot, and you could actually be getting much more for your money somewhere else.

Over the last year, the average price of U.S. residential real estate has been up to $27 per square foot from February 2020 to February 2021, an increase of nearly 20%.

Similar increases can be seen in Canada, with personal finance site PiggyBank reporting only 21% of non-homeowners feeling they are ‘very likely’ to own a home one day.

With a new era of online business and remote workers on the rise, Americans have the chance to choose communities based on their quality of life rather than employment prospects.

For many, the drawcard to living in the hustle and bustle of our big cities is new opportunities. But big cities are expensive, and the cost of living compared to other areas is through the roof.

Cheapest vs most expensive state

The cost of living in America varies dramatically between each state. From Mississippi being the cheapest state to live in with a median household income of $46,511 to Hawaii being the most expensive state with a median household income of $83,173.

The Cost Of Living Index

The Cost of Living index calculates the average cost of living at 100. Every state that averages less than 100 is considered below the national average for the Cost of Living.

States that are over 100, their cost of living is above the national average.

The average cost of living takes food, shelter, clothing, utilities, transport, healthcare, public education, and taxes into consideration.

The average cost of living calculated by MIT is $16.54 per hour or $68,808 per year for two working adults in a family of four.

The minimum wage of $7.25 per hour leaves families at the poverty threshold.

Smaller cities or towns can still offer an excellent education, healthcare, and community spirit, along with an increase in your quality of living.

Less traffic, more clean air, cheaper housing, and even fewer taxes in some states are a drawcard.

Living in a state where there is a lower living wage will allow more of your income to become available for investment. Over time this will enable you to gain more financial freedom and build financial peace.

The median household income in the U.S. was $67,521 in 2021, decreasing almost 3% from the 2019 figure of $69,560.

The 5 Cheapest States To Live In

Here is our top 5 list of cheapest states to live in the U.S. based on 2 adults working in a household of 4 people.

The monthly rent reflects the average rent for a two-bedroom apartment.

Living in any of these states will allow you to save more of every dollar that you earn.

1. Mississippi

  • Cost of Living Index: 84.9
  • Living wage per hour: $21.09
  • Median household income: $46,511
  • Average rent per month: $851
  • Average childcare: $10,960

Okay, so it’s not as glamorous as other states but Mississippi is definitely one of the cheaper states to live in the U.S. and it definitely has its benefits.

The state offers over 50 colleges and universities and is known for its great sense of community. The worries of traffic and smog will fade away after a few months of living here, making Mississippi a great choice and the cheapest state to live in.

2. Oklahoma

  • Cost of Living Index: 85.7
  • Living wage per hour: $22.06
  • Median household income: $53,840
  • Average rent per month: $907
  • Average child care: $14,600

Oklahoma has a mild climate, which can be a big drawcard to those who don’t like drastic changes in temperatures.

The mild weather makes for beautiful green scenery all year round. For the most part, it has a strong economy.

The cities are full of college students, and there is the vibrancy of big-city life if you want that.

Education opportunities are also vast. Extra study on the side and you might increase your income even more.

3. Kansas

  • Cost of Living Index: 86.4
  • Living wage per hour: $23.24
  • Median household income: $61,091
  • Average rent per month: $942
  • Average child care: $15,100

Kansas has plenty of booming industries such as agriculture and aerospace, and also boasts one of the lowest cost of living rates in the U.S.

Kansas also has a good job market with an unemployment rate of less than 4%.

If you enjoy all the seasons, Kansas is the perfect fit. From hot summers to cold winters and everything inbetween, Kansas offers a variety of climates.

4. Alabama

  • Cost of Living Index: 87.5
  • Living wage per hour: $21.16
  • Median household income: $61,091
  • Average rent per month: $883
  • Average child care: $12,320

Alabama has warm weather, great college football, and a low cost of living. The state of Alabama also has one of the lowest unemployment rates in the U.S. and great education – like the The University of Alabama, Auburn University, and Troy University.

Alabama is a great state to live in and has something for everyone. It is rich in culture, has beautiful nature scenes, and has very affordable housing costs.

