Cheapest States To Live In To Make The Most Of Your Money!
Are you looking for the most affordable states to live in?
Perhaps you want to save money, be financially independent, or retire early? Maybe you just want to manage your money better?
Then where you live can make a significant difference. On whether you achieve your long-term financial goals. Or not.
So today, let’s review some of the cheapest states to live in 2021. To make your hard-earned dollars go further.
Cheapest States To Live In
Also, every state has something unique to offer. Especially when it comes to your budget.
So, it is important to take a look at some big-hitting expenses. These costs can really take a bite out of your cash flow. They must be considered when deciding where to live.
Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.
Cheap States To Live In Will Reduce Costs In The Large Budget Categories
For most families, the following expenses take the greatest share of our money:
It just makes sense that these represent the largest expenses for most of us.
We all need a place to live, food to eat, and a means to get where we need to go. Managing these expenses wisely will limit your financial risks.
So, keep these costs in mind. When searching for the most affordable states to live in.
But there’s more to your budget than these 3 areas. Let’s focus on 2 others next…
The Most Affordable States To Live In: Health Care Costs
Health care costs are another area to check into. But health care impacts some of us more than others.
Are you in your 20’s and have a short-term goal to strike out on your own? Well, health care costs are probably not a big deal at that age.
On the other hand, as we get older, health care costs become a larger concern.
Cheapest States To Live In: Low Taxes
But, I also want to throw income taxes into this discussion. Don’t forget to consider tax-friendly states. And, I will have a little more on a few of those states in a moment.
So, if you are looking to make a move. To somewhere with a lower cost of living. And head off money issues before they get started. Then, any of the following states are viable contenders.
It’s time to take a closer look at these most affordable states to live in for the year 2021. Because keeping your living costs in check will help you avoid common money problems in the future.
Most Affordable States To Live In: Texas
They say everything is bigger and better in Texas, and it’s the truth. But did you know that Texas is also one of the cheapest states to live in?
Texas is a land of opportunity with a strong foundation for entrepreneurial exploration and achieving business goals. It is also known as a state with a low cost of living.
With the main metropolitan areas– Austin, Dallas, Houston, and San Antonio. Checking in as being more affordable than similar cities throughout the country.
Cost Of Living
Specifically, the cost of living in Texas is about 6% lower than the average of all states in America. Groceries and health care contribute to the cost savings.
Cost Of Housing
But, where Texas shines is in the cost of housing. The median cost of the state’s average home is nearly 16% less than the national average.
No Income Taxes!
Finally, Texas is 1 of only 8 states that does not levy an income tax. That is a big bonus. And just one more reason why Texas is a cheap state to live in. More on no tax states in a moment.
In addition to one of the lowest costs of living in the U.S. and high earning potential, Texas is a deregulated state with progressive energy options.
The state has strong green initiatives. And is a leader in the generation of electricity from wind power. So, you can save money while protecting the environment.
One Of The Cheapest States To Live In: Iowa
Iowa is another one of the most affordable states to live in. And a state with a low cost of living.
It is an often-overlooked state. Being stereotyped as mostly farming.
However, Iowa is one of the cheapest places to live in America. And also has some of the best options for healthcare and education in the country.
Cost Of Living
Depending on where you live, the average cost of living in Iowa is about 10-15% lower than the average of all states in America. Groceries, utilities, and transportation all contribute to the cost savings.
Furthermore, do you like to drive? Then know that Iowa ranks highly for the low cost to own and operate a vehicle.
Finally, the median housing cost in the USA is around $230,000. However, in Iowa, it’s much less.
Put it all together. And these traits make Iowa one of the cheapest states to live in based on the cost of living.
Most Affordable City Living In Iowa
The capital is Des Moines. It is also the largest city in the state based on population.
Furthermore, Des Moines is rated as one of the best cities to live in across America. It gets high marks for having an excellent median home value to median income ratio. When compared to similar-sized cities.
Utilities are similar to the national average. But, housing costs are significantly cheaper. Which helps keep your mortgage costs down.
High-paying industries in the Des Moines metropolitan area include professional opportunities. Insurance, banking, manufacturing, and technology all play a significant role.
