The American workforce is in the midst of drastic changes. With the prevalence of the Covid-19 pandemic, people are switching from in-office work to working remotely. Also, with inflation on the rise, workers are migrating from busy, expensive cities to LCOL areas in search of a way to make their earning power go further. LCOL stands for “low cost of living.” A LCOL area is any area or city where the cost of living is below the national average. A lot of factors contribute to one’s decision to relocate to LCOL areas. Some quantifiable factors include: household income, rent and cost to buy a house, price of food, tax rates, and public transportation options.
How is the Cost of Living Quantified
The cost of living is mainly associated with the direct relationship of supply and demand. As an example, let’s look at housing costs. In a very densely populated city, the housing market is usually a hot market with more buyers than the supply of housing. This drives up prices, making it more expensive to purchase a home or even rent an apartment. In LCOL areas, the price of housing is lower because the supply is higher than the demand. This is just one example, and you will want to do a comparison of all the quantifiable factors in HCOL vs. LCOL areas to figure out what is best for you.
HCOL vs. LCOL
For the majority of households, the expenses of food, transportation, and housing are the three biggest costs. Where you live plays a large part in how expensive these things amount to be. How much you spend based on personal factors and your earning potential need to be considered before moving to a new city. LCOL areas tend to have lower incomes, but the costs associated with living on a day-to-day basis are considerably lower. You need to assess whether living in a LCOL area (which are often rural areas) with lower income, but a lower cost of living average, with lower taxes as well (including lower income taxes), or living in a HCOL area (which are often bigger cities, like San Francisco, for example) with higher incomes as there are more especially high paying jobs but a high cost of living average, will add up to a better way of living for you and your family. For example, in San Francisco, the median home price is $1,344,190, the average price of a gallon of gas is $4.04, and the average cost of a dozen eggs is $3.79. While San Francisco, is an extreme example, many HCOL cities share the same high cost characteristics. So, while there are higher paying jobs in HCOL areas, the prices for basic necessities can be astronomically higher than LCOL areas. This is especially true for housing, so you would want to search for housing subsidies.
The current trend is that people are moving to LCOL areas for remote work with a better work-life balance and lower-cost of living. This is thought to be a better move for their financial freedom and mental and physical health. In this article, I will list the top LCOL areas in the United States (based on prominent sources), and why you might want to move there to have more earning power and reach your financial goals.
My List of LCOL Cities
#1: Green Bay, Wisconsin
While you may not think of Green Bay, Wisconsin as the most exciting place to live in the United States, moving there has a lot of advantages as it is considered a LCOL city, but has a big city feel. Because of this, it is a good alternative to HCOL cities. It offers a low cost of living, 10 percent below the national average. Housing costs in particular are less than the national average, about 22 percent lower. You will find an abundance of adequate houses to buy at a low cost. In addition, utility prices are 3 percent lower than the national average. No more worrying about whether you can afford to pay your gas and electric bill. Also, you will find that you pay less for groceries on a monthly basis with grocery costs being 9 percent lower than the national average. Individuals spend an average of $2,954 per year on food and families of four spend about $8,530. Besides your housing budget, food costs, and transportation costs, everyone cares about how much health care will cost. It is one of the biggest expenses that you may come across. However, in Green Bay, comprehensive medical services are offered and healthcare costs are 5% below the national average. Also, transportation costs in Green Bay are quite reasonable, with the city offering day, weekly, and monthly passes for bus fares. One downside to living in Green Bay is that Wisconsin has relatively high property taxes, compared to other LCOL areas with lower property taxes. But you will find that other lower costs of goods and services offset this higher property tax rate.
A Highly Entertaining Place
There is a lot to do in Green Bay, so don’t consider this somewhat rural town to be boring or inadequate for your own personal entertainment. It is a big football town, with one of the most famed football teams in history, the Green Bay Packers. So why don’t you go to a game and then enjoy what else the city has to offer. It offers a flourishing entertainment industry and arts culture. You will find their downtown area to be bustling and full of things to do. With a lower cost of living, you will find that you have your personal finances in order with money left over after your expenses to be used to enjoy all the city has to offer.
