Money Management

Do you want to stretch your dollar a bit further? If so, you might want to think about relocating. Read on to find out about the most affordable states! 

The cost of living can vary greatly across the United States. When it comes to finding a place to live, considering the cost of living is an essential factor. Living in certain states can save you a considerable amount of money thanks to a low cost of living. But where should you move to? We’ll give you the lowdown on the most budget-friendly states where you could save the most money.

What is the definition of cost of living?

When we talk about cost of living, we are referring to the expenses required to maintain a certain standard of living in a particular location. This includes everything from housing and groceries to transportation and healthcare. The cost of living can vary greatly depending on where you live in the world.

For example, the cost of living in a big city like New York City is significantly higher than in a rural town in Alabama. It’s important to consider the cost of living when making personal financial decisions, such as taking a new job or relocating. By doing so, you can ensure that your income is sufficient to cover your expenses and let you maintain a comfortable lifestyle.

Why is the cost of living different in each state?

If you’ve lived in different states, you may have noticed that the cost of living can vary significantly. But why does this happen? Cost of living tends to be higher in large urban areas and lower in rural areas, due to population. Demand for housing is high in places like California and New York, which drives up prices.

In addition, city space is limited, and lots of people want homes, leading to higher rent and house costs. Meanwhile, in rural areas, land is more abundant, leading to larger homes at lower prices. The general economic climate of a state also impacts the cost of living — states with strong economies tend to have higher costs of living overall.

California is the world’s fourth-largest economy, and also has the third-highest cost of living in the country. States with higher costs of living tend to have higher salaries as well, but it is important to consider all factors before making a decision to relocate.

Cost of Living Index

Since 1968, the Council for Community and Economic Research (C2ER) has collected and published cost of living index data at the state and local levels. The Cost of Living Index measures the cost of consumer goods and services and is based on more than 90,000 prices covering 60 different items.

The composite index is based on six component categories — housing, utilities, grocery items, transportation, health care, and miscellaneous goods and services. The higher the index, the higher the costs in comparison to the other states. In addition to the cost of living score, we’ve also included the median household income in the state, the median home price, and median monthly rent for a two-bedroom apartment.

In comparison, here are the U.S. averages:

Median household income: $69,021Median home price: $400,770Median monthly rent: $1,199

15 states with the lowest cost of living

Median household income: $49,111

Median home price: $279,000

Median monthly rent:$1,032

Median household income: $56,956

Median home price: $309,500

Median monthly rent: $1,045

Median household income: $64,521

Median home price: $315,000

Median monthly rent: $1,042

Median household income: $54,943

Median home price: $322,450

Median monthly rent: $1,008

Median household income: $65,030

Median home price: $279,000

Median monthly rent: $1,275

Median household income: $61,043

Median home price: $386,450

Median monthly rent: $1,004

Median household income: $65,429

Median home price: $309,900

Median monthly rent: $968

Median household income: $61,944

Median home price: $288,050

Median monthly rent: $1,093

Median household income: $50,884

Median home price: $227,000

Median monthly rent:$855

Median household income: $58,516

Median home price: $424,950

Median monthly rent: $1,126

Median household income: $52,123

Median home price: $285,000

Median monthly rent: $949

Median household income: $61,938

Median home price: $237,450

Median monthly rent: $1,060

Median household income: $66,644

Median home price: $371,375

Median monthly rent: $1,053

Median household income: $63,202

Median home price: $267,000

Median monthly rent: $1,079

Median household income: $67,321

Median home price: $372,495

Median monthly rent: $1,283

Median household income: $68,002

Median home price: $439,900

Median monthly rent: $959

What does this data mean?

Eight of the 16 states (Texas and Wyoming are both tied for 15th) with the lowest cost of living are in the South. Seven states are in the Midwest, and just one, Wyoming, is in the West. The cost of living in the first two regions is generally lower compared to other parts of the United States, especially the states along the West and East Coasts.