Furthermore, despite the city’s higher earnings potential. Des Moines also maintains a low cost of living. Just like the rest of the state. Making the city and all of Iowa one of the most affordable states to live in.
So, do you work in the education or healthcare industries? Are you a business professional?
Then, consider Iowa as a great place to earn an income. Without paying extremely high rent or transportation costs.
An Affordable State To Live In: Kansas
There’s no place like home, especially if your home is in Kansas. This state makes the list of most affordable places to live every year. And is 3rd on our list of cheap states to live in, work in, or retire to.
It’s known for its low housing and transportation costs. Also, grocery costs are significantly less than the national average. These features make it one of the cheapest places to live in the USA.
Cost Of Living In Kansas
So, let’s put some numbers behind Kansas’ low cost of living. To see what makes it one of the most affordable states to live in.
I can assure you this. Kansas living is much more affordable versus its neighboring state to the West, Colorado.
The median cost of a home in Kansas is about 40% less than the national average. Thus, Kansas easily ranks in the top 10 of all states for low house prices.
Kansas grocery bills check in about 7% below the national average.
Auto ownership comes in nearly 20% below the average in the U.S. Because gas, insurance, and maintenance for vehicles are all pretty cheap in the state.
And, you will love this. Topeka Kansas offers cash incentives for workers willing to relocate to the county in which it resides. Or, work remotely for applicants that qualify.
And here’s one more way to keep your cost of living low in Kansas. By saving on all your online purchases.
We use the cashback app, Rakuten. And receive rebates on everything we buy online.
This little secret works anywhere you decide to live. But, why not make it even less expensive to live in Kansas, once you get there.
You can learn more about Rakuten here.
Economic Opportunity In Kansas
Kansas isn’t as entrepreneur-friendly as other states. But it offers several industries with robust employment opportunities.
Kansas has growing healthcare, manufacturing, and agriculture industries. And they frequently have openings available for skilled workers.
Cheap But Good Food In Kansas
Finally, if you move to Kansas. Make sure to sample some of the local delicacies.
Barbeque, country fried steak, burgers, and great steaks top the list. Of great food to enjoy in Kansas.
Related: More reading about the pros and cons of living in Kansas
Cheapest States To Live In The US: Arkansas
Having visited Arkansas several times, it’s a great place to enjoy the outdoors.
So, when looking to save money, step out and get some fresh air and exercise without breaking your budget.
Cost of Living
Furthermore, Arkansas boasts the one of the lowest-costs of living in the U.S. It is another cheap state to live in.
Transportation, groceries, utilities, and healthcare all fall below the national average. With transportation being significantly so.
This state’s low cost of living makes it an attractive option if you make minimum wage. And need to make the most of every dollar.
Costs depend on where you choose to live in Arkansas. But, on average the cost of living is about 10-15% lower. As compared to the average of all states in America.
Cost Of Housing
But, where Arkansas rises above other states is in the cost of housing. It is a big contributor to the low cost of living.
Because the median cost of the state’s average home is very affordable. It is nearly half of the median home cost measured across the United States.
Here’s another area where Arkansas wins for cost savings. Property taxes. Also called real estate taxes.
Whether you own a home and pay property taxes directly. Or, rent. The property tax bill still comes out of your pocket.
And when it comes to property taxes, living in Arkansas is a winner. Because property taxes on a median-priced home come in as one of the lowest 5 states in the nation!
Resource: Get a mortgage for your new home
Another benefit of living in Arkansas is that healthy food is extremely affordable when compared with other states. Locally grown crops include rice, sweet potatoes, tomatoes, watermelons, and assorted other fruits.
Those living on a shoestring budget will be able to eat well. And won’t have to worry about sacrificing their health due to monetary limitations.
Most Affordable States: Oklahoma
Consider Oklahoma when developing your medium-term financial goals. That is if you desire a state with a low cost of living.
Furthermore, the state also boasts a low unemployment rate. Making it a smart option for 2021.
Housing costs are only a fraction of the national average. And, Oklahoma has a bustling economy.
The job market is diverse for both skilled and unskilled laborers. But there are also a lot of areas ready for development.
Here are some examples of what I’m talking about…
Cost of Living
First of all, the median price of a home is nearly half of the median-priced home across the entire United States.
