![]() ![]() Higher numbers are more expensive and lower numbers are less expensive. A cost of living index of 100 represents the national average. A cost of living index is a way to normalize and compare the cost of living between different areas. ![]() The Bottom LineĪ state or metropolitan area’s cost of living is defined as the cost it takes to live in that particular location. Another thing to consider is that your income may be lower in areas with a lower cost of living, though that may not be as much of a factor if you have a remote job. Cost of living in rural Albany, Georgia will be much less than living in metro Atlanta. Keep in mind that these are just average costs of living for an entire state and the cost of living will vary greatly within a state. According to the 2020 fourth-quarter Cost of Living Index report from CCER, the ten states with the lowest cost of living are: The cost of living by state varies depending on the year and also on the methodology used to calculate the cost of living. Which States Have the Lowest Cost of Living? State and local tax policies also contribute to the overall cost of living. Similarly, being closer to farms and other food production can keep an area’s food costs lower. If you live in an area with access to oil or natural gas, it stands to reason that your energy costs might be lower than other areas. How close a state or metropolitan area is to various natural resources can also play a factor. Generally speaking, cities and urban areas have a higher cost of living than rural areas.Ĭost of living of specific commodities can vary with other factors as well. One major reason for differences in cost of living is how rural or urban an area is. There are a variety of different reasons why cost of living varies by state and even within a given state. If you’ve ever traveled to or lived in different parts of the United States, you may have noticed that prices often change as you go to different areas. Prices for each of these areas varies from month to month and in each different state and community. Energy (gasoline, fuel oil, electricity and natural gas).The CPI is used by the government to determine things like the cost-of-living adjustment for Social Security.īLS calculates CPI indexes for the following categories in addition to an overall index: Bureau of Labor Statistics publishes the Consumer Price Index (CPI). There are a variety of different companies and organizations that calculate the cost of living in different locations, and each one uses a slightly different cost of living formula. What Makes Up the Cost of Living Formula? If you live in an area with a cost of living index of 109, then you know that your cost of living is roughly 9% higher than the national average. This allows you to easily compare the cost of living in different locales. Then states or metropolitan areas where the cost of living is higher than the national average have numbers greater than 100, and those with a lower cost of living have an index of less than 100. Typically a cost of living index takes the average cost of living across the whole nation and sets that as a baseline of 100. The Council for Community and Economic Research (CCER) has compiled, published and studied cost of living information at the local level since 1968. Another way that you will often see cost of living measured is as a cost of living index. One way that cost of living can be measured as either a raw monthly or annual amount. What is Cost of Living?Ĭost of living is defined as the total amount of money that is needed to live in a particular area. If you’ve lived most of your life in one location, you might be surprised to find that costs vary in different states and municipalities. Without being tied down to a physical office location, we are seeing people move to different locations across the country. Many people are starting to return to office jobs, but others are continuing to work remotely. During the COVID-19 pandemic, many people started working remotely for the first time. ![]()
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