The Cost Of The Big Three Expenses By State

One of the key rules for smart money management is to focus on the “big three”.  What are the big three?

For the vast majority of households the three biggest expenses are housing, transportation, and food.

If you save the maximum on those three things, you can really accelerate your net worth and in turn your path to financial independence.  And optimizing those big ticket items also allows you to not sweat the petty stuff, at least as much.  Go ahead, have your latte.

If you’re a regular reader you’ve seen some of my posts that map data of various financial measures by state.  I’ve covered debt, housing, car ownership, and the cost of public schools among other things.

In this post I’m going to break down the cost of the big three by state.  After looking at my data sources and how to best depict the analysis, I decided to break things down to monthly costs since that’s a common metric that many or perhaps most use to track expenses.

*Washington D.C will not be included in completion due to data unavailability

 

Housing

For the monthly costs that go toward housing, the Census Bureau publishes data from the American Community Survey.  The median home ownership costs include monthly mortgage payments, real estate taxes, insurance, and utilities.  These data do not include the down payment required to buy a home.

The data are from 2015 which are the most recent available and I pulled them from this site since working with government sites can be clunky and frustrating.  Into the mapping machine the data went, and with a nice Accidental FIRE color scheme here are the results:

 

 

Realizing that everyone does not own a house, I’m including rental data in this analysis.  The best source for that is Apartment List since they take the same Census Data from the American Community Survey and use a pretty sophisticated methodology to extrapolate it forward.

They have data for 1 and 2 bedroom rentals by state, and update it every month.  I pulled the data in April 2018, so the numbers you see here will be a tad lower than what’s on their site currently.

The data include the costs of monthly rent and utilities for all kinds of rental properties.  For simplicity sake, I averaged the 1 and 2 bedroom rates together for each state to get one cost. 

And the map:

 

Transportation

To get the vehicle costs, I used my previous post with data aggregated for three years.  The reason the data was aggregated is due to the fact that many states have one-time up-front costs when purchasing a vehicle, while others don’t.

So just using the cost to operate an existing vehicle every year is not the whole picture.  But I realize many or most people would transfer an existing vehicle to a new state if they moved.

I also realize this is a bit inconsistent with the house data as I did not include the associated costs of buying a house.

But the only data I could find showing the cost of solely operating an existing vehicle annually was from 2014 and out of date, so I chose the more recent data that includes purchasing price and averages over three years.

My blog, my rules.  I’m just doing the best I can with what I have available:)

So here are the data from that post, broken down to a monthly cost:

 

 

 

Food

I pulled annual food expenditure data by state from Maptitude, which uses the same American Community Survey Census data.  Check out their site, good stuff for geography geeks everywhere. 

I took the annual food expenditure data and did some super complex analysis – I divided it by 12 🙂 

And the results:

 

 

Let’s Do Some Sums

Okay, if you’re still tracking we now have two flavors of monthly housing costs (own and rent), monthly car ownership costs, and monthly food costs.  All by state.

That’s the big three.  So let’s do some arithmetic and take this puppy home.  First is the map showing the monthly sum of the cost of owning a house, transportation, and food:

 

 

The most expensive 5:

New Jersey	$3,399.31
Hawaii	$3,253.27
California	$3,171.02
Massachusetts	$3,044.94
Connecticut	$3,026.18

The least expensive 5:

West Virginia	$1,843.35
Arkansas	$1,888.70
Mississippi	$1,920.01
Kentucky	$1,965.83
Alabama	$1,977.73

 

The difference between the cheapest (West Virginia) and the most expensive (New Jersey) is $1,556 per month.

 

And Switching the first variable from home ownership to rent yields some different results:

 

The most expensive 5:

Hawaii	$2,715.27
California	$2,678.02
Massachusetts	$2,421.94
New Jersey	$2,420.31
Maryland	$2,394.80

The least expensive 5:

Arkansas	$1,504.70
South Dakota	$1,526.21
West Virginia	$1,536.35
Kentucky	$1,561.83
Mississippi	$1,562.01

The difference between the cheapest (Arkansas) and the most expensive (Hawaii) is $1,211 per month.

 

Conclusion

Where you live obviously matters, and when it comes to the “big three” expenses it varies quite a bit.  I hope this analysis can provide you a decent baseline understanding of how much the big three will cost in each state.

Of course you should do further research if you’re considering a geoarbitrage move to save money.  That research should include the income side of things among other variables, and I did a post on that highlighting a great tool to help you work those numbers out too.

Also be sure to check out my Geoarbitrage Resources Page that has tons of great tools to help you find your perfect location.