One contributing factor is the availability of cheaper housing options. In these areas, it’s more common to find larger homes with yards for a fraction of the cost of a similar property in California or New York. Additionally, the cost of goods and services such as groceries, gas, and utilities tend to be more affordable as a result of a lower demand. While there are certainly exceptions, living in the South or Midwest can stretch your dollars further. In addition, making smart money decisions such as using the best gas and groceries credit cards can help you earn rewards, lowering your costs even more!

These sixteen states offer an affordable cost of living, particularly when it comes to housing. Keep in mind that there may be other factors to consider, such as job opportunities, schools, and climate, when deciding on a new place to live. However, if you’re looking to save money, moving to one of these states may be a great decision. Your bank account will thank you!

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You have options for paying your property taxes. Read on to see what to do. 

The median U.S. property tax bill is $2,971 a year, according to research from The Motley Fool. But your property taxes may be lower or higher, depending on where you live and what your home is valued at.

When it comes to paying your property taxes, you have options. You could write out a check to your township or municipality directly on a predetermined basis, or you could allocate extra money every month in your mortgage payment for property tax purposes. The question is, which option is better?

When you pay your property taxes through your loan servicer

What many homeowners opt to do is have their mortgage loan servicers pay their property taxes on their behalf. Under this setup, you’ll commonly send your loan servicer an amount of money every month that’s larger than the payment for your mortgage’s principal and interest alone. That extra money will go into an escrow account that your loan servicer will dip into as needed to pay your property taxes as they come due.

In many areas, property taxes are paid quarterly, though they’re sometimes paid twice a year or even once a year. When you pay your property taxes through your loan servicer, you get to make a single monthly payment, and you don’t have to worry about allocating funds for your property tax bills or having to remember to pay them.

When you pay your property taxes yourself

When you pay your own property taxes, you generally get to send your mortgage loan servicer a smaller amount of money each month. That’s because you’re simply covering your loan’s principal and interest, and you aren’t covering added costs.

Some people like the idea of doing things this way because they’re not parting with as much money on a monthly basis. If you send your loan servicer a smaller check each month, you can keep the difference in your savings account and earn some interest on it until you need to write out a check to cover your property tax bill.

But if you’re going to pay your property taxes yourself, you’ll need to be really disciplined. If you’re required to make a $1,500 property tax payment every quarter, you must make sure to allocate $500 a month in your budget for that expense. You may just find it easier to have your loan servicer handle those payments so you don’t have to worry about being short.

What’s the right call for you?

Property taxes are an unavoidable part of owning a home. And unfortunately, they have the potential to rise over time.

Rolling your property taxes into your mortgage payments might be the safer and more convenient way to cover that expense. But if you’d rather be in charge of those payments yourself, then you’ll just need to budget carefully for them and mark the dates on your calendar for when your property taxes are due.

Some towns or municipalities will give you a modest grace period for paying property taxes late. But if you go beyond that, you’ll generally accrue interest on overdue property taxes that can make that already large expense even more costly.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Shop at Costco? Read on for key mistakes to avoid. 

Many people love Costco for its low prices and wide selection of products. And let’s be real — those free samples are pretty sweet, too.

But whether you shop at Costco often or only on occasion, it’s important to do so strategically — especially these days, when the cost of food and so many products is higher thanks to inflation. Here are a few things you should aim to never do at Costco.

1. Buy new grocery products in bulk on a whim

Buying groceries in bulk can often result in a nice amount of savings. And it’s a good idea to load up on items in bulk at Costco that are staples in your pantry and even fridge.

But one thing you don’t want to do is take a chance on a new item with a bulk Costco buy. If you don’t end up liking the item or getting much use out of it, you could easily end up throwing your money away.

So let’s say Costco is passing out samples of a delicious-looking whole grain cracker that you decide is quite tasty. You might pick up a bulk box thinking you’ll bring it home for your family to enjoy. But if your family has never tried those crackers before, they may decide that they’re gross and bland and refuse to eat them. At that point, you may not manage to finish them yourself, leaving you to throw some of that box away.

