16 States Where You Could Save the Most Money

The cost of living can vary greatly across the United States. When it comes to finding a place to live, considering the cost of living is an essential factor. Living in certain states can save you a considerable amount of money thanks to a low cost of living. But where should you move to? We'll give you the lowdown on the most budget-friendly states where you could save the most money.

What is the definition of cost of living?

When we talk about cost of living, we are referring to the expenses required to maintain a certain standard of living in a particular location. This includes everything from housing and groceries to transportation and healthcare. The cost of living can vary greatly depending on where you live in the world.

For example, the cost of living in a big city like New York City is significantly higher than in a rural town in Alabama. It's important to consider the cost of living when making personal financial decisions, such as taking a new job or relocating. By doing so, you can ensure that your income is sufficient to cover your expenses and let you maintain a comfortable lifestyle.

Why is the cost of living different in each state?

If you've lived in different states, you may have noticed that the cost of living can vary significantly. But why does this happen? Cost of living tends to be higher in large urban areas and lower in rural areas, due to population. Demand for housing is high in places like California and New York, which drives up prices.

In addition, city space is limited, and lots of people want homes, leading to higher rent and house costs. Meanwhile, in rural areas, land is more abundant, leading to larger homes at lower prices. The general economic climate of a state also impacts the cost of living -- states with strong economies tend to have higher costs of living overall.

California is the world's fourth-largest economy, and also has the third-highest cost of living in the country. States with higher costs of living tend to have higher salaries as well, but it is important to consider all factors before making a decision to relocate.

Cost of Living Index

Since 1968, the Council for Community and Economic Research (C2ER) has collected and published cost of living index data at the state and local levels. The Cost of Living Index measures the cost of consumer goods and services and is based on more than 90,000 prices covering 60 different items.

The composite index is based on six component categories -- housing, utilities, grocery items, transportation, health care, and miscellaneous goods and services. The higher the index, the higher the costs in comparison to the other states. In addition to the cost of living score, we've also included the median household income in the state, the median home price, and median monthly rent for a two-bedroom apartment.

In comparison, here are the U.S. averages:

• Median household income: $69,021
• Median home price: $400,770
• Median monthly rent: $1,199

15 states with the lowest cost of living

Median household income: $49,111

Median home price: $279,000

Median monthly rent:$1,032

Median household income: $56,956

Median home price: $309,500

Median monthly rent: $1,045

Median household income: $64,521

Median home price: $315,000

Median monthly rent: $1,042

Median household income: $54,943

Median home price: $322,450

Median monthly rent: $1,008

Median household income: $65,030

Median home price: $279,000

Median monthly rent: $1,275

Median household income: $61,043

Median home price: $386,450

Median monthly rent: $1,004

Median household income: $65,429

Median home price: $309,900

Median monthly rent: $968

Median household income: $61,944

Median home price: $288,050

Median monthly rent: $1,093

Median household income: $50,884

Median home price: $227,000

Median monthly rent:$855

Median household income: $58,516

Median home price: $424,950

Median monthly rent: $1,126

Median household income: $52,123

Median home price: $285,000

Median monthly rent: $949

Median household income: $61,938

Median home price: $237,450

Median monthly rent: $1,060

Median household income: $66,644

Median home price: $371,375

Median monthly rent: $1,053

Median household income: $63,202

Median home price: $267,000

Median monthly rent: $1,079

Median household income: $67,321

Median home price: $372,495

Median monthly rent: $1,283

Median household income: $68,002

Median home price: $439,900

Median monthly rent: $959

What does this data mean?

Eight of the 16 states (Texas and Wyoming are both tied for 15th) with the lowest cost of living are in the South. Seven states are in the Midwest, and just one, Wyoming, is in the West. The cost of living in the first two regions is generally lower compared to other parts of the United States, especially the states along the West and East Coasts.

One contributing factor is the availability of cheaper housing options. In these areas, it's more common to find larger homes with yards for a fraction of the cost of a similar property in California or New York. Additionally, the cost of goods and services such as groceries, gas, and utilities tend to be more affordable as a result of a lower demand. While there are certainly exceptions, living in the South or Midwest can stretch your dollars further. In addition, making smart money decisions such as using the best gas and groceries credit cards can help you earn rewards, lowering your costs even more!

These sixteen states offer an affordable cost of living, particularly when it comes to housing. Keep in mind that there may be other factors to consider, such as job opportunities, schools, and climate, when deciding on a new place to live. However, if you're looking to save money, moving to one of these states may be a great decision. Your bank account will thank you!