Where is the Lowest Cost of Living in the United States?

United States Cost of Living

I’ve got my answer memorized when people ask how we feel about moving next month – “We are sorry to leave – but happy to arrive.”  My husband and I will be moving back to the Midwest after 24 years on the road with his military career.

Why are we leaving our beautiful bay area town and nearly perfect weather?  Cost of living is a major part of the decision.  Over the next 40 years, our money will go farther and we will have more purchasing power by living in a lower cost of living area.

On the non-money side of the decision, nearly all of our parents and siblings live within 90 miles of our soon-to-be hometown.  Those 2 factors help outweigh the downside of dealing with the snow and ice of winter, threat of tornados, and living with humidity again!

Let’s review some of the lowest cost of living areas in the United States – and how you can factor your place on the map as part of your overall financial plans and lifestyle goals.

Lowest Cost of Living Areas By City

Many different magazines and online websites list the lowest cost of living metropolitan areas.  Here is a sample.

Forbes Top 10 list of Best Places to Live Cheaply:

  • Sandusky Ohio
  • Monroe Michigan
  • Cumberland,Maryland/West Virginia
  • Kokomo Indiana
  • Bay City Michigan
  • Pocatello Idaho
  • Fairbanks Alaska
  • Springfield Ohio
  • Wheeling West Virginia/Ohio
  • Elkhart-Goshen Indiana

Kiplinger’s Top 10 list of US cities with a Cheap Cost of Living:

  • Brownsville Texas
  • Pueblo Colorado
  • Fort Hood Texas
  • Fort Smith Arkansas
  • Sherman Texas
  • Springfield Illinois
  • Waco Texas
  • Fayetteville Arkansas
  • Austin Texas
  • Springfield Missouri

Small towns typically do not make these Top 10 lists.  You may personally know a gem of a town in your state that would never make the rankings.

However, small towns with a low cost of living may be hours from the nearest major medical treatment facility, airport, university, or even Big Box stores and have limited employment opportunities.

Lowest Cost of Living Areas By State

The Missouri Economic Research and Information Center has a Top 10 States list for lowest cost of living:

  • Oklahoma
  • Texas
  • Tennessee
  • Arkansas
  • Nebraska
  • South Dakota
  • Missouri
  • Kansas
  • Georgia
  • Mississippi

Cost of Living Elements

When a Top 10 list is created, typical living expenses are taken into account like consumer goods, housing costs, transportation costs, utilities, and health care.

Housing is the biggest expense for most people and has the greatest impact on spending power. This includes the average cost of a home and property taxes.

Income taxes are another consideration.  States like  Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington and Wyoming do not have income tax, but may make up for it with a higher sales tax or property tax.  That’s why it’s important to look at all the taxes for an area – property tax, sales tax, gasoline tax, retirement/military pensions, and income tax.

How to Compare the Cost of Living

People move for a variety of reasons.  Sometimes it’s by choice – sometimes it’s because of an employment change or opportunity.  How can you know if packing up the trailer will help you financially?  How can you compare your current salary with a promotion that’s available in another place?

There are several online tools that allow you to compare two major cities.  You might need to use a city on the list that closest to you.

Using the free tool from areavibes, my current area has an index of 136 (meaning it’s 36% above the national average) and my new town has an index of 93.  Our purchasing power is going to increase at least 30% with a majority of the savings falling into the housing category and taxes on current income and military pension.

Other comparison tools are available at Sperling’s Best Places and PayScale.  Each one uses slightly different scales, but the overall averages are close when I compared my two cities.

The Non-monetary Elements

Money isn’t everything – and it’s certainly not the main reason to live in a certain state or town.  Each of us have a list of important things to consider:

  • Location of family members – adult children, parents, siblings
  • Employment – major industries, unemployment rates
  • Faith communities – will you find a new faith home easily?
  • Weather – snow, ice, heat, humidity, natural disasters, on my!
  • Education – specific programs or opportunities for learning
  • Outdoor interests – do you like to ski, surf, or hike?
  • Airports – how often do you travel for business or pleasure?
  • Medical – do you need ongoing care or a specialists?

Are you ready to pack your bags?

Where you live impacts your life in a daily basis.  Are you near family for the next birthday bash?  Can you work in a master’s degree at night?  Will your children go to a good college-prep high school?  Can you afford your home as you as age or retire?

A list of cheapest places to live might not have you packing your bags next week – just keep in mind that your place on the map can help or hinder your financial journey.

