5 States with the Lowest Cost of Living | Cost of Living Indexes Explained

Living in the USA is becoming increasingly expensive. Inflation rates gradually increase the cost of housing, utility bills, groceries, and transportation, leading many Americans to cut costs wherever they can, and living costs vary sharply from state to state. If you’re researching which states have the lowest cost of living and are planning on moving to live a less expensive life, we’ve got the list you’ve been looking for.

In this article, we’ll go over the five states with some of the lowest costs of living: Oklahoma, Mississippi, Alabama, Missouri, and West Virginia. Then, we’ll examine what makes these states more affordable than others.

Understanding Cost of Living Metrics

Different sources measure cost of living and housing affordability in different ways, so it’s best to look at several different affordability indexes to determine the best move for you. An affordability index, or cost of living index, uses data on how much several common necessities cost to determine how easy or difficult it is to live in a certain city, state, or country. 

Different indexes use different systems to rank and number their results–for example, the World Population Review cost of living index calculates the average cost of living throughout the country, then measures the average cost of living in a certain state against that baseline.

Housing is a major factor in the cost of living, and some affordability indexes only factor in housing costs vs. median income to determine how easy it is to purchase a home or take out a mortgage loan.

Here are a couple of factors to watch for when examining housing affordability:

• Mortgage rates. According to the National Association of Realtors, the average U.S. family used to earn 92.3% of the income required for a 30-year mortgage loan in May of 2024, but as of May 2025, the same family earns 97.2% of that income.
• Rent prices. According to Baselane, the rental market in the U.S. saw median rent prices rise by about 3.2% for a two-bedroom apartment last year, even though rental vacancy rates remained steady during the same period; operational costs, rising interest rates, and high demand keep prices elevated.
• Property taxes. The July signing of the 2025 U.S. budget legislation has raised the state and local tax deduction cap for property taxes to $40,000 for incomes under $500,000.

Most cost-of-living indexes average the housing index with four other factors:

• Grocery costs, which average how affordable food and other necessities are.
• Utility costs, which average how affordable power, water, and other utilities are.
• Transportation costs, which average how much a resident can expect to spend on gasoline or public transport.
• Healthcare costs, including how much health insurance copays and uninsured health costs are.

In short, there’s a lot to pay attention to when examining cost-of-living indexes. While we’re going to give you a snapshot of several states with low costs of living, do extensive research to find out what factors are most important to you, and once you’ve made a decision and you’re pricing out moving costs, consider looking into self-storage to help make the transition easier and even more affordable.

The 5 States with the Lowest Cost of Living

(Data sourced from the Missouri Economic Research and Information Center Cost of Living Data Series for Q1 2025. The index score is calculated by dividing the cost of living in a state by the national average cost of living and taking that percentage; a lower number means a lower cost of living.)

#1: Oklahoma

Index score: 85.5

As of the first quarter of 2025, Oklahoma has the lowest cost-of-living index out of all 50 states, thanks to remarkably low average housing costs–70.5% of the national average, whether you’re living in a city like Oklahoma City, Tulsa, or Norman, or making your home in a rural area.

The second most prominent factor in Oklahoma’s cost of living is transportation costs, which are 86.7% of the national average. Grocery, utility, and healthcare costs are all at around 94% of the average. While employment rates are slowing in Oklahoma, as in the rest of the country, as of April 2025, the healthcare and leisure/hospitality sectors have experienced significant growth according to the local Oklahoman newspaper.

#2: Mississippi

Index score: 87.3

Mississippi ranks as the second most affordable state, with housing costs at 72.5% of the national average and utility costs at 89.7% of the average. Key cities to look at moving to include Jackson, Gulfport, and Hattiesburg, and when looking for work, you’ll find the farming and manufacturing industries are the most prominent.

Renting or owning a home will be significantly easier in Mississippi than in many other states, and lower utility costs will make monthly bills less of a strain. However, the average wages in Mississippi are lower than in many states, and the job market is unfortunately somewhat limited.

#3: Alabama

Index score: 87.6

Alabama ranks third on the list of affordable states, with housing costs at a shocking 69.1% of the national average. Healthcare costs are also the lowest of the five states we’re spotlighting, with prices at only 90.7% of the national average, making it an ideal new home for retirees and those with chronic conditions.

