Whether you’re a recent college graduate just starting your career or an established professional looking for a fresh start, several factors can determine where in the U.S. you might decide to live. While culture and lifestyle certainly play a role in the decision, affordability is one of the biggest factors people should consider.
Financial advisors recommend that everyone should strive to save at least 20% of their annual income. Despite this, one recent study found that nearly half (46%) of American households don’t have any retirement savings.
While there are certainly a number of factors that can contribute to how much you are able to save, choosing to live in a state that offers a low cost of living can greatly impact how much you are able to stash away every year.
With that in mind, we wanted to know which states offer Americans the most bang for their buck. As such, we’ve put together a ranking of all 50 states to determine which states are the best for saving money.
To obtain our rankings, we looked at ten factors: average income, median rent, utility costs, median home price, state and local sales taxes, tax burdens, cost of groceries, childcare costs, gas prices, and the average cost for a cup of coffee. For each category, states were able to earn up to 10 points for a maximum of 100.
The complete findings are as follows:
States | Total (out of 100) |
| South Dakota | 73.60 |
| Missouri | 69.80 |
| Kentucky | 69.00 |
| North Dakota | 68.50 |
| Oklahoma | 68.40 |
| Wyoming | 67.20 |
| Idaho | 66.70 |
| Iowa | 66.60 |
| Michigan | 66.00 |
| Kansas | 65.00 |
| Ohio | 64.80 |
| New Hampshire | 63.80 |
| Texas | 63.20 |
| Mississippi | 61.40 |
| Utah | 61.00 |
| Louisiana | 60.60 |
| Nevada | 60.50 |
| Arkansas | 59.80 |
| Nebraska | 59.60 |
| Arizona | 58.40 |
| Montana | 55.10 |
| West Virginia | 55.00 |
| Wisconsin | 54.90 |
| Colorado | 54.70 |
| New Mexico | 54.50 |
| Delaware | 54.40 |
| Indiana | 53.00 |
| Georgia | 51.20 |
| Virginia | 50.40 |
| Florida | 49.80 |
| North Carolina | 49.40 |
| Alabama | 49.00 |
| Alaska | 47.80 |
| Tennessee | 47.60 |
| South Carolina | 46.40 |
| Minnesota | 46.20 |
| Pennsylvania | 45.40 |
| Oregon | 45.10 |
| Maryland | 44.90 |
| Maine | 44.40 |
| Rhode Island | 43.00 |
| New Jersey | 41.40 |
| Vermont | 39.60 |
| Illinois | 39.20 |
| Connecticut | 35.00 |
| Massachusetts | 31.40 |
| Washington | 28.20 |
| Hawaii | 27.40 |
| New York | 27.30 |
| California | 25.40 |
The Best States for Saving Money
According to our findings, the best states for saving money include South Dakota, Missouri, and Kentucky. Although none of these states have particularly high average incomes (none of them rank in the top half of all states), they all makeup for it by providing a low cost of living.
South Dakota
South Dakota, for example, has one of the lowest median rent costs in the country, with a median monthly rent of $1,105. Compare this with Massachusetts, which has the highest median monthly rent at $2,714. South Dakota also scored well in the categories pertaining to state and local taxes, the cost of groceries, and the cost of childcare.
Missouri
Missouri also scored highly for median rent, with the average rental property costing $1,235 per month. Missouri home prices are also some of the lowest in the nation, with the median home price in the state being $267,000. Other categories where Missouri scored well include the cost of groceries, childcare costs, gas prices, and the cost of a cup of coffee.
Kentucky
Similarly to South Dakota and Missouri, Kentucky has low median rents ($1,218) and home prices ($257,000). Kentucky also has comparatively low state and local taxes, as well as affordable groceries, childcare, and gas.
The Worst States for Saving Money
Rounding out the bottom of the list, we found the states that are the worst for saving money to be Hawaii, New York, and California. It’s interesting to note that each of these states scored quite well for the average income of their residents. Despite this, cost of living factors in each of these states contributed to their lower overall scores.
Hawaii
Due to its remoteness, the cost of living in Hawaii is higher than most other states in the union. As such, Hawaii scored extremely low in categories pertaining to rent ($2,512), home prices ($713,000), utilities, groceries, childcare, and gas prices.
New York
New York City is one of the most expensive cities in the entire U.S., driving New York to the bottom of the list. In addition to high rent ($2,639) and home prices ($531,000), New York scored poorly in the following categories: state and local taxes, cost of groceries, and cost of childcare.
California
Like Hawaii and New York, California is another popular living destination with high taxes that drive the cost of living higher than other areas of the country. The median rent in California is $2,531, while the median home costs $799,000, good for third-highest and highest in the country, respectively. Other categories where California didn’t perform well include local tax rates, cost of childcare, and gas prices.
Why are Some States More Expensive than Others?
There are many factors that can contribute to a high or low cost of living in any given state. Some of the bigger factors include the supply and demand of homes and rentals. In more popular states, like those with year-long warm weather and beach access, the housing costs can skyrocket compared to less densely populated states.
Another key factor is state and local taxes. According to Todd Stearn, founder and CEO of The Money Manual, rent, mortgages, and taxes are the three biggest expenses for most people. Todd said:
“The best states to save money are going to typically be those with the lowest cost of owning or renting your home, as this is the biggest expense for most people. Another major expense is tax. States like New York, California, Hawaii, Vermont, and New Jersey have some of the highest taxes in the country, making it harder to save money.”
How Businesses Can Avoid Higher Costs of Living
For businesses looking to expand, it is important to know the cost of living in the states you are looking to enter. This can help indicate which places require more upfront capital to cover things like rent, employee salaries, utilities, and other fixed costs that come with entering a new market.
Luckily, with a virtual phone number, you can gain all the benefits of entering a new market without the high price tag. Virtual numbers allow you to easily connect with your customers in a local market, even if your business is located across the country or on the other side of the globe. Explore our wide selection of virtual numbers to learn more.
Methodology
We looked at the following ten criteria for each state:
- Average Income
- Median Rent
- Utility Costs
- Median Home Price
- State + Local Sales Taxes
- Tax Burdens
- Cost of Groceries
- Childcare Costs
- Gas Prices
- Average Cost for a Cup of Coffee
Using these criteria, each state was given a score between 1 and 10 for each based on where it ranked among every state. The scores were added together to obtain the total score (out of 100) for each state.
Sources
https://www.justice.gov/ust/eo/bapcpa/20220401/bci_data/median_income_table.htm
https://www.rentcafe.com/average-rent-market-trends/us/
https://www.forbes.com/home-improvement/living/monthly-utility-costs-by-state/
https://www.bankrate.com/real-estate/median-home-price/#median-price-by-state
https://taxfoundation.org/data/all/state/2023-sales-tax-rates-midyear/
https://taxfoundation.org/data/all/state/tax-burden-by-state-2022/#burdens
https://www.zippia.com/advice/average-cost-of-groceries-by-state/
https://worldpopulationreview.com/state-rankings/child-care-costs-by-state
https://gasprices.aaa.com/state-gas-price-averages/
https://matadornetwork.com/read/coffee-cost-state/
https://www.beckershospitalreview.com/finance/average-annual-healthcare-cost-in-all-50-states.html
