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The 10 Most (And Least) Expensive States In America

The 10 Most (And Least) Expensive States In America

2017 cost-of-living index figures by C2ER (Council for Community and Economic Research) are fresh out of the oven. Well, despite continued widespread recovery tactics, where you live in America has a great deal of impact on what economic challenges you face. No country is immune from economic slumps but higher than average state autonomy in America means economic growth varies by state. While one might expect to see California and New York on the list of most expensive states in America, shifting economic landscapes make several unexpected states more expensive as well. Complicated economic factors, as well as public officials struggling to meet the challenges of the future, make these ten states the most expensive and most affordable in America.

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    Most Expensive States

    1. Hawaii

    Take palm-fringed, sandy beaches, sizzling cultural melt, and add incredibly beautiful flora and fauna – and that’s the ‘magical’ allure of Hawaii. All these goodies, however, come with a steep price. Looking to buy a home in Hawaii? That’ll set you back a whopping $1 million on average. And that isn’t all – it’ll cost you nearly$3000 to rent a two-bedroom apartment and the monthly energy bill is estimated at $455.51, a figure that’s about 3 times what you’d shed in some leafy suburbs of California. But you live in Hawaii, the Aloha State!

    2. New York

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    Chiming at the second place is the Empire State. That in and of itself isn’t surprising at all in a state where the average home goes for $1.6 million (yes, you read that right). Looking to rent? Forget about it; a cozy two-bedroom apartment averages $4200 in monthly rent. Of course, New York is vast and uneven recovery/growth is partly to blame. Despite the improvement in unemployment rates since the end recession, New York continues to battle with aging infrastructure and starkly different growth rates. But there are areas like Rochester (average home price is $287000) where life is surprisingly easier than Manhattan. Nonetheless, you will still shed more than $160 for monthly energy bill there.

    3. California

    Not surprisingly, California is also one of the most expensive states in America. High housing costs in this state have long made it one of the pricier states, but population growth is another concern. At around $1 million, the average price of a home in metro San Francisco is the 3rd highest nationwide. California is also the number one state for poverty, reportedly carrying $1.6 billion in debt. While the state holds only 12% of the American population, nearly 33% of all welfare recipients are Californian.

    4. Massachusetts

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    It’s official – it’s now more expensive to live in Massachusetts than Alaska! The cost of groceries is through the roof, with 24-ounce T-bone steak going for more than $62! While the average price of a home is $634,233, expect to pay 3 or even 5 more times in most Newton, Framingham, and Cambridge neighborhoods. At $2668, the average rent for a sweet two-bedroom apartment in Boston is the 4th highest in the US. And the energy bill of $287.63 is close to $100 more than would be in Anchorage.

    5. Alaska

    A newcomer to this list, Alaska – the moose state – offers unsurpassed natural beauty and close-knit culture you’ll never find elsewhere. With only 760 farms, it’s no surprise that most produce and food items are hauled from different states. And that trickles down to tons of other costs. A loaf of bread which goes for a mere $1.79 in Iowa will set you back $4.68 in Anchorage. But again, this is Alaska – the land of amazing wildlife. Paying utility bills ($201.39 for energy) and healthcare isn’t a walk in the park either.

    Least Expensive States

    1. Mississippi

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    One of the less densely populated states, Mississippi is one of the least expensive states to live in. With low per capita income, the state’s housing costs remain correspondingly low as well (the average home price of $199,028), making the cost of living affordable. Mississippi previously relied mainly on cotton production to drive the economy. In the last two decades or so, however, Mississippi has diversified agricultural and livestock industries, ensuring economic growth. Now focusing on producing rice, soybeans, chicken, and catfish, Mississippi continues to pursue diversification to enrich its economy, a strategy which has been successful so far.