The cost of living in Alabama is lower than most states in the U.S., making it one of the most popular states to live in for 2022.

5. Georgia

  • Cost of Living Index: 87.8
  • Living wage per hour: $22.53
  • Median household income: $61,224
  • Average rent per month: $1,090
  • Average child care: $13,781

Georgia is a very popular state with more than 100,000 people moving there every year. The state has a laid-back culture, clean air, and good food.

The state of Georgia has plenty of safe cities to live in, which is why it’s ideal for young families and college students. With coastal beaches and the popular Georgia State University, the state is known for its southern hospitality.

Here is a list of the 10 cheaper states to live in the U.S. in 2022:

  1. Mississippi (84.9)
  2. Oklahoma (85.7)
  3. Kansas (86.4)
  4. Alabama (87.5)
  5. Georgia (87.8)
  6. West Virginia (88.5)
  7. Missouri (88.6)
  8. Indiana (88.9)
  9. Iowa (88.9)
  10. Tennessee (89.5)

Lowest Cost of Living Between All States

Here is a full list of the lowest cost and least expensive states to live in for 2022, based on the cost of living per state.

RankStateCost of Living IndexHousingGroceryUtilities
1Mississippi84.968.592.687.9
2Oklahoma85.771.093.395.2
3Kansas86.471.79298.1
4Alabama87.569.997.8100.7
5Georgia87.875.493.691
6West Virginia88.567.898.794.5
7Missouri88.679.595.995.3
8Indiana88.977.393.3103.1
9Iowa897210194
10Tennessee89.58094.294
11Arkansas89.978.192.996.9
12Texas90.982.589.9100.5
13Illinois91.480.79892.2
14Nebraska91.583.697.786.5
15Michigan91.680.691.799.1
16Wyoming91.880.410383.2
17Ohio9278.498.794.8
18Louisiana92.886.996.487.6
19New Mexico93.688.298.191.4
20South Dakota93.891104.689.3
21South Carolina94.281.1101110.8
22Wisconsin94.884.197.7102.7
23North Carolina9588.99896.6
24Kentucky95.278.394108.5
25North Dakota96.792.310294.8
26Minnesota96.884101.399.4
27Pennsylvania97.987.4104.9109.9
28Puerto Rico9873.7119.9151.6
29Idaho99.710697.682.2
30Utah102.4108.299.893.1
31Florida103107.6105101.7
32Virginia103.2110.396.398.8
33Delaware103.9103.810394.6
34Montana104.8119102.584.9
35Colorado105.8122.794.290.5
36Nevada105.4118105.194.6
37Arizona106.9121.5101.6100.4
38New Hampshire113.2105.5103.1112.4
39Rhode Island113.8116.9100.1125.8
40Washington113.9125.5108.189.6
41Connecticut116.7122.3104.9131.4
42Vermont116.7130.1107.8120.7
43Maine116.9126.6101.899.8
44New Jersey118.6141.9103.1112.4
45Oregon120.6144.3107.1106
46Maryland125.1162.7112.1106.2
47Alaska126.7120.3135148.4
48New York136.8191.5112.199.5
49California139.8193.2116.4125
50Massachusetts147.9204.7112.8122.9
51District of Columbia 154.5249.6112107
52Hawaii 189.9312.8150.3141.3

To better understand the costs of living costs across all states, we need to take a closer look at the national costs of living.

The average household in the United States spends $61,334 a year on expenses. Of this, around $1,784 (or 34.9%) a month is dedicated to housing and housing-related costs.

While the median price of a single-family home in the U.S. is $396,300, the average rent for a two-bedroom apartment is around $1,295 a month.

American households dedicate a further 16% of their spending to transportation which amounts to about $9,826 a year.

Healthcare costs amount to an additional $5,177 every year, while food, groceries, and dining amount to another $7,317 every year.

Personal income for individuals nationwide is $35,805 while the median household income is $67,521 a year.

The living wage for the United States is $68,808 annually for a family of four.

Living Wage by State 2022

Below is a list of states according to the living wage needed by a household to support themselves, based on a family of four with 2 adults working full-time.

