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It can be tougher to save money in the Northeast than in the South or Midwest, a recent Bankrate analysis found.
Bankrate identified how easy it is to save money across the US using household income growth, tax burdens, and other measures that can affect one’s ability to put away money.
“The lower the tax rates, the more likely you’re going to be to save, and the ability to save is more important than your ability to actually earn in some of those money markets or CDs,” Stephen Kates, a financial analyst for Bankrate, told Business Insider.
Bankrate found Tennessee to be the easiest state to save in, followed by Missouri and Texas. Tennessee and Texas don’t have income taxes. Kates said Tennessee also did well for its local economy and employment growth rate.
“Southern states, Midwestern states, they have got the lower cost of living,” Kates said. “Some of them have the lower taxes or no taxes, and that does go a long way.”
You can hover over the map below to see how each state ranked, where 50 means it’s the toughest state to save. We also included the figures Bankrate used to determine the ranking.
Many Americans have already migrated South to take advantage of a cheaper cost of living. Vered DeLeeuw moved from California to Memphis, Tennessee, and enjoyed the live music scene, a more relaxed life, and the area’s affordability.
“Groceries, restaurants, and even utilities are less expensive and Tennessee has no state income taxes,” DeLeeuw told Business Insider. “Having a lower cost of living enables us to save significantly more each month compared to in California, where we could barely save anything.”
While it can be easier to build up savings in the South, Bankrate found Hawaii to be the hardest state to save money in. New Jersey and California were also challenging states.
California’s high cost of living and taxes can make it relatively harder to save money, Bankrate found. “It hurts the real income growth rate over time,” Kates said.
Fabiana Muñoz, a freelance writer and author, moved to Florida after living in different places in California, including San Francisco.
“While paying far too much to rent just one room, I struggled to picture myself building a life here in the long run,” Muñoz wrote about San Francisco.
Danielle-Ann Kealohilani Rugg, who moved back to Hawaii from Oregon, told Business Insider Hawaii’s cost of living is a con. She said rent in Oregon for a three-bedroom, two-bath home with a yard was $1,500, while her rent in Hawaii “for a slightly larger home” was $3,550.
“I may earn more money in Hawaii, but it’s offset by the cost of living in Hawaii being much greater than in Oregon,” she said.
Living in a state where it’s harder to save doesn’t mean it’s impossible to do so. Still, Kates said you have to prioritize saving in your budget. Kates said having a direct deposit to your savings or investment account can help with being disciplined and consistent.
Kates said there are other factors beyond saving money that people think about when choosing where to live, such as how close a location is to family or things that are important to someone’s lifestyle.
“If people are thinking about, ‘Where do I want to live? How do I want to live?’ It’s important to think about can you get a job? Is that job going to have the ability for my income to grow? Am I going to be able to save? But you want to be able to, outside of that, have a good lifestyle. For different people that may involve different things,” Kates said.
Do you have a moving, cost of living, or saving money story to share? Reach out to this reporter at [email protected].
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