Does saving money feel like a challenge, even if you earn a decent income or keep a tight budget? It may have something to do with where you live.

Factors such as how much you earn, the price of daily essentials, housing costs, taxes, and more can impact your ability to save, some of which may be out of your control — and depend on the state you live in.

Curious about how your state aids or impedes your ability to save? We evaluated seven key metrics across all 50 states to determine the best and worst states for savers. (See our full methodology here.)

5 best states for saving money

1. North Dakota

North Dakota scored the top spot on our list as the best state for saving money. This state has one of the lowest costs of living, combined with a strong median annual household income of $78,720.

The state also has a significantly lower top marginal state income tax rate than some of the other states on our list. Finally, less than 40% of North Dakota renters and less than 23% of homeowners are housing cost burdened (defined as spending 30% or more of household income on housing costs).

Read more: What percentage of your income should go to a mortgage?

2. South Dakota

South Dakota came in second place with a median household income of $67,180 and the lowest combined percentage of housing-cost-burdened renters and homeowners across the country.

South Dakota also has the ninth-lowest household debt-to-income ratio across all states. Another perk: South Dakota is one of nine states with no income tax, making it easier for residents to allocate more of their paychecks toward savings.

3. Kansas

Kansas took the third spot on our list, with a median household income of $73,040 and one of the lowest percentages of housing-cost-burdened homeowners across the country.

Kansas also has the third-lowest cost of living. Further, the sales tax rate in Kansas is 6.50%, which is a bit higher than some states on our list, but its top marginal income tax rate sits at 5.70%, which is about the median point across all states.

4. Iowa

Fourth on our list is Iowa, which has the lowest percentage of housing-cost-burdened homeowners in the nation, at 18.7%. The median annual household income in Iowa is a substantial $76,320. Residents also pay modest taxes, with the top marginal state income tax rate of 5.70% and a state sales tax of 6%.

5. Nebraska

Nebraska took the fifth spot on our list of the best states for saving money. The annual median household income is an impressive $78,360. Further, the sales tax rate in Nebraska sits at 5.50%, along with an effective property tax rate of 1.63%. Nebraska was also one of the states with a lower percentage of housing-cost-burdened renters and homeowners — 42% and 21.2%, respectively.

5 worst states for saving money

1. Hawaii

The worst state for saving money is Hawaii. This state has the second-highest individual income tax rate and the highest cost of living in the country. It also has the highest household DTI, despite the median household income being a whopping $91,010.

Renters and homeowners in Hawaii face higher housing costs as well, with over 56% of renters and 36% of homeowners burdened by housing costs.

2. California

It may come as no surprise that the state known for high taxes and cost of living is the second-worst state for saving money. With the highest top marginal income tax rate of all the states (13.30%), the highest sales tax rate (7.25%), and the second-highest score for cost of living, savers may not have much income left over to put in their savings accounts.

The median household income in California is $85,300, but even a higher salary isn’t enough to cover California’s housing costs in many cases. As it stands, 53% of renters and 37% of homeowners are burdened by housing costs.

3. Massachusetts

Massachusetts is the third-worst state for saving money, according to our data. It has the second-highest median household income out of all the states we compared at $93,550. Still, nearly half of all renters and close to 30% of homeowners in Massachusetts are burdened by housing costs. Massachusetts also had the third-highest cost of living across all states.

4. Florida

Florida came in fourth place among the worst states for saving money. The median household income in Florida is $65,370 and it’s one of a handful of states with no state income taxes. Even so, the majority of Floridians are burned by their rent (56.8%). Plus, this state had a higher cost of living compared many other states we evaluated.

5. New Jersey

New Jersey took the fifth spot on our list of the worst states for saving money. Despite an impressive median household income of $92,340, more than half of all renters and 33% of homeowners in New Jersey are housing cost burdened.

New Jersey also has one of the highest top marginal state individual income tax rates on our list at 10.75%. These factors, paired with a higher cost of living and DTI than most other states, make the Garden State a tough place to live for Americans hoping to boost their savings.

How to maximize your savings

Even if you don’t live in one of the best states for savers, there are still ways you can maximize your savings. Here are a few tried-and-true savings strategies that work regardless of your ZIP code:

Choose the right type of savings account

Where you keep your savings is just as important as the amount you’re contributing. The national average interest rate for a savings account is only 0.46%, according to the FDIC. However, there are savings options out there that can help your savings grow faster.

For instance, putting your money in a high-yield savings account or certificate of deposit (CD) could help you earn as much as 5% APY or more on your savings. This can help you earn a significant amount of interest over time and hit your savings goals faster. And keep in mind that online banks, which are known for offering competitive rates and low fees, allow you to open an account from anywhere in the U.S.

