With the economy starting to recover, many Americans are still struggling to regain the footing they had lost in the 2008 economic downturn. One major concern for many when it comes to finances is the cost of living. The cost of living varies from state to state. In one recent article by Bloomberg Businessweek, the cost of living is reportedly increasing by an average of 0.3 percent. The main drivers behind the increase in cost of living are rent and food prices. With these types of increases, it becomes more imperative than ever to opt for states where the cost of living is relatively low. Below are some of the states with the lowest cost of living averages.
Mississippi
Mississippi is consistently ranked as the state with the lowest cost of living in the country. The factors behind the low cost of living are the prices of consumer goods, rent, and housing. For example, the price for consumer goods is 11.3% below the U.S. average. If you’re considering renting in this state, you’ll pay a low $840 per month. Buying a home is just as easy, with the median home prices listing around $155,000. Things get even better when you look at utilities. Those who live in Mississippi pay an average of $175 per month for utilities. While there is certainly a low cost of living in comparison to other states, Mississippi also has a very high unemployment rate. The unemployment rate currently stands at 9.1%.
Tennessee
Like Mississippi, those who live in Tennessee also enjoy a low cost of living. In Tennessee, the median housing prices are around $138,000. In terms of grocery and health prices, the state is also nearly 10 points below the U.S. average. Additional costs that rank quite low compared to other states are utilities, rental housing, transportation, healthcare, and miscellaneous goods and services. One of the main reasons that Tennessee has such a low cost of living is the salaries. Unfortunately, while the cost of living is low, so are the household incomes. For example, those who live in the state have a household income of about $42,000 per year. This is significantly below the U.S. national average, which is at $55,000 per year.
Arkansas
The cost of living in Arkansas ranks pretty close to those of Tennessee and Mississippi. Housing in Arkansas is well below that of Tennessee and Mississippi. For example, the median home value is $111,000 and the property tax rate is .52 percent. Median rental prices are also quite low, standing at about $850 per month. Groceries and transportation costs are also cheaper than the national average. Those who live in a small apartment can expect to pay around $135 per month in utilities. Unlike Tennessee and Mississippi, Arkansas does have a positive economic situation. Most of the state’s jobs are through the vibrant tourism industry.
Iowa
Iowa is very similar to Arkansas in terms of cost of living. Median home values are a bit higher ,standing at $130,000 and the property tax rate is 1.29 percent. Food, utilities, and rental costs are pretty low too. In some, those who live in Iowa pay around $35,000 in total basic expenses if they have one child. This figure seems pretty low when one looks at the median net income, which is about $36,000 per year. Aside from living costs, Iowa also has some of the lowest childcare and rental costs in the country.
Kentucky
The final state in the top five is Kentucky. Like the above states, Kentucky is an extremely affordable state to live in. Kentucky’s cost of living is lower than the US average, ranking about 21 percent lower. Average home prices are about $140,000, while rental prices are about $800 per month. Food, transportation costs, and utilities are also low due to the many natural resources that the state offers.
Summary
Overall, choosing a state with a low cost of living has some immense benefits. Rather than struggle on a monthly basis to meet your bills, you can relax a bit and enjoy a more financially-friendly lifestyle.
