5 Best States To Live In If You Want To Get Rich
Written by
Jake Safane
Edited by
Gary Dudak
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Where you live majorly impacts your wealth. After all, hyperlocal factors like taxes and the local economy significantly affect your net earnings.
That’s not to say that living in one state over another automatically destines you to a certain financial status. Factors like your chosen profession and how you save and invest your money matter too. Still, if you want to give yourself a better chance of becoming rich, you might look to certain states with favorable conditions for becoming wealthy.
“When it comes to building wealth, you don’t just want to choose an inexpensive place to live/invest in; you want to choose a place that has a positive growth outlook for the future,” said Seamus Nally, CEO of TurboTenant. “You want a place that you can afford at the current moment, but that will allow your wealth to grow exponentially over time.”
“Often, you’ll hear people talk about moving to states with no income tax such as Florida and Texas like it’s the best thing for everyone. In reality, if you’re someone who doesn’t have much income, maybe this doesn’t matter as much. Understand the total cost of living in different areas to make sure you’re making the best decision for you and your family,” said Chris Urban, CFP and founder of Discovery Wealth Planning.
Determining the best state is subjective and depends on your situation. For some, living in a low or no-income-tax state makes a significant difference. For others, the location might matter more in terms of real estate investment potential. And if you work remotely, for example, then the local job market isn’t as big of a deal to you, and instead, you might focus on getting your costs down so you can invest more and afford a nicer home.
Still, if you want to get a general sense of which states offer a relatively good mix of affordability and income potential, consider the following.
Texas
Texas has no state income tax for individuals, although property taxes tend to be higher than average. Still, Texas has a lot going for it that makes the state attractive to those looking to build wealth.
“First and foremost, it’s generally a pretty affordable state to live in — its statewide affordability is 7% below the national average, and housing costs are 17% below the national average,” said Nally. “But even more beneficial than that, in my opinion, is the outlook of cities like Austin. Austin is becoming one of the nation’s most prominent emerging tech hubs, with a growing economy and lots of people moving there for job opportunities.”
Kansas
Living in the middle of the country is a great choice if you’re looking to keep your housing costs and overall cost of living down. But as Nally noted, it’s not just about finding the lowest costs. While that’s a good baseline, you also likely want to have economic opportunities that enable you to grow your wealth, like through real estate gains or growing your business with local customers, if that applies to you.
In Kansas, the median income is only slightly below the national average ($73,040 for Kansas vs $74,580 nationwide), whereas some other low-cost states have dramatically lower median incomes. Meanwhile, Kansas ranks third nationwide in personal income growth, according to the latest Bureau of Economic Analysis (BEA) data.
Minnesota
Minnesota ranks in the top 10 in terms of median household income by state, according to the U.S. Census Bureau, with the average household earning $90,390 per year. Yet Minnesota still has a below-average cost of living, letting you stretch your dollar further and have more left over to save and invest.
Within Minnesota, the industries with the most job growth were local-oriented ones like construction, health care and arts/entertainment/recreation, according to a Minnesota Chamber of Commerce analysis. So, if you work in one of these industries, perhaps Minnesota is a good place to live.
Colorado
Colorado is not only one of the healthiest states in the nation, but it can also be a great launching pad for your financial future. The cost of living in Colorado is a little higher than the national average but it’s still far below some other high-cost Northeast and West Coast states.
Meanwhile, Colorado ranks in the top 10 for median income, just behind Minnesota. The state also ranks fourth nationwide in personal income growth, according to BEA data. Plus, Colorado is the 10th most tax-friendly state, according to a MoneyGeek analysis, so it has a good mix of wealth-building attributes.
Oklahoma
Lastly, Oklahoma ranks as one of the most affordable states in the nation. Three of the 10 lowest cost-of-living cities are in this state, according to research from C2ER – The Council for Community and Economic Research. Meanwhile, Oklahoma City has been attracting newcomers and growing quickly.
To be fair, Oklahoma has one of the lowest median incomes in the nation, but it does rank seventh in terms of personal income growth according to BEA data. And if you simply want to stretch your dollar as much as possible to focus on growing your investments to become rich, then Oklahoma could be a great place to do so.
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