Does saving money seem difficult, even with a decent income or a strict budget? The issue might be related to your location.
Various factors such as your earnings, the cost of daily essentials, housing expenses, taxes, and more can influence your ability to save. Many of these elements might be beyond your control and are often dependent on the state you reside in.
Interested in how your state supports or hinders your saving efforts? We analyzed seven key metrics across all 50 states to identify the best and worst states for savers. (See our full methodology here.)
Top 5 States for Saving Money
1. North Dakota
North Dakota ranks as the best state for saving money. It boasts one of the lowest costs of living, coupled with a robust median annual household income of $78,720.
The state also boasts a significantly lower top marginal state income tax rate compared to several other states on our list. Additionally, in North Dakota, less than 40% of renters and under 23% of homeowners are considered housing cost burdened, meaning they spend 30% or more of their household income on housing expenses.
**2. South Dakota**
South Dakota ranks second with a median household income of $67,180 and the lowest combined percentage of housing-cost-burdened renters and homeowners in the nation.
The state also features the ninth-lowest household debt-to-income ratio nationwide. Another advantage is that South Dakota is one of nine states with no income tax, allowing residents to allocate more of their earnings toward savings.
**3. Kansas**
Kansas secured the third position on our list, with a median household income of $73,040 and one of the lowest percentages of housing-cost-burdened homeowners in the country.
Kansas also boasts the third-lowest cost of living in the country. While the state’s sales tax rate is 6.50%, slightly higher than some states on our list, its top marginal income tax rate is 5.70%, which aligns closely with the national median.
4. Iowa
Iowa ranks fourth on our list, distinguished by having the nation’s lowest percentage of housing-cost-burdened homeowners at 18.7%. The median annual household income in Iowa is a notable $76,320. Additionally, residents benefit from a top marginal state income tax rate of 5.70% and a state sales tax of 6%.
5. Nebraska
Nebraska secures the fifth position on our list of the best states for saving money. The state boasts an impressive annual median household income of $78,360. Nebraska’s sales tax rate is a moderate 5.50%, complemented by an effective property tax rate of 1.63%. Furthermore, Nebraska has a lower percentage of housing-cost-burdened renters and homeowners, at 42% and 21.2%, respectively.
### 5 States Where Saving Money is Most Challenging
#### 1. Hawaii
Hawaii tops the list as the most challenging state for saving money. It has the second-highest individual income tax rate and the highest cost of living nationwide. Despite a median household income of $91,010, the state also has the highest household debt-to-income (DTI) ratio.
Housing costs are a significant burden, with over 56% of renters and 36% of homeowners struggling to meet their housing expenses.
#### 2. California
California is the second-worst state for saving money, a fact that surprises few given its reputation for high taxes and living costs. The state imposes the highest top marginal income tax rate (13.30%) and the highest sales tax rate (7.25%). Coupled with the second-highest cost of living, these factors leave residents with limited income to save.
The median household income in California stands at $85,300, yet this substantial figure often falls short when it comes to covering the state’s exorbitant housing costs. Currently, 53% of renters and 37% of homeowners find themselves burdened by these expenses.
Massachusetts ranks as the third-worst state for saving money, based on our analysis. Despite having the second-highest median household income among the states we reviewed at $93,550, nearly half of all renters and close to 30% of homeowners are financially strained by housing costs. Additionally, Massachusetts boasts the third-highest cost of living in the country.
Florida is fourth on the list of the worst states for saving money. With a median household income of $65,370 and no state income tax, one might expect better financial health among its residents. Nevertheless, 56.8% of Floridians are overwhelmed by rent costs, and the state has a comparatively high cost of living.
New Jersey
New Jersey ranks fifth on our list of the most challenging states for saving money. Despite a notable median household income of $92,340, over half of all renters and 33% of homeowners in the state face significant housing cost burdens.
Additionally, New Jersey imposes one of the highest top marginal state individual income tax rates at 10.75%. Coupled with a higher cost of living and debt-to-income (DTI) ratio compared to most other states, these factors contribute to the Garden State’s difficult financial landscape.