RankStateLiving Wage
1South Dakota$28,853
2West Virginia$29,306
3Kentucky$29,459
4Arkansas$29,491
5Mississippi$29,542
6Wyoming$29,629
7North Dakota$29,712
8Tennessee$29,905
9Oklahoma$29,936
10Ohio$29,982
11Alabama$30,248
12Indiana$30,323
13Iowa$30,655
14Idaho$30,663
15Louisiana$30,688
16Montana$30,742
17Nebraska$30,847
18Kansas$30,943
19Missouri$31,060
20New Mexico$31,074
21Michigan$31,077
22Wisconsin$31,235
23Nevada$31,547
24Texas$31,702
25Pennsylvania$32,157
26Alaska$32,406
27Utah$32,408
28North Carolina$32,572
29South Carolina$32,994
30Georgia$33,255
31Florida$33,315
32Arizona$33,442
33Minnesota$33,539
34Delaware$33,551
35Maine$33,696
36Rhode Island$34,045
37Vermont$34,166
38Illinois$34,471
39New Hampshire$35,054
40Connecticut$35,574
41Washington$35,810
42Oregon$36,285
43Colorado$36,285
44Virginia$36,517
45Maryland$37,288
46New Jersey$37,906
47California$40,372
48Hawaii$40,944
49Massachusetts$41,416
50New York$41,700

Does your dollar stretch further where you live compared to the rest of the country? Comment below.

Was this article helpful?

31 out of 37 found this helpful

Sources

Lorien is the Country Manager for Financer US and has a strong background in finance and digital marketing. She is a fintech enthusiast and a lover of all things digital.

Share on
Read Icon309249 reads

TN
the_nisser
Please update the minimum wage mentioned. " The minimum wage of $7.25 per hour leaves families at the poverty threshold."
Reply
    LorienAuthor
    Thank you very much for your suggestion. Although I can understand your point, at the moment the federal minimum wage for covered nonexempt employees is $7.25 per hour, as per the U.S. Department of Labor. We'll update the page if this changes. Thanks again!
BM
brian_maris
GREAT, how about city by city ? St George Utah was the fastest growing city in America. What is our COL index ?
Reply
    LorienAuthor
    Hi Brian, thank you for your feedback - I'm sure we can do a comparison by city, stay tuned!
MG
m._goudy
Washington is ridiculous. My POS house I paid $135K for in 2003 is somehow worth $385K today and I have not done any improvements in 15 + years. Plus, Jay Inslee is adding the Capital Gains tax and our fuel prices are through the roof. I paid $3.99 a gallon today. Plus, the new long-term care tax is taking more money from working taxpayers, and if I move, I won't get the benefit of using it.
Reply
    LorienAuthor
    This is very interesting indeed. Gas prices are now exceeds $4 a gallon with even higher prices expected as inflation is at a record high.
    CB
    crystal_budne alcarez
    Are you kidding me everyone on here in Southern California we are paying nearly $6 a gallon of gas and I pay to live in a 2 bdrm apt is $ 2,220 for rent additional $30 for a parking spot 2nd car additional $50 $123 for gas water trash electricity runs $80 - $150 a month. That doesn't include car insurance medical cell phone and internet because of the damn smart TV. That doesn't include any extras or pets or children.
JF
jimmy_flow
What's the difference between the two lists? The first lists the five cheapest states to live in while the second lists the relative cost of living between all states... what makes them different?
Reply
    LorienAuthor
    Hi Jimmy, the first list expands on the top 5 cheapest states to live in, whereas the following table lists all states in order of cheapest to most expensive to live in. The final table shows the living wage needed to live in each state (from lowest to highest) based on a family of four.
    CB
    crystal_budne alcarez
    What about your senior citizens or widows like me who's husband's have passed and me who's disabled the government wonders why California's are forced into homeless living how about thinking sbout the elderly and disabled seniors so they can afford to not be homeless
Load more

Explore our topics

We use cookies to give you the most relevant experience. By using our site, you accept all cookies and our privacy policy. To find out more about what cookies we use you can go to privacy overview