How far your money goes each month often depends on where you live. It's a fact of life that it just costs more to live in some places than others. Main drivers include the cost of housing, groceries, insurance, transportation, healthcare, and basic services.
Why bring it up? Because for many people, moving might be the easiest way to increase their disposable income.
For example, a young person just starting out might be working in retail but living in a large city. By moving to a smaller city, with a lower cost of living, their money might go farther. After all, the same retailer probably pays the same in both places.
The same is true for someone who has just retired. While they were working, living in an expensive city might have been just fine, but not so fine when their income is reduced, and fixed.
GOBankingRates.com, a personal finance site, has analyzed the cost of living in each state and measured it against the national average cost of living. In doing so, it has compiled two lists – the five most expensive states in which to live and the five cheapest.
Hawaii is the most expensive, for a couple of reasons. First, lots of people would like to live there. Second, everything costs more in Hawaii because it's an island chain in the middle of the Pacific Ocean. It costs a lot to get things delivered there. For example, Hawaii has the highest gasoline prices in the U.S.
While Hawaii's cost of living is 67.4% above the national average, Washington, DC's cost of living is the second highest, at nearly 50% above the average. In DC, housing is the big driver. Homes and apartments in the nation's capital cost 134% above average.
New York, California, and Massachusetts round out the five most expensive states, and are very close in terms of costs. They range from 35.2% to 34.7% above average.
Housing is also a big cost driver in California, where costs are 92.7% above average. California also has the second-highest transportation costs in the nation.
Where your money goes farther
Where can you move to stretch your dollars? Mississippi tops the list, with a cost of living 14% below the national average. In Mississippi, housing costs are 31.6% below the national average. Its gasoline prices are among the cheapest in the country.
The second most affordable state is Indiana, with a cost of living 12.1% below average. Michigan is reasonable too, coming in at 11.8% below average. Arkansas and Oklahoma are not far behind, at 11.5% and 11.4% respectively.
Some states that didn't make either top five list nonetheless are very cheap or expensive in certain categories. For example, Alaska has the highest healthcare costs in the country, while Alabama has the lowest.
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