Furthermore, rents are affordable too. Ranking near the lowest cost one-third of states in the U.S. for renters.
Finally, food, utilities, and transportation expenses are all below national averages.
Business And Employment Prospects
If you have a business. Or, are thinking about starting one. Then consider Oklahoma.
The same traits keeping the state’s cost of living low. Benefit your company too.
Specifically, low costs for property, rent, utilities, and transportation. Make for a business-friendly climate.
On the other hand, are you looking for a job? Then you should know Oklahoma ranks in the top one-third of all states. For the lowest unemployment rates.
Some of the largest employers include the U.S. Department of Defense, Walmart, and the Chickasaw Nation gaming business.
The energy industry is also well represented in Oklahoma. Because several Fortune 500 companies operating in this sector are headquartered there.
Examples include NGL Energy Partners, Oneok, Devon Energy, and Chesapeake Energy. Furthermore, the state university system is another large employer.
Before you apply for that new job in Oklahoma, make sure your credit score is in good shape. Because new employers will frequently check. You can check your credit score for free using Credit Karma.
So, while living in Oklahoma, you have the option to buy an extremely affordable house. That may come with plenty of extra property.
Also, enjoy an overall low cost of living. And combine all of these positive traits with solid prospects for making a living.
Related: More reading about the pros and cons of living in Oklahoma
One Of The Cheapest States To Live In America: Missouri
Missouri is another state with extremely affordable housing. It is rated at about 70% of the national average. This makes the state one of the cheapest areas to live in.
While the cost of groceries, utilities, transportation, and health care also come in below average. As compared with the rest of the country. So, opportunities to make the most of your finances are tremendous.
Missouri also offers a rich job market in specialty areas like biotech. Also, plenty of jobs in retail, service, and business management.
This plays out in the state’s favorable unemployment rate. Which is ranked in the lowest quarter of all states in the U.S.
Also, Missouri promotes a healthy business environment. A WalletHub survey showed that small businesses in Missouri were quite resilient during the recession of 2020.
And you will want to think about locating in St. Louis. Because it is often ranked as an attractive American city to live in. Because it scores high marks for affordability and vibrant culture.
Plus you are just a short drive to many beautiful state parks. For some outside recreation. So life doesn’t become all about money, work, and no play.
Related: More reading about the pros and cons of living in Missouri
Best States To Live In For Cost Of Living: Mississippi
When it comes to the cheapest states to live in, Mississippi always ranks near the top.
While there is no official cost of living index reported by the U.S. Government. There are private indices and surveys that do.
These take into account the big-spending areas I have already mentioned. Those being housing, food, and transportation.
But also costs like health care, insurance, and services. For example, child care services in Mississippi are much cheaper in comparison to other states. In addition, Mississippi offers some of the lowest college tuition costs in the country.
The state has mild winters. Is home to dozens of high-quality colleges and universities.
Also, you won’t be far from great areas to relax. Like the Mississippi Gulf Coast and New Orleans.
Finally, jobs are plentiful in certain industries. Especially, education, agriculture, manufacturing, and food processing.
Across the board, Mississippi shines. When looking for one of the cheapest states to live in. And keeping your living costs in check is a great way to improve your finances.
Related: More things to know about Mississippi
Cheapest States To Live In: Tennessee
Tennessee is one of the best places to live in for the state’s cost of living. It is about 12% lower than the national average.
Furthermore, Tennesse has plenty to offer new and existing residents of the state. Employment opportunities are plentiful. And Tennessee boasts an unemployment rate lower than the national average.
Plus, plenty of land for recreation, farming, or business use. But, a couple of more points that keep Tennessee on top. As perhaps my personal favorite cheapest state to live in…
Cost Of Housing
Tennessee gets high marks for the cost of housing. The median price of the state’s average home is nearly 30% less than the national average.
This makes for many cheap places to live in Tennessee.
Cost Of A College Education
Finally, don’t forget about the Tennesse Promise. It is a unique program that furthers Tennessee as one of the best cheap states to live in.
Tennessee Promise is both a higher education scholarship and mentoring program. It is focused on increasing the number of students that attend college in the state. And encouraging their success in school.
The program provides students a last-dollar scholarship to attend community college. What this means is the scholarship will cover tuition and fees not covered by the Pell grant, the HOPE scholarship, or state student assistance funds.