However, Alabama also has one of the lowest quality of life out of all 50 states, considering its poverty rate is currently 16.8%. You may want to consider moving to a different state if you’re looking for work or looking to improve your financial situation. 

#4: Missouri

Index score: 88.0

Missouri is the fourth most affordable state to live in as of Q1 2025, with housing costs at 74.8% of the national average. The most affordable metropolitan area in the state is Joplin, offsetting its slightly higher-than-average utility costs with housing at 61.3% of the national average. Those looking to move to Kansas City or St. Louis can expect housing prices to be a bit higher, at 74.8% and 83.1% of the national average, respectively.

Missouri prides itself on investing in its statewide transportation system, and the Department of Transportation is currently implementing a five-year improvement program to address concerns and relieve congestion. If educational opportunities are a factor in your destination, you’ll find plenty of grants and scholarships to help you pay for your or your child’s education, such as a recent one effective at the end of August 2025 for public safety personnel.

#5: West Virginia

Index score: 88.6

Last on our list for now is West Virginia, which ranks fifth primarily due to its low average housing costs, 71.6% of the national average. However, like Alabama, WV comes with a lower quality of life thanks to outdated infrastructure, a difficult job market, and a high rate of poverty (17.8% as of current data).

This doesn’t mean you should avoid West Virginia, though. According to Niche, there are plenty of recreational and leisure opportunities in places like Star City, and Bridgeport is held in high regard for its family-friendly atmosphere. You may want to relocate here if you want a slower pace of life in a smaller town.

Factors Making These States Affordable

Every state we’ve looked at has had a significantly lower average cost of housing than the national average, thanks to median home prices in general dropping slightly across the country. Rental markets, despite rent going up somewhat, are still rather affordable, and property taxes now allow you to deduct more when filing your return.

You may have also noticed that all five states aren’t among the most recognizable and don’t have some of the most populated cities in the country; smaller cities and metropolitan areas make labor costs more affordable, and there’s less of a regulatory burden on more limited areas. Energy costs in more rural areas can also be lower thanks to more availability and opportunity for wind and solar power stations.

Many of these states have large rural areas outside of their more metropolitan areas, leaving potential residents with more opportunities to purchase or rent land for their purposes. While some states need to work on their infrastructure, others have optimized highway networks and public transport, and fewer cities lead to less pollution and cleaner air throughout the state.

Self-Storage Benefits in Low-Cost States

Getting ideas now? Choosing where to live is one thing, but moving and storing your belongings is another. Luckily, low-cost states also have cheaper self-storage costs to increase demand, making it easier for you to move while keeping everything secure as you relocate. When looking at options with SelfStorage.com’s built-in search tool, you’ll find a variety of unit sizes to meet your needs and prices to meet your budget.

Self-storage facilities are an excellent option to temporarily keep your belongings safe and secure while you’re moving. While buying or selling a home, you can use a storage unit to keep personal belongings in while staging it for visitors, and you can find affordable portable storage pods to keep, move, and secure your things, whether you’re moving one state away or across the country.

Even after your move, you’ll find self-storage useful for a variety of lifestyle needs, such as keeping seasonal items and decorations in when the weather conditions aren’t right for them. It also gives you an extra space to put items while decluttering your home office or garage, especially recreational equipment and hobby or craft items you may not be using at the moment.

If you need to store inventory or documents for a small business, equipment for a construction or home improvement contractor business, SelfStorage.com has a solution for you. From climate control to advanced security, you can find it in our storage network. 

SelfStorage.com Can Help Make Your Move Cheap & Simple 

Saving money by moving to a new state is tempting and intimidating all at once, but with the right research, you’ll find a place that meets your work and lifestyle needs while cutting costs. Oklahoma, Mississippi, Alabama, Missouri, and West Virginia will all save you significant amounts on housing, so look into what it takes to move to one of these states and keep tabs on the most recent cost-of-living index data to make smart decisions.With the right planning and budgeting, you can easily move to a new state while keeping cash in your pocket, and SelfStorage.com is here to help you save even more as you look for storage solutions. Use our built-in search tool to find storage options near you–or near your new home.