    2. Indiana

    Next up, is Indiana, a state famous for the Indianapolis 500 and low-cost homes (averaged at $270,204). At the Crossroads of America, you can expect rock-bottom prices for groceries and other basic food items. A head of lettuce goes for a paltry $1.04 while a pound of coffee and ground beef will set you back just $4.43 and $3.74 respectively. A boom in the local economy has pushed prices up a teensy bit, but you can still pick up a check at dinner.

    3. Michigan

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    The Great Lakes State, much like Mississippi and Arkansas, offer low-cost housing (averaged at $274,355) for consumers, yet it’s consistently ranked in the top ten for best states to do business. After all, this is the home of the American auto industry. The average gas price in Detroit was about $2.04 when it hit more than $3 in most parts of the country. The auto industry has bounced back, healthcare is thriving and high-tech jobs are supplanting manufacturing, helping this state become more competitive to prospective employers, keeping the economy working for Michigan citizens.

    4. Arkansas

    Like Mississippi, Arkansas is a more rural state, offering consumers low housing costs. Arkansas also boasts incredibly low costs for doing business, attracting six Fortune 500 companies to the state. Rent for a two-bedroom apartment is just $700 a month and the monthly energy bill is $145.79, roughly half of what you’d pay in Massachusetts. In short, Arkansas’ low cost of living is balanced by a lower household income than average but still remains a top state for the economic climate.

    5. Oklahoma

    Rounding up our list is the Sooner State, the home of undulating wheat fields. And the cost of groceries, including a loaf of wheat bread for less than $3, is appropriately cheap. Well, that isn’t all – a grand 2,400 square-foot home will only chip off around $300K from your bank account. With a sub-$150 monthly energy bill and low-cost health care, Oklahoma is certainly one of the best places you’d be lucky to call home.

    Featured photo credit: US Department of Interior via om.wikipedia.org

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    Alicia Prince

    A writer, filmmaker, and artist who shares about lifestyle tips and inspirations on Lifehack.

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    Last Updated on September 2, 2020

    How to Set Financial Goals and Actually Meet Them

    How to Set Financial Goals and Actually Meet Them

    Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

    In this article, we will explore ways to set financial goals and actually meet them with ease.

    4 Steps to Setting Financial Goals

    Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

    1. Be Clear About the Objectives

    Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

    It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

    Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

    2. Keep Goals Realistic

    It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

    It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

    3. Account for Inflation

    Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

    Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

    For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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    4. Short Term Vs Long Term

    Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

    As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

    By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

    How to Achieve Your Financial Goals

    Whenever we talk about chasing any financial goal, it is usually a two-step process:

    • Ensuring healthy savings
    • Making smart investments

    You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

    Ensuring Healthy Savings

    Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

    This is the focal point from where you start your journey of achieving financial goals.

    1. Track Expenses

    The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

    Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

    If you’re not sure where to start when tracking expenses, this article may be able to help.

    2. Pay Yourself First

    Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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    Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

    The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

    Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

    3. Make a Plan and Vow to Stick With It

    Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

    Nowadays, several money management apps can help you do this automatically.

    At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

    Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

    You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

    4. Make Savings a Habit and Not a Goal

    In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

    Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

    • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
    • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
    • If you go shopping, always look out for coupons and see where can you get the best deal.

    The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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    5. Talk About It

    Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

    Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

    6. Maintain a Journal

    For some people, writing helps a great deal in making sure that they achieve what they plan.

    If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

    When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

    Making Smart Investments

    Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

    1. Consult a Financial Advisor

    Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

    Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

    2. Choose Your Investment Instrument Wisely

    Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

    Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

    As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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    3. Compounding Is the Eighth Wonder

    Einstein once remarked about compounding:

    “Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

    Use compound interest when setting financial goals

      Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

      Start saving early so that time is on your side to help you bear the fruits of compounding.

      4. Measure, Measure, Measure

      All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

      If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

      Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

      The Bottom Line

      Managing your extra money to achieve your short and long-term financial goals

      and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

      More Tips on Financial Goals

      Featured photo credit: Micheile Henderson via unsplash.com

      Reference

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