Cost of living by state 2022 [compare rates using COLI tool] | Insure.com (2024)

You might have picked where to live based on the job market or school district — or even the weather. But what about the local cost of living?

How much you spend on major expenses like housing, groceries, and insurance all affect your cost of living – and prices for goods and services can vary widely by location. And that means a state’s cost of living can be the difference between being financially comfortable or struggling to keep your head above water.

To compare the cost of living across the states, Insure.com ranked each using the Cost of Living Index published for the first quarter of 2022 by the Council for Community and Economic Research. We used the index, which tracks regional differences in the cost of consumer goods and services, to evaluate several factors such as housing, groceries, transportation, utilities, and health care. We also included the cost of auto and home insurance. Items were weighted by Insure.com by what we deemed most necessary.

Our base cost of living is represented by 100; in this case, 100 represents the national average. Locations are then indexed against this number. For example, a state with a cost of living of 110 would be 10% higher than the national average.

Based on our cost-of-living assessment, Hawaii is the most expensive state at 188.29 while Mississippi is the least expensive at 83.89.

So, if you are considering moving, or simply want to know how your state stacks up, read on for more information about the cost of living by state.

What is cost of living?

Cost of living refers to the amount of money you need to cover basic living expenses in a certain location. That can include the average cost of rent/mortgage payments, utilities, food and groceries, healthcare, insurance, transportation and other goods and services.

Cost of living can tell you how expensive it is to live in one area versus another. Usually, a cost of living index is used to compare this information.

Average cost of living by state

Curious how the different states compare when it comes to cost of living? Check out our graph below.

Hawaii has a cost-of-living index of 188.29, indicating that it is 88.29% more expensive to live there than the national average. Mississippi ranks lowest on the index with an index value of 83.89, suggesting a 16.1% savings over the national average when compared to its productivity levels and standard of living.

A state like California or Hawaii has much higher rates than areas like Utah and Idaho. However, the cost of living varies by region within a state, too. Rural areas usually have a lower cost of living than suburban and urban areas. Even metro areas within the same state vary.

One example is Texas. Cities like Houston, Dallas, El Paso, San Antonio, Austin, Amarillo, and Beaumont are all proudly Texan, but the cost to live in each varies.

The more congested Northeast isn’t immune to the substantial cost of living shifts either.

New York has the New York City area, Long Island and Westchester County, which all have high costs. However, The Empire State also includes more affordable areas like Albany, Rochester, Utica and Buffalo.

So, don’t write off an entire state if it has an overall high cost of living. Instead, dig deeper into the numbers to gauge specific regional costs.

Cheapest states to live in

According to our data, the Midwest and Southern U.S. are the cheapest states to live in. Here are the 10 states with the lowest cost of living and how they compare to the national average:

• Mississippi (-16.10%)
• Iowa (-11.03%)
• Oklahoma (-10.60%)
• Alabama (-10.40%)
• Kansas (-10.39%)
• Arkansas (-10.29%)
• Indiana (-10.02)
• Ohio (-9.52%)
• Tennessee (-8.57%)
• Nebraska (-8.39%)

Most expensive states to live in the U.S.

As far as the most expensive states (we also include Washington, D.C.) to live in, they tend to fall along the two coasts. Here are the 10 most expensive states to live in and how their cost of living compares to the national average:

• Hawaii (+88.29%)
• District of Columbia (+56.87%)
• New York (+48.30%)
• California (+46.12%)
• Alaska (+26.07%)
• Maryland (+25.24%)
• Oregon (+24.02%)
• Massachusetts (+21.61%)
• New Hampshire (+19.91%)
• Washington (+19.11%)

Why cost of living matters

A state’s cost of living has a major impact on your ability to save money and build your wealth. If you live in an area with a high cost of living and don’t have the income to support it, you could end up living paycheck to paycheck.

On the other hand, a lower cost of living means expenses are relatively low, so you may have more room in your budget to save, invest, or spend on items you need – or want.

However, keep in mind that wages often mirror the cost of living. If you live in an expensive area such as San Francisco or Washington, D.C., your salary will likely be higher to account for that.

If you live in Kalamazoo, Michigan, or Jackson, Mississippi, your expenses will be much lower – but so might your salary.

What is a cost of living adjustment (COLA)?

When looking at the cost of living, many people often wonder about a term they often hear: cost of living adjustment. In order to account for inflation and ensure that Americans who rely on certain government benefits can afford to live, a cost of living adjustment (COLA) is sometimes made to Social Security and Supplemental Security Income (SSI).

Established in 1972, the adjustment is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is calculated by the Bureau of Labor Statistics.

The COLA for 2022 was 5.9%.

Cost of living calculator

Whether you’re moving for a job or relocating in retirement, our cost of living calculator can help you evaluate how much it’ll cost you to live in your new destination.

For instance, compare costs related to major budget categories like housing, groceries, utilities, transportation, health care, other goods and services and home and auto insurance. You can compare any two factors side-by-side.

Our cost of living calculator also provides the salary you’ll need to maintain your current standard of living. Knowing what you’ll need to earn to maintain your lifestyle gives you critical information to see if moving to that area is worth it.

Methodology

A cost of living index evaluates several factors, which are weighted in terms of importance. Below are the eight main expense categories we used to gauge cost of living, from most to least important:

• Miscellaneous goods and services (30%)
• Housing (29%)
• Groceries (13%)
• Transportation (9%)
• Utilities (9%)
• Health care (4%)
• Auto insurance (2%)
• Home insurance (2%)

We then ranked the states by those results. The base cost of living is always represented by 100; in this case, 100 represents the national average. Locations are then indexed against this number. For example, a state with a 110 on the cost of living index would be 10% higher than the national average.

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