#2: Huntsville, Alabama
I put Huntsville, Alabama as number two on my list of my top choices for LCOL cities because the cost of living there is 4 percent lower than the national average, with only a one percent price difference above Green Bay. Moving there is a great way to save money. In fact, U.S. News and World Report ranked it as the most affordable city in the United States. It has very affordable transportation and housing costs. In fact, the average rent per month is about 750 dollars and the price of a home there is 168,900 dollars, which is low compared to San Francisco, for example, which is a house poor city. The average annual salary is above average (about 58,73o dollars) which means that individuals can achieve financial independence with their high income and have money to spend on other things. According to U.S. News and World Report, only about 20 percent of household income goes toward housing (about the same as Green Bay), which means you will have more money left in your pocket to explore what the city has to offer, including several shopping malls and also museums, if you are into the arts. In addition, food prices are a little below the national average with individuals spending on average $3,210 and a family of four spending about $9,271. Also, transportation costs are quite low. Recently, the city implemented a plan to increase the convenience and availability of public transit, offering one-way fares for one dollar for the majority of users, and fifty cent one-way fares for disabled people, Medicare card holders, senior citizens, students, and young children.
#3: Grand, Rapids, Michigan
Grand Rapids, Michigan is a LCOL city that also has a big city feel. With a metro population of 1,069,696 people, it is Michigan’s second largest city. Reuters named this city among the top 20 cities for 7-year job growth in 2019. The job market is very good there, so finding a job there should be easy. But annual incomes tend to be lower, with the annual average in the city being below the national average at 49,700 dollars. However, your money will go further, with residents spending as little as about 20 percent of their income on day-to-day spending. The cost of housing is 10 percent below the national average. Also, the cost of groceries is 9 percent below the national average. And the city offers low fares for public transit, including single rides for $1.75 and monthly cards for $47. Actually, the total cost of living in Grand Rapids, Michigan is about 3.3 percent lower than the national average.
Why Else Should You Live in Grand, Rapids, Michigan
It is a beautiful city located on the banks of the Grand River where you can experience all 4 seasons. It has a thriving arts scene. In fact, the world’s largest annual art competition decided on by voting took place first in Grand Rapids, Michigan in 2009. Also, there is an annual Festival of the Arts which takes place around the city’s most famous sculpture called “La Grande Vitesse,” which is French for grand rapids. What’s more, is that there are museums to tour as well. You will find no shortage of things to do and good food to eat in Grand Rapids.
#4: Fayetteville, Arkansas
Fayetteville is the second largest city in Arkansas, which is currently experiencing high population growth. Its metro population equals about 526,101 people. Fayetteville has seen a population uptick in the past 5 years due to the great migration to LCOL cities to reach financial independence. This is for good reason, as the city has a low cost of living with people living there spending about 20 percent of their income on housing costs, just like Huntsville, Alabama. Annual expenses for food equal about $2,985 for individuals and families of four spend about $8,621. Also, one great thing about Fayetteville is that bus fares are free! With that said, you will find that Fayetteville has a very low cost of living.
One of the characteristics associated with larger HCOL cities is a booming economy. While Fayetteville is not a HCOL city, but a LCOL city, it still has a thriving economy. Forbes magazine put Fayetteville as number 27 on its list of best places for business and careers. Things taken into account in this ranking include the city’s low crime rate, the cost of starting and doing business in the city, the cost of living, and the number of college graduates living there.
What Makes Fayetteville so Great?
Also, according to the U.S. News and World Report, Fayetteville is number 4 on their list of the best places to live and ranked as one of the best places to retire in the South. The city revolves around the University of Arkansas, and with this being the case, has a thriving music and arts scene, liberal minded residents, and tasty southern barbeque food.
