What is the Cost of Living Index?
The term “cost of living” refers to the amount of money required to cover basic expenses such as food, shelter, transportation, and healthcare.
The cost of living can vary greatly depending on the region, so to better understand and quantify these differences, cost of living indexes are used.
Employers use these indexes to determine wages, while government agencies use them to determine the need for interventions, such as annual adjustments to Social Security benefits.
Individuals also use these metrics when considering relocation, particularly for employment purposes.
To calculate the cost of living indexes, a baseline for comparison is established. The United States average cost of living serves as the baseline, set at 100, for comparing costs across states.
The cost of living is determined by various categories, including:
- Housing
- Transportation
- Grocery items
- Utilities
- Health care
- Miscellaneous goods and services
Example: Montana’s COLI is 103.7 which is 3.7% higher than the national average. Mississippi’s COLI is 85.3, 14.7% lower than the national average.
Cost of living in the U.S. for 2024
On average, American households allocate 16% of their spending towards transportation, which amounts to $9,826 per year.
Healthcare expenses average around $5,177 annually.
Food expenses, which include both groceries and dining out, come to an average of $7,317 per year or $609.75 per month. Utility costs in the United States typically amount to $370.16 per month.
The median household income in the United States is $67,521 per year, while the personal income for individuals is $35,805. A family of four would require an annual income of $68,808 to meet the living wage in the country.
U.S. states with the lowest cost of living in 2024
Here are the top 10 states with the lowest cost of living:
- Mississippi (85.3)
- Oklahoma (86)
- Kansas (87.7)
- Missouri (88.4)
- Alabama (88.8)
- Iowa (89.7)
- Nebraska (90.1)
- Arkansas (90.3)
- West Virginia (90.3)
- Tennessee (90.4)
1. Mississippi
Cost of living index: 85.3
Cost of housing: 68.6
Cost of health: 97.6
Mississippi has the cheapest state to live in with the lowest cost of living of all U.S. states. The state's housing index sits at 68.6, the second-lowest in the country behind Oklahoma.
The average price for a single-family Mississippi home is $140,818 and the average rent for a two-bedroom apartment in Mississippi is $991.
When we look at the average living wage in Mississippi for a family of four, it comes in at $80,523 while the median income is $70,656.
2. Oklahoma
Cost of living index: 86
Cost of housing: 68
Cost of health: 91.8
Oklahoma is the second-cheapest U.S. state to live in, with a cost of living index of 86. The state also has the cheapest cost of housing index at 68, and the cheapest cost of health index of 91.80.
The typical home value in Oklahoma state was $200,203 in 2023, with a median household income of $53,840.
The average living wage for a family of four in Oklahoma is $21.63 per hour.
3. Kansas
Cost of living index: 87.7
Cost of housing: 69.4
Cost of health: 97.1
The cost of living in Kansas is 87.7, making it the third-cheapest state to live in the U.S. The cost of housing comes in a 69.4, just after Mississippi, and the cost of health is similar to Nebraska, at 97.1.
When we look at the average house price in Kansas of $216,131, this is very similar to Iowa, coming in at $215,458. The state is among the cheapest in the U.S., with an income-to-home value ratio of 30%.
The median household income in Kansas for a family of four is $61,091.
4. Missouri
Cost of living index: 88.4
Cost of housing: 77.2
Cost of health: 89.9
Missouri ranks fourth on the list of cheapest states to live in the U.S. with a cost of living index of 88.4. The cost of housing ranks at 77.2 while the cost of health comes in at 89.9, just below Tennessee.
The average living wage in Missouri is $22.89 per hour and the typical home price is $240,000. The median household income in Missouri is $57,290.
5. Alabama
Cost of living index: 88.8
Cost of housing: 70.4
Cost of health: 86.9
Alabama is fifth on the list with a cost of living index of 88.8. The average cost of housing is 70.4 and the average home value in Alabama is $220,419, making living in Alabama very affordable.
The cost of health index is 86.9, the second-cheapest in the U.S., behind Kentucky.
The average living wage in Alabama is $22.47 per hour and the median household income for a family of four is $52,035.
6. Iowa
Cost of living index: 89.7
Cost of housing: 72.4
Cost of health: 99.7
Iowa's cost of living index comes in at 89.7, with a cost of housing index of 72.4 and a cost of health of 99.7, just below Oklahoma.
The living wage in Iowa for a family of four is $23.70 per hour, with the median household in the state at $215,458.
7. Nebraska
Cost of living index: 90.1
Cost of housing: 78.4
Cost of health: 97.1
Nebraska falls within the top 10 cheapest states to live with a cost of living index of 90.1. The cost of housing index is 78.4, similar to Illinois and Georgia, with the cost of health score coming in at 97.1.
The average house price in Nebraska is $255,447, while the median household income for the state is $63,015.
The living wage in Nebraska is $23.84 per hour.
8. Arkansas
Cost of living index: 90.3
Cost of housing: 76.3
Cost of health: 87.2
In Arkansas, the cost of living index is 90.3 with the cost of housing index at 76.3 and the cost of health at 87.2.
