If you’re moving to America, you may be curious about the cost of living by state. Whether you choose to move to New York, Florida, Texas, or Minnesota, you’ll encounter vastly different lifestyles by U.S. state. This could be particularly true if you’re an immigrant who wants to save so you can thrive or support friends or family in your home country.
Fortunately, there are some strategies to determine which state’s cost of living to standard of living ratio works best for you. In this article, we’ll be covering the cost of living by state in America and which state is best to relocate to according to your needs or preferences.
- How to Calculate Cost of Living by State
- How is state cost of living calculated?
- What is the Average Cost of Living per State?
- What State is the Cheapest to Live in?
- What is the Most Expensive State to Live in?
- What States Have the Best Income-to-cost-of-living Ratio?
How to Calculate Cost of Living by State
When trying to find an affordable place to live with ample job opportunities in America, you may want to figure out the right formula to calculate the cost of living by state. Fortunately, the American Government issues a cost of living index which sums up all the important variables, resulting in a number that indicates the cost of living to the living standard ratio in each state. The cost-of-living index helps us to understand the percentage difference in the cost of living between two different locations. The number 100 represents the U.S. average, and every state is compared to this standard.
For example, if a certain state has a cost-of-living index of 90, it is 10% below the country’s average. If another state has an index of 130, the cost of living is 30% higher than the average.
Why Does it Matter?
Higher-cost locations often have higher-paying jobs, while more affordable states tend to have fewer employment opportunities, meaning whichever state you choose could affect your career and earning prospects hugely. In fact, this reality has kept many working professionals tied to certain U.S. cities or more expensive states.
However, with a rapid and ever-evolving shift toward remote work worldwide, relocating to a more affordable state has become easier.
Before you decide on a new location, let’s take a closer look at how to calculate the cost of living by state in the U.S.
How is state cost of living calculated?
The cost of living by state index offers a peek into the U.S. states with the highest and lowest cost of living. In order to create a cost of living index, researchers and experts compile data on the primary living expenses to understand the average cost of living for the entire United States. These considerations include house prices, education fees, car payments, and even just the cost of grocery shopping. In other words, day-to-day necessities are taken into account alongside the bigger expenses in life.
Some of the most common considerations are:
- And the list goes on.
What is the Average Cost of Living per State?
The monthly living expenses for a single person in the USA are, on average, $3,189, which amounts to around $38,266 per year. The average cost for a family of four is around $7,095 per month, which amounts to $85,139 per year. Using these figures as a benchmark, we can determine whether a state is above or below the average when it comes to the cost of living.
Starting with one of the most populated and famously expensive states in the U.S., New York’s cost of living per month for a family of four is $ 7,800 and $ 5,300 for a single person.
Moving south toward Texas, another popular U.S. state, we find the cost of living for a single person sitting around $3,305 per month on average, while a person living the same lifestyle in Florida would require an average of $3,635 monthly. In the Western state of California, the average cost of living for a single person monthly works out to $3,886 per month.
What State is the Cheapest to Live in?
Coming in as the cheapest U.S. state to live in is the southern state of Mississippi, with a low cost of living index score of 83.3, over 15% cheaper than the national average. It also features the lowest average housing costs in the United States, at 33.7% below the national average. The median single-family home costs around $140,818.
|Lowest average housing costs in the nation||The highest poverty rate in the country|
|Lowest average transportation costs in the nation||Economic concerns and fewer job opportunities|
|Warm weather and mild winters||Poor quality of education and healthcare system|
|Plenty of (inexpensive) Southern comfort food|
Kansas and Alabama are next in line when it comes to the cheapest U.S. states to live in.
What is the Most Expensive State to Live in?
Unsurprisingly, New York and California top the list of most expensive places to live in America. However, they are also accompanied by less expected states such as Hawaii, where the cost of living is bumped up by the constant influx of tourists. Massachusetts and Oregon are also relatively expensive states to live in.
What States Have the Best Income-to-cost-of-living Ratio?
Income to cost of living standards tends to determine your standard of living, meaning you’ll want to focus on it just as much as the cost of living alone. So, while Mississippi may be the cheapest state to live in, you may not live comfortably there or enjoy the highest quality services in terms of health care and education.
However, there are some states that offer affordable living alongside high lifestyle standards, including:
- New Jersey.
The Bottom Line
When moving to the U.S. as an immigrant, there’s plenty to consider, one of the main things being where you want to live. However, your preferred location may not always make the most sense financially, especially if you want to save or send money home. If that’s the case, you may want to look into the cost of living by state and weigh it up with your expected earnings. Be sure to keep the standard of living in mind alongside the pros and cons of residing in each state. To select the ideal location for your budget and preferences, you may want to look into the U.S. states with the best income-to-cost-of-living ratio, enabling you to live comfortably while saving.
Finally, you will be able to send money from the US back home with Small World from certain states. Find out more information about how you can send money by checking our website or mobile app and send money without leaving your home and enjoy our fee-free first online transaction promotion.