#5: Pittsburgh, Pennsylvania
Pittsburgh, Pennsylvania is the second largest city in the state, after Philadelphia, with a population of about 302,971 people. With a low cost of living, spending among people in this city equal to about 20.4 percent of their annual income on housing costs, including utilities. Individuals spend about $3,891 annually on food. Also, transportation costs are pretty inexpensive. One-way fares are $2.75 if you are paying with change, and $2.50 if you have a card. Also, people with Medicare cards, senior citizens, and children receive half-price discounts on one-way fares. Pittsburgh offers higher paying jobs, with the annual average income of 50,536 dollars according to the U.S. Census Bureau. In addition, the National Bureau of Economic Research named Pittsburgh number two on the list of the best cities for intergenerational economic mobility, so the potential income you can earn there is quite high. But remember, as incomes go up, so does lifestyle inflation, which is defined as the increase in spending when a person’s income increases. Additionally, the number of college graduates in the city is also quite high as well, equaling about 45.4 percent of the population.
Pittsburgh Arts and Culture
With diverse residents, Pittsburgh offers an environment where arts and culture are imbedded in the city. One billion dollars is the economic impact that arts and culture have on the city. There are 32 museums to tour, 19 libraries to enjoy while sipping some coffee, 3 sports teams to see compete, 1500 performances every year, and it is the number one city in the United States in spending on the arts, according to pittsburghregion.com. Why not spend the money you have saved by moving to this LCOL city on soaking up some culture. You will have enough money for enjoying the night life, including going to bars and restaurants.
#6: Hickory, North Carolina
I chose Hickory to be number 6 on my list because it is a small city, but is growing, as more people migrate here to find better opportunities and experience a lower cost of living. According to the U.S. Census Bureau, the population of Hickory was 41,067 people in 2020. Compared to other cities on this list, moving to Hickory can save you even more money because people that live there spend only 19.3 percent of their income on housing, compared to 20 percent in Huntsville, Fayetteville, and Pittsburgh. The average price monthly for food in Hickory, North Carolina equals about $458 for individuals and $1207 for a family of four. Also, transportation costs are quite reasonable. One-way fares are $2.50 and fares for children under five years of age are free. With money saved from these low cost expenses, you can see a minor league baseball game, or go to the Hickory Motor Speedway, or go to a museum, and the list goes on and on.
#7: Knoxville, Tennessee
Knoxville, Tennessee is a great LCOL city to move to if you want to experience Southern culture with many festivals and a lot of bluegrass and country music to offer. With a metro population of 861,872 people and an average salary of $47,740, people can live there comfortably. Not only this, people spend about just 21 percent of their income on living expenses. The average price of a home in the city of Knoxville is 335,283, which is well below the national average of $365,616. This is according to Zillow. While, the average annual income for a family living in Knoxville is lower than the national average, food costs are lower than the national average, lessening the burden placed on families. Average families will also save on utilities, health care and transportation. Transportation costs are especially low, with one-way fares being $1.00 and fifty cents if you qualify for a discounted fare. One day passes are $2.00 and one dollar for discounted fare. A thirty day pass costs thirty dollars and fifteen dollars if you get a discount. The city’s public transit also offers twenty ride passes for fifteen dollars and for $7.50 for the discounted rate.
#8: McAllen, Texas
McAllen, Texas is a great LCOL city to consider moving to, listed by Yahoo Finance. With a major bike path, a large golf course, a dog park, and opportunities for bird watching, there are many options for recreation. According to the U.S. Census Bureau, in 2020, McAllen Texas had a population of 142,210, making it the 22nd most populated city in the state. According to arrestyourdebt.com, the cost of living in McAllen is a whopping 24% below the national average. The median cost of buying a new home is $216,875. Cited by The Motley Fool, the median home price in the United States in the first quarter of 2022, was $428,700. So, buying a home in McAllen is nearly half of the median home price in the United States. Also, the median rent in the city is $704.64 per month. The grocery prices there are 14% below the national average. Some costs of basic foods include: a loaf of bread, $2.98; a gallon of milk, $1.90; a dozen eggs, $1.35,; a small bunch of bananas, $2.88; and a hamburger, $4.08. Also according to payscale.com, healthcare costs in McAllen equal to be about 27% lower than the average in the United States. Regarding transportation costs, despite the higher gas prices recently, one-way bus fares will continue to cost one dollar and fifty cents for students, seniors, and people with disabilities.