And let’s not forget about another cost of living factor: taxes! As I have mentioned, people tend to overlook taxes when looking for an affordable place to live. And Tennessee checks in as a very tax-friendly state.
Tennessee has no tax on earned income. And, property taxes are also very low.
There is a quirky tax on dividends and interest. It is called the Hall tax.
But here’s the good news. The Hall tax is being phased out. And, it will be completely repealed starting in 2021.
Cheapest States To Live In For Low-Income Taxes
While we are on the subject of taxes. And how they impact our list of most affordable places to live.
I want to highlight a few more low-tax havens next. Just in case reducing your tax burden by living in a low tax state has found its way into your personal financial goal planning.
No Individual Income Tax States
Where to live, if you do not want to pay state income taxes. And a few words on the states I have not already mentioned in this article…
2. Florida: That’s right. The Sunshine State is known for more than just warm weather.
Because Florida does not collect income taxes from individuals. The state also offers up one of the lowest state corporate tax rates in the country.
Making taxes. One of the big benefits of Florida living.
And the cost of living? It’s not outrageous. Especially considering the state’s popularity.
Furthermore, if you don’t mind living in small towns, off the coast, or in rural areas. Then Florida has inexpensive living options.
3. Nevada: Then we have another one of the sunniest states. Logging more than 300 days of sunshine each year.
But that’s not all when talking about Nevada. Since the sun shines on your tax bill too.
Because one of the advantages to living in Nevada is? No income taxes!
4. South Dakota
5 and 6. Texas and Tennessee: See the discussion on these states. Earlier in this article.
7. Washington: Arguably, one of the most beautiful states in the country. For its picturesque landscape.
And, there are no individual or business income taxes. For those residing in Washington state!
And last, but not least. In our list of tax-friendly states…
8. Wyoming: This state is a tax dodgers paradise. All within the confines of the law.
- No individual or corporate income tax
- Reasonable property taxes
- Low sales and gasoline taxes
So, if you do not like forking your money over to state governments (and who does?). Then taking up residence in Wyoming. Might be the decision you ever make.
State Taxes On Investment Income
With the repeal of the Hall tax, Tennessee joined the other seven states listed above that do not impose an income tax.
New Hampshire doesn’t tax earned income either. But they have their version of Tennessee’s Hall tax. The state taxes investment income in the form of interest and dividends at 5%.
As you might imagine, we are not big fans of special taxes on dividends here at Dividends Diversify!
High Tax States Add To The Price Of Living
Finally, I want to offer a couple of personal thoughts on taxes. Because I live in a high tax county that is located within a high tax state.
The tax burden is driving people away. And that is putting downward pressure on our home values.
Resulting in a bigger tax burden on those of us who choose to stay. Or, have to stay. So don’t forget about taxes when looking for the least expensive state to live in.
On the other hand, low taxes are one reason for economic growth and urbanization in some states. Texas and Tennessee come to my mind immediately.
Summary: Low-Cost Places To Live
There are many affordable states in which to live. No matter how you choose to work and play in 2021.
Find the state that helps achieve your financial goals. Then set off on a new adventure.
To conclude here is our list of most affordable states to live in 2021…
What Are The Cheapest States To Live In?
Be sure to consider these states for their lower costs of living:
It is interesting to note that states on the East and West Coast are not represented. For example, California has a very high cost of living. Otherwise, it would be a great state to live in.
And don’t forget to consider tax-friendly states.
Cheapest States To Live In For Low-Income Taxes
- South Dakota
What Is The Cheapest State To Live In?
Finally, it looks like Texas and Tennessee are the big winners. They make both my cost-friendly and tax-friendly lists.
Texas and Tennessee rank very high. And could be the cheapest states to live in.
Resource: Save money on your grocery purchases
More Reading To Help Reduce Your Expenses
- Find affordable life insurance
- Save money on all your online purchases
- More states to explore before you move
Disclosure & Disclaimer: I am not a licensed investment adviser, financial adviser, or tax professional. And I am not providing you with individual investment advice, financial guidance, or tax counsel. Furthermore, this website’s only purpose is information & entertainment. And we are not liable for any losses suffered by any party because of information published on this blog.