Top Reasons Why Living In Indiana Is Cheaper Than Other States
Are you looking for an affordable place to live? Then, please stick with me as I explore why living in Indiana is so cheap.
Bargain prices mean your dollars go farther after relocating to Indiana. Here’s why.
Why Is Living In Indiana So Cheap?
Indiana living is cheap because of low housing, transportation, and grocery costs. All of these expenses combined are well below national averages. Furthermore, the state places a modest tax burden on residents due to the reasonable income tax rate and low property taxes.
Next, let’s dig into the six reasons you can balance your budget in Indiana.
Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.
1. Living In Indiana Is Cheap Because Of Its Demographic Makeup
Indiana is cheap because the state mainly consists of small towns and mid-sized cities. Thus, nearly two-thirds of Indiana’s population lives in small communities and rural areas. Expenses in these areas are low and bring down the state’s overall average cost of living.
Living in a small town is cheaper for several reasons. First, land costs less. Second, real estate taxes are lower. Finally, limited demand for goods and services keeps prices in check.
Indianapolis is the state’s only significant metropolitan area, approaching 2 million residents. Fort Wayne has the next most extensive population base of about 350,000 residents. After these two cities, there is a significant drop-off in population density. As the population base falls, so does the cost of living.
So, if you want to live in Indiana on the cheap, move to a small town. Conversely, move to one of the well-off northern suburbs of Indianapolis, and you will see a dramatic increase in the cost of living. For example, living in Carmel, Indiana, is expensive.
Of course, there are tradeoffs—specifically, fewer jobs, amenities, and entertainment options than a big city provides. Thus, Indiana living might be a little boring. But for those looking to cut costs, the savings add up.
With the big picture view taken care of, let’s dive into some details next.
2. Live In Indiana For Less Money Because Of Low Home Prices
Indiana’s median home value is nearly 40% less than the median-priced home in the United States.
Housing costs consume the most significant amount of a family’s financial resources, much more than any other budget category. As a result, cheap houses mean cheap living in Indiana. Rents are also affordable.
Source of U.S. median home price: Federal Reserve Bank of St. Louis economic research
Source of median Indiana home price: Redfin
Why are houses so cheap in Indiana?
Houses are cheap in Indiana due to limited population growth and because there is plenty of land to expand the housing stock. Thus, the supply of homes keeps up with the demand, and prices stay in check.
Next, I will stick with real estate for my third of six points about moving to Indiana to save money.
3. Indiana’s Cost Of Living Is Low Because Of Property Taxes
Indiana is cheap because of its low property taxes.
Two things factor into your property tax bill. First, the real estate tax rate, and second, the value of your home the tax rate is applied.
Basic math tells us that cheap home prices mean lower property taxes. Thus, Indiana residents consistently pay less in property taxes than residents of most other states.
As a result, a study by Bankrate.com ranked Indiana as the eleventh lowest state for the annual real estate tax paid on a median-value home.
Next, please allow me to stick with the topic of taxes. I will keep it short to not bore you about Indiana living and taxes.
4. For Living On The Cheap, Income Taxes In Indiana Make It A Tax-Friendly State
Living in Indiana is cheap because the state has a modest income tax.
You will pay the state about 3% of your earnings for taxes. Furthermore, under certain conditions, the state has committed to reducing the income tax rate in the coming years. Finally, for potential Indiana retirees, social security income is tax-free.
Indiana’s income tax rate compares favorably to some of its neighbors, including Illinois, Michigan, and Kentucky.
5. Indiana Is Cheap To Live Because Of Transportation Costs
Transportation costs less in Indiana.
While most residents own and travel by car, the abundance of small towns and rural landscapes means shorter, easier commutes without big city traffic jams.
Furthermore, outside of Indianapolis, there is little to no rush-hour traffic in the state.
Thus, gas, car, and transportation costs are cheaper in Indiana. As a result, a recent study by Forbes ranked Indiana the 30 lowest state for the cost of transportation.
Please allow me to round out my list of reasons why Indiana is so cheap by addressing food costs.
6. It’s Cheap To Live In Indiana Because Of Groceries
Groceries make Indiana a cheap place to live.
Based on a recent study done by Digg.com, your grocery bills in Indiana are 3% cheaper than the average for the United States. For consistency, the study compared food prices at Walmart locations in each state.
Okay. I covered the big picture view and have dug into the financial details. So, it’s time to wrap up with some final thoughts.
Why Indiana Is A Cheap Place to Live
Indiana is cheap to live in for the following six reasons:
- Small-town and rural living
- Low home prices
- Affordable property taxes
- Reasonable income taxes
- Inexpensive transportation costs
- Cheaper groceries
Since paying taxes, having a place to live, food to eat, and a way to get around town are necessities, Indiana’s cost of living is lower than many other places.
Will you regret moving to Indiana? The answer is no if your goal is to save money.
Author Bio: Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.