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What are the cities with the lowest cost of living in the US in 2023?

Depending on where you live can make a big difference in how much you need to earn in order to live comfortably. Here’s a look at the lowest-cost cities.

The most affordable cities in the United States

Americans across the country have been reeling from accelerated price rises not seen in four decades as the global economy has been hit by one shock after another. The higher cost of living has spurred some states to send residents relief checks to cope with inflation now that the federal government has ended pandemic-era support, some of those direct payments are still going out.

However, how much money you need to be able to afford the necessities and still have money left over for discretionary spending and even save a little can vary from coast to coast. A couple of analyses on affordability of numerous US cities found where you can live on less and where a paycheck goes further.

What are the cities with the lowest cost of living in the US in 2023?

It should come as no surprise that the cities with the lowest cost of living are not on the coast, but some are in East Coast states. The majority are located in the Midwest down through to Texas and the Deep South. GOBankingRates came up with a list of 35 cities with “surprising” low cost of living.

They based their findings on compared living expenses in 150 of the largest US cities using the 50/30/20 budgeting rule as a guideline. This refers to the portion of income that people dedicate to each category to find how much is needed to live comfortably. Fifty percent of your income for necessities, thirty percent to cover discretionary spending and twenty percent goes toward savings.

GOBankingRates included the cost of rent, groceries, utilities, transportation and healthcare in the necessities category. By doubling that total they reached their estimate of what salary you would need to earn to meet the 50/30/20 budgeting rule.

Five cheapest cities to live in the US

CityTotal annual cost of livingAnnual income neededMedian household income
(in 2021 dollars), 2017-2021
1Akron, OH$21,631.90$43,263.79$42,129
2Cleveland, OH$21,710.15$43,420.29$33,678
3Toledo, OH$22,308.57$44,617.14$41,671
4Shreveport, LA$24,373.68$48,747.35$41,782
5Birmingham, AL$24,439.12$48,878.25$39,403

Where are the most affordable places to live?

Other factors play into how affordable a city is though. As noted above, while the cost of living in the above mentioned cities may be lower than the rest, the median household income according to the US Census Bureau in all of those cities is below what is need to meet the 50/30/20 budgeting rule.

Another analysis by Investopedia found the five US cities where your paycheck goes further. It goes without saying that most places where you can earn a much better salary are also the places where the cost of living is higher, thus negating those increased earnings. However, there are major cities where the annual income needed to maintain the same quality of life is far below that of other cities.

Five cities where paychecks go further

  • Houston, TX
  • Dallas-Fort Worth, TX
  • Charlotte, NC
  • Denver, CO
  • Austin, TX

Housing markets that are undervalued

One of the biggest expenses that Americans have is housing costs. While during the pandemic the price of housing skyrocketed nationally, fueled by the Great Migration and rock-bottom interest rates, there are still some cities that are affordable.

Looking at data from November 2022, the most recent month for which comprehensive data is available, US News and World Report found the markets that were the most affordable. The Department of Housing and Urban Development (HUD) sets the level of affordability of households spending on shelter at no more than 30 percent of their gross income. This allows renters and homeowners to have more money left over for necessities and emergencies.

The average payment-to-income ratio (APIR) in November 2022 was 36.6 percent nationwide. However, there were 14 metropolitan statistical areas that were under HUD’s threshold in the top twenty undervalued markets, primarily located in the Midwest, but also on the East Coast and in Texas. Topping the list was Detroit where the ratio was less than half the national average at 17.4 percent. The Motor City was followed by Cleveland, St Louis, Philadelphia and Cincinnati.

The five most undervalues housing markets

Detroit, MI17.4%
Cleveland, OH18.9%
St. Louis, MO21.7%
Philadelphia, PA22.3%
Cincinnati, OH23.6%