#9: Augusta, Georgia
For a LCOL city, Augusta, Georgia is actually quite large, with it being the third largest city in the state. The population of the city in 2020 was 202,081 people. The cost of living in Augusta is sixteen percent lower than the national average and six percent lower than the average cost of living in the state. Just like McAllen, Texas, lower housing costs are a major reason why people may want to move there. With the median home price of $251,200, housing costs in Augusta are five percent below the state average and twenty-nine percent lower than the national average. However, paying for rent comes at a high cost, with the average monthly rent of $1,129. The price of food in Augusta is relatively low, though, so you can save money in that regard. The price of a gallon of milk is about $1.51 there and the price of a dozen eggs is about $1.19. Also, transportation costs remain relatively low in Augusta, with one-way fares for most people being $1.25 and discounted fares being sixty cents.
#10: Fort Wayne, Indiana
With a metro population of 409,419 people, Fort Wayne, Indiana is the second largest city in the state, just after Indianapolis. As with any large city, there is a lot to do in this LCOL area, including events and festivals, touring museums, and a large zoo, just to name a few things. The average annual salary in this city is $48,060 which puts it below the national average. But the slower pace of population growth keeps the cost o living relatively low there because, as discussed earlier, if the demand is low and the supply is high, prices go down. In fact, the cost of living in Fort Wayne is only about 20% of the city’s median household income. The cost of housing is thirty-six percent below the national average, with a median home price of just $253,378 and the median rent of $774 per month. Grocery costs are 13 percent lower than the national average and transportation costs are comparable to other low cost of living areas.
#11: Springfield, Missouri
Springfield, with a population of 169,176 in 2020, is the third largest city in Missouri. It is the main city in the Springfield metropolitan area, that has a population of 481,483. The birthplace of Route 66, it has always been a hub of economic activity and a place of great wealth mobility. The cost of living in Springfield is twelve percent below the national average. Housing prices are also relatively cheap, with the median house price of $243,247 and the average monthly rent at about $948 per month. The cost of housing is twenty-tw0 percent below the national average. With that said, the amount you spend on groceries is at about the national average, so expect to save more on housing than on food. Transportation costs are six percent below the national average, with the average price for a gallon of gas being $4.09. But there are also expansive bus routes to transport people from place to place efficiently and safely.
After having finished reading the list, can you see the advantages of living in LCOL areas. HCOL and LCOL cities have key differences. While LCOL cities may not be as visually appealing or have as many people living there as HCOL cities, they are a great way to expand your earning power. With lower grocery bills, housing costs, and transportation costs in LCOL cities where the supply is high and the demand is low, you can save more money for retirement and/or spend more money on fun things to do in your LCOL area. And despite what you may think, yes, there are a lot of things to do in LCOL cities.
There has been a recent trend of people moving to LCOL cities and switching from doing in-office to remote work and experience a low cost of living. After all, you have been living in the same neighborhood or same city for so long, perhaps it is time for a change. But it is important to do your research on the living index in the city you wish to live. While incomes tend to be lower, the demand for these lower paying jobs is also low, so finding a modest paying job shouldn’t be that difficult.
While a LOCL city may not have everything you want, it has everything you need. When money is tight and you want to stretch your dollar as far as possible, it is important to assess your needs versus your wants. Do you need or just want to live in a downtown area with a nice view of the skyline? Do you need or do you want to live in a highly populated area? These are just some of the questions you need to as yourself when deciding on whether to switch from living in an HCOL city to a LCOL city.