Digging up my roots these past months has been painful as we leave behind great friends, a wonderful community, and perfect weather – but we will replant and grow stronger in our new hometown and our financial foundation will be stronger too!

Have you moved to a different location based on the cost of living?  How would planning a future move help your financial goals or lifestyle?  Leave a comment!












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15 Comments
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  1. Our goal is to move to a very expensive area in a few years – areavibes score from 90.6 currently to 130.8. Reasons to move: proximity to family, weather, and job opportunity. We really like where we live now and enjoy the low cost of living but you can’t beat those intangibles!

    • Cherie

      Emily – Like everything in life, it’s about balance. True balance requires sacrifices in one area to increase enjoyment in another area. If you already know going in about the financial requirements, you will be stronger to weather the changes required to keep in balance.

  2. Huh? Interested about the US problems. What about Canada eh?

    • Cherie

      Bill – Many people can find new living opportunities outside of the United States and North America that can help with their financial goals! Many retirees are enjoying life on a mission project or sailing around the world.

      If a change in location will change your financial situation, do the research and determine whether the trade-offs are worth it.

  3. Rosey

    I grew up in one of the top cities mentioned, and we still visit annually. While the perks of low-cost are nice, the downsides to the city are plentiful too (most notably the lack of good paying jobs and the substandard public education system). It’s so hard to research and know a place without actually living in it. We’re contemplating a big move in our future, but have no idea of where to settle.

    Thank you for this article, it was good food for thought.

    • StillTrying

      It is hard to decide. The places I’ve lived, not many were of my choosing. I suggest you ask ppl that are similar to yourself to talk about the things that concern you.

      I’ve lived in:

      Texarkana AR/TX
      Lttle Rock/North Little Rock,AR
      Lake Tahoe, (Stateline)
      Atlanta, GA (just south of the airport)
      Monroe, MI
      Columbus, MT
      Billings, MT
      New Braunfels, TX
      San Antonio, TX
      Hot Springs, AR

      I promise I’m not a gypsy, a carny, vagabond, running from the law, or the IRS!!!

      Feel free to reply, I will keep up with Follow-up comments :-)

    • Cherie

      We lived in many different cities all over the US with a military career. Our attitude was to get the most out of that area because you were always going to leave in a few short years. We also learned that one area is not the same to each resident – and basically, it’s hard to judge a cover by it’s book.

      This also taught us to evaluate what makes an area a nice place to live? Just the weather? The location on a map? The distance to the shore? Our ideas of what makes a place nice has evolved over time as our priorities have evolved.

      We were blessed to come together on the same page as a married couple with a location that serves his professional needs, my needs to be closer to family. Here we are finding many bonus benefits of extremely friendly neighbors, helpfulness in the form of a lawnmower on loan, my mother’s extra planters, my aunt’s cleaning frenzy one morning, etc.

  4. Generally speaking, the cost of living decreases the farther you are from either coast in the US. These stats prove it.

    • Cherie

      Very true! There are gems of towns to live in near the coasts that generally do not appear on these Top Ten Lists.

  5. My wife and I enjoy a small town with really low cost of living measurements. (West Branch, Michigan – about an hour north of Bay City, which was on one of the lists) For example, we purchased our home (1300 square feet a few blocks from where I work) a couple years ago for less than $60,000. However, the drawback is an obvious one…fewer jobs and lower salaries for those jobs. It probably evens out in the end. Either way, I enjoy the small town atmosphere.

    • StillTrying

      Not to mention, learning how to live in a very cold region, lol! That’s job unto itself, heh?

  6. While I would love to live somewhere with a low cost of living, the negatives usually outweigh the positives for me. I’ve lived in the LA Metro area all my life, and all I know is expensive, expensive, expensive. Heck, hubby and I were paying $1,270/month for a 1 bedroom, 700 sq ft apartment, and just about everyone almost passed out when they heard the price. Since we’re now both considering joining the military, it’s very possible we’ll move out of sunny SoCal but who knows, we may enjoy it.

    • Cherie

      Briana – We were a military family and lived in all the major areas of the United States. Getting older and having those experiences made us realize that a majority of the goods & services in one area are also available in a lower cost of living area. The commercial world is expanding in terms of brick/mortar businesses and internet business. We are not nearly as isolated compared to 30 years ago.

      Especially when you are young, take those risks to live in many different areas and see what works best for you!

  7. From the Forbes list, that is Fairbanks, Alaska, not Fairbanks, Arkansas.

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