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According to a recent survey conducted by Yahoo Finance and Marist Poll, 47% percent of Americans cite cost of living as their biggest obstacle to saving money.

Rising inflation continues to impact Americans nationwide. The latest data from the Bureau of Labor Statistics finds that the Consumer Price Index (CPI) increased 3% year over year in January.

But some parts of the country are hit harder by rising costs than others, and where you live plays a key role in the price of everyday essentials, from eggs at the grocery store to your monthly rent.

Read more: $5 eggs and other inflation pain points: Here's where prices are rising

Cost of living by state

The following map shows how the cost of living compares by state according to an index developed by the Bureau of Economic Analysis (BEA). The index is set relative to a baseline of 100, which represents the national average. If a state’s index is above 100, living there is more expensive than the baseline; if the index is below 100, the cost of living is lower than the baseline.

5 states with the highest cost of living

California: 112.6

California has the highest cost of living in the country — 12.6% higher than the national average. And the primary driver is housing costs, especially in metropolitan areas like San Francisco and Los Angeles. In California, the regional price parity (RPP) for housing rents is 157.8, meaning housing costs are 57.8% above the national average.

District of Columbia (D.C.): 110.8

The nation’s capital has the second-highest cost of living — 10.8% higher than the national average — also largely due to exceptionally high housing costs and utility prices.

New Jersey: 108.9

New Jersey's cost of living exceeds the national average by 8.9%. Proximity to major urban areas like New York City contributes to higher housing costs, and the cost of goods in the state are some of the highest in the country.

Hawaii: 108.6

Hawaii’s cost of living is 8.6% higher than the national average. That’s largely due to the state’s more remote location, which requires that many goods be imported, driving up the prices. Plus, limited land availability and high demand for housing contribute to higher living costs.

Washington: 108.6

Washington state rounds out our list of the top five states with the highest cost of living at 8.6% higher than the national average. And you might notice a theme: High housing costs were a major driver, with housing prices in Washington more than 25% higher than the national average.

5 states with the lowest cost of living

Arkansas: 86.5

Arkansas holds the title of the state with the lowest cost of living — 13.5% lower than the national average. This is thanks, in large part, to low housing costs. In fact, Arkansas has some of the least expensive housing in the country, only behind Mississippi and West Virginia. Even so, personal expenditures in the state rose a modest 1.9% year over year.

Mississippi: 87.3

Mississippi’s cost of living is 12.7% lower than the national average. Personal expenditures increased just over 1% year over year, and housing and utility costs remain some of the lowest in the country.

South Dakota: 88.1

South Dakota’s cost of living is 11.9% below the national average. Like other states on this list, South Dakota's affordable housing market plays a major role in maintaining its lower overall price levels.

Oklahoma: 88.3

The cost of living in Oklahoma is also 11.7% below the national average. In addition to lower housing costs, Oklahoma benefits from relatively low prices on goods and services, contributing to its overall lower cost of living.

Louisiana: 88.3

Louisiana has one of the lowest costs of living at 11.7% below the national average. The state benefits from low housing costs, as well as some of the cheapest goods in the country.

How to reduce your cost of living

Your state’s cost of living can significantly impact your ability to afford daily essentials, save money, and reach your financial goals. If you live in a state with a higher cost of living, consider these strategies for reducing your expenses:

• Sign a longer lease to save money on rent: When a landlord has to spend time searching for a new tenant, they miss out on rental income. And with each new tenant, there’s a risk that they won’t stick to their payments. Standard leases tend to be about 12 months, but signing a longer lease could entice them to lower your monthly rent in exchange for guaranteed rental income over a longer period of time.

• Refinance your mortgage: If you’re a homeowner, refinancing your mortgage could help you lower your housing costs. Refinancing involves replacing your existing home loan with a new mortgage for the same property but with new and better terms. If you can secure a lower interest rate, you’ll lower your monthly payment and long-term interest savings.

• Rely more on public transportation: If your city has good public transportation, using it instead of driving can save on gas, insurance, and maintenance. You don’t have to give up your vehicle altogether, although you may want to consider it if a large chunk of your budget goes toward car payments and expenses.

• Negotiate with service providers: You don’t always have a say in which company provides your electricity or cable service. But you may be able to reduce how much you pay with some strategic negotiation. Contact your internet, cable, phone, and utility companies and ask about promotional rates, loyalty discounts, or lower-cost plans. If another provider offers a better deal, ask if your current provider will match or beat it. Also, some companies offer discounts for long-term customers, so it doesn’t hurt to ask.

• Consider relocating: If you live in a high-cost-of-living state, the easiest way to reduce your costs is by moving to a cheaper state. In particular, states with no income tax (like Texas or Nevada) can help you keep more of your earnings.

Read more: How to save money in 2025: 50 tips to grow your wealth