The average Arkansas home price is $199,000 with the state having one of the highest income-to-home-value ratios.
The median household income in Arkansas is $49,475 and the living wage is $22.49 per hour.
9. West Virginia
Cost of living index: 90.3
Cost of housing: 70.9
Cost of health: 97
The cost of living index in West Virginia is similar to Arkansas at 90.3. The cost of housing index is 70.9, very close to Alabama at 70.4.
The typical home price in West Virginia is $156,000 and the median household income is $48,037. The living wage in West Virginia is $24.02.
10. Tennessee
Cost of living index: 90.4
Cost of housing: 82.9
Cost of health: 88.1
The cost of living in Tennessee is 90.4 and the cost of health is 88.1. The cost of housing comes in at 82.9, which is
The typical home value in Tennessee is $310,782 and the median household income is $48,037. The living wage in Tennessee is $21.94 per hour.
Cost of living in all U.S. states
| State | Cost of Living Index | Cost of Housing Index | Cost of Health Index |
| Alabama | 88.8 | 70.4 | 86.9 |
| Alaska | 124.4 | 118.1 | 149.8 |
| Arizona | 107.2 | 125.3 | 93.5 |
| Arkansas | 90.3 | 76.3 | 87.2 |
| California | 134.5 | 134.5 | 106.4 |
| Colorado | 105.5 | 116.1 | 102 |
| Connecticut | 113.1 | 122.7 | 709.7 |
| Delaware | 102.6 | 99.7 | 104.3 |
| District of Columbia | 148.7 | 241.8 | 104.7 |
| Florida | 100 | 110.5 | 96.3 |
| Georgia | 91 | 78.5 | 101.4 |
| Hawaii | 179 | 307.7 | 118.4 |
| Idaho | 106.1 | 113.8 | 101.2 |
| Illinois | 90.8 | 78.3 | 95.4 |
| Indiana | 91.5 | 77 | 98.9 |
| Iowa | 89.7 | 72.4 | 99.7 |
| Kansas | 87.7 | 69.4 | 97.1 |
| Kentucky | 93.8 | 72.5 | 81.8 |
| Louisiana | 92 | 84.7 | 97.9 |
| Maine | 111.5 | 118.9 | 96.2 |
| Maryland | 119.5 | 152.2 | 96.2 |
| Massachusetts | 148.4 | 219.5 | 112.6 |
| Michigan | 92.7 | 80.9 | 94 |
| Minnesota | 94.1 | 82.3 | 111.5 |
| Mississippi | 85.3 | 68.6 | 97.6 |
| Missouri | 88.4 | 77.2 | 89.9 |
| Montana | 103.7 | 111.4 | 95.7 |
| Nebraska | 90.1 | 78.4 | 97.1 |
| Navada | 101.3 | 110.7 | 94.9 |
| New Hampshire | 115 | 109.8 | 120.6 |
| New Jersey | 114.1 | 136.8 | 96.1 |
| New Mexico | 94.2 | 87.5 | 99.6 |
| New York | 125.1 | 173.03 | 104.5 |
| North Carolina | 96.1 | 92.1 | 109.5 |
| North Dakota | 94.6 | 484.3 | 111.6 |
| Ohio | 94 | 80.1 | 96.5 |
| Oklahoma | 86 | 68 | 91.8 |
| Oregon | 115.1 | 139.9 | 101.4 |
| Pennsylvania | 99 | 89.9 | 96.7 |
| Rhode Island | 110.5 | 114.6 | 107.4 |
| South Carolina | 96.5 | 89.4 | 96.7 |
| South Dakota | 93.8 | 93.9 | 97 |
| Tennessee | 90.4 | 82.9 | 88.1 |
| Texas | 93 | 84.2 | 94.1 |
| Utah | 101.5 | 106.5 | 90.3 |
| Vermont | 114.9 | 131.4 | 106.2 |
| Virginia | 103.1 | 107.7 | 102.6 |
| Washington | 115.1 | 129.4 | 119.8 |
| West Virginia | 90.3 | 70.9 | 97 |
| Wisconsin | 95 | 84.4 | 113.7 |
| Wyoming | 92.8 | 80.7 | 98.6 |
Rent Index – Top 10 Lowest U.S. Cities
The Rent Index is an average of the price of renting an apartment in the city, compared to New York City. E.g. if the rent index is 70, it means the average rental price in that city is around 30% lower than in New York City.
Here are the 10 cities with the lowest Rent Index in 2024:
- Bucaramanga, Colombia – 5.0
- Cali, Colombia – 6.4
- Fortaleza, Brazil – 6.6
- Goiania, Brazil – 7.4
- Recife, Brazil – 7.4
- Barranquilla, Colombia – 7.7
- Curitiba, Brazil – 8.6
- Belo Horizonte, Brazil – 8.9
- Sao Jose dos Campos, Brazil – 9.3
- Quito, Ecuador – 9.6
The city with the highest Rent Index is New York City (100), followed by Hamilton (93.6), San Fransisco (90.3), George Town (79.7), and San Diego (79.5).
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