Financial Implications of Living in a Small Town

WTH is a small town anyhow? According to Wikipedia, “a town is a human settlement larger than a village but smaller than a city. The size definition for what constitutes a “town” varies considerably in different parts of the world.”

The word “town” is further broken down in the section about the United States: ” In some instances, the term “town” refers to a small incorporated municipality of less than 10,000 people, while in others a town can be significantly larger.”

It seems no one can agree on what is a town and what is a city, let alone the difference between a small town and a “regular” sized town.

Anyhow, for my purposes today, I’m going to say I live in a small town. My town’s current population is 5,416 and we are easily the largest town within about a 1.5 hour radius. Plus, we don’t have that many things to choose from in terms of entertainment.

Ok, my town is not quite that bad. But there are some serious differences in the financial lives of people who live in my area vs those who live in “the big city”.

So, how are the finances of someone living in a small town different from someone in a big city? I’m glad you asked.

Spending More

– There’s no competition. Because of the small size of our towns, there’s no price competition to drive down the cost of goods and services. Even everyday things like groceries can cost more out here because of the lack of competition. Of course, it’s gotten more competitive out here now that we finally have a Walmart… (I never thought I’d be thankful for Walmart, but sometimes I am.)

– You have to plan ahead and (sometimes) buy in bulk. Again, because of the lack of stores out here, combined with the lack of selection available in the few stores we do have, you have to plan ahead when you get ready to go to one of “the big cities” around us. This also means you have to be financially prepared to drop all your money in one fell swoop by buying in bulk. Oftentimes when my family or friends and I go to Denver, we get strange looks for buying things in bulk. I’ve even gotten comments from sales clerks about the high amount I’m spending. What they don’t understand is when you live in a small town you have to buy everything all at once because you only have the opportunity to shop “in the city” every 6 months (or less). (But bulk buying can save you money in some ways too.)

Spending Less

– Entertainment costs are low. There’s nothing to do here. We have only 4 “sit-down” restaurants and they get really boring after a while. Our movie theatre gets only 2 movies at a time. The good thing about this lack of entertainment is that is helps keep my entertainment spending in check.

– You can borrow and beg for lots of things. I haven’t had to “invest” in many tools or repair things even though I am a homeowner. Because I’m related to about half the town (okay, probably only about 1/3 of it), I can usually borrow or trade to get the tools I need to work on any DIY projects or repairs that need completed.

 Do you live in a small town? How does small town or big city living affect your spending?

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About Kayla

Kayla is a mid-20s single girl living in the Midwest, USA. She is focused on paying off her consumer and student loans, while simplifying her life and closet. You can join her on her journey at ShoeaholicNoMore or follow her on Twitter.


  1. I have lived in a small town (around 5000) and also a larger town (114,000). It definitely affects your spending. I feel as if when you’re living in a larger town, I think it can go both ways. There are more opportunities for lower-spending activities. There are a lot of community gardens, in my city, that enable you to grow your own food. My community is really established in urban gardening, so that could also help.

    At the same time, there are more opportunities to spend money. More restaurants, more bars, more movie theaters, all that take money. I mean, you could go out to a different restaurant every day for multiple weeks and still not visit any.

    As for living in a small town, I lived close enough (15 minutes away) from Wal-Mart and Meijers, so that helped keep costs down when grocery shopping. Living in a small town does cut on your commute time (if you work in or near the city), so that really helps.

    I can’t really relate to living in a huge city (like Chicago, NYC, Boston, etc), but I am sure there are even more drawbacks/pluses.

    • Michelle – these are all excellent points about how the size of your town can affect your spending. I also find that housing costs a lot less here in my small hometown vs the larger town I lived in during college. But, that housing price was also inflated in the college town because it was a college town – lots of people needing to rent so are willing to pay whatever it takes to find a place to live.

  2. I was born in a small, rural town but have lived in Toronto my whole life. I’m such a simpleton and homebody that I think I would enjoy living in a small town more. You’re right that things are more expensive – the bowling alley by my apartment charