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
- 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:
- South Dakota
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.
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!