2. Shop without a list

Costco warehouses are enormous, and they’re loaded with a host of products, from groceries to toiletries to apparel to electronics. That’s why it’s so important to make a shopping list before heading to Costco.

If you don’t make a list and force yourself to stick to it, you might end up making your share of impulse buys. That could result in higher credit card bills you struggle to pay.

3. Forget to use a rewards card

You have options when it comes to paying for your Costco purchases. You can write out a check, use cash, or pay by credit card.

Costco only accepts Visa cards, so if you don’t have one and don’t wish to apply for one, you might have to pay a different way. But if you have a Visa card that offers rewards, it pays to use it at checkout. You may be eligible for a nice amount of cash back for the items you were already planning to buy.

You should also know that if you have a Costco executive membership, which gives you 2% back on all purchases, you can double up with credit card rewards. So if you have a Visa card that gives you 1% back on all purchases and an executive membership, you can walk away with 3% back on the Costco items you’re buying.

Costco can be a great place to shop, but it’s important to do so strategically. That means knowing which items are suitable for bulk purchases, avoiding impulse buys to preserve your budget, and racking up credit card rewards as the opportunity presents itself.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Visa. The Motley Fool has a disclosure policy.

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Women lag behind men in terms of retirement savings. Read on to see why. 

It’s important to enter your retirement years with a fair amount of money saved up. Social Security won’t be enough to replace your former wages in full. Rather, those benefits will replace just a fraction of them. And if you want financial flexibility and stability in retirement, you’ll need to go in with a solid nest egg.

Unfortunately, though, many women are at risk of coming up short with regard to retirement savings. In a recent blog post, financial guru Suze Orman cited research from T. Rowe Price, which found that women, on average, contribute 43% less to workplace retirement plans than men. Here are some of the reasons women’s long-term savings aren’t on par with men’s.

1. Women earn less

Data from the Pew Research Center reveals that the gender pay gap is still very much alive and well in the U.S. In 2022, women earned an average of 82% of what their male counterparts took home. That’s only a slight improvement from 2020, when women earned 80% as much as men.

2. They have more educational debt

An estimated 23% of women take on debt in the course of getting a degree. By contrast, only 14% of men have to go the same route. Among millennials who borrowed for education, women had an average debt load of $19,300, while men only had to borrow $12,900. For Generation X borrowers, the average balance for women was $23,000. For men, it was $15,000.

3. They’re more likely to be caregivers

Up to 81% of all caregivers are female, says research from the University of Missouri – Kansas City. And women might spend as much as 50% more time than men providing care. Because of this, women are more likely to have to take a career break or time off of work, which no doubt impacts their earnings. And the less women earn, the less easy it becomes to fund a retirement plan.

How to ramp up your retirement savings

Whether you’re saving for retirement in a 401(k) through your job or an IRA account you manage on your own, there are steps you can take to boost your contribution rate. And the sooner you do, the more wealth for retirement you stand to build.

First, fight for a fair wage if you’re not being compensated equitably. Research salary data for your job and industry and see how your wages compare. If you can make the case that you’re underpaid, your employer might agree to boost your pay, which could make it easier to carve out money for a retirement plan.

At the same time, work on growing your job skills. The more skills you have, the easier it becomes to command a higher wage.

What’s more, if you’re on a career break right now due to being a caregiver, try to keep your skills current. And, if possible, try to earn a small paycheck doing some sort of side gig. Not only might that put a little extra money in your bank account, but it could help you avoid the type of resume gap that could be harmful to your career.

It’s unfortunate that women have less savings for retirement than men, but it’s also not particularly shocking. But you shouldn’t just resign yourself to having less money during retirement. Instead, take steps to boost your IRA or 401(k) plan contributions so you’re able to enjoy the comfortable retirement you absolutely deserve.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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