Lower your tax bill

There are several tax credits and deductions that you may qualify for that can lower your tax liability in April. For example, making extra contributions to your 401(k), IRA, and/or health savings account (HSA) can help lower your taxable income. There are also write-offs related to caring for dependents, working from home, medical expenses, student loan payments, and more.

However, unless you’re a tax expert, you may not know about all of the deductions and credits available to you. Tax software programs are fairly reliable when it comes to finding potential write-offs. But if you’d like the help of a human expert, consider speaking with a tax professional who can help you identify which credits and deductions you can take advantage of at the federal and state level to lower your overall tax bill or increase your refund.

Read more: Wondering what to do with your tax refund? 5 ways to spend it wisely

Pursue a raise

Saving more money isn’t just about trimming your costs — it can also be helpful to look for ways to increase your income. One of the easiest ways to do that is to ask for a raise.

But before you meet with your manager, you’ll need to do some preparation. Begin documenting your accomplishments and concrete ways you've contributed to your company's bottom line. Then present your case for getting a raise when the time is right (such as during a yearend review or following a strong sales quarter).

If a raise isn't an option, set a date to revisit this conversation with your manager at a later time. You may also want to consider whether it makes sense to look for a new position; strategic job hopping can be an effective way to increase your salary over time.

Downsize your home

Housing costs can place a major financial strain on American households, especially for those in higher cost of living areas.

Whether you’re a renter or a homeowner, downsizing to a more modest home can help trim your monthly rent or mortgage payment, as well as reduce the amount you spend on utilities and maintenance. If it makes sense for your situation, relocating to a new neighborhood or even a new state with a lower cost of living or tax rate can also help you save significantly.

Make saving part of your budget

Contributions to your savings should be considered a monthly expense in your budget. This ensures saving remains a priority and that your savings account grows consistently over time. You may also consider setting up automatic contributions from your checking account to your savings account so you don’t even have to think about it.

Read more: Your complete guide to budgeting for 2024

Look for ways to trim your expenses

The less you spend on unnecessary expenses, the more you can afford to set aside for future savings goals. Take some time to review your monthly budget and your most recent bank statements. Be honest with yourself about which expenses are non-negotiables and which ones you can probably scale back (think: unused subscriptions, takeout orders, shopping, etc.).

Every dollar counts when it comes to saving money and shaving a few dollars of your bottom line each month can make a big difference in your savings account balance.

Read more: How to save money in 2024: 44 tips to grow your wealth

Focus on paying off high-interest debt

Debt can be a drag on your budget, especially your savings account contributions. Carrying debt costs money in interest over time. Prioritize paying off high-interest debt such as credit cards to free up room in your budget. There are many debt repayment strategies you can use to tackle your debt — so find one that works for you.

Read more: What’s more important: Saving money or paying off debt?

Methodology

Our grading system, collected and carefully reviewed by our personal finance experts, comprised more than 400 data points to develop our list of the best and worst states for saving money.

We evaluated all 50 states according to several key metrics, using the most recent data available:

• Household debt-to-income ratio (DTI): We used publicly available data from 2023, provided by the Federal Reserve, to determine the household DTI for each state. States with a lower DTI ranked higher on our list.

• Percent of renters and homeowners experiencing housing cost burden: “Housing cost burden” is defined as spending 30% or more of household income on housing costs. We used information from the Population Bureau, sourced from the U.S. Census Bureau’s 2020 ACS Public Use Microdata Sample to determine which states had more housing cost burdened renters and homeowners.

• Median household income: The median household income is the true “middle” income across all residents where half of all households earn more than the median and half earn less. We favored states with a higher median household income based on 2022 data, the most recent available from the Federal Reserve Bank of St. Louis.

• Cost of living: Cost of living is defined as the amount of money needed to cover your basic living expenses in a particular area. We favored states with a lower cost of living, based on the Missouri Economic Research and Information Center’s cost of living index for Q1 2024.

• Effective property tax rate: This is defined as the average amount of residential property taxes actually paid, expressed as a percentage of home value. We favored states with a lower tax rate, based on analysis by the Tax Foundation using the U.S. Census Bureau’s 2021 American Community Survey.

• State sales tax: Sales tax is a tax imposed on the sale of goods and services. We favored states with a lower sales tax rate, based on analysis by the Tax Foundation.

• Top marginal state individual income tax rate: We relied on analysis from the Tax Foundation to determine the current maximum statutory income tax rate in each state, based on individual income tax rates, brackets, standard deductions, and personal exemptions for single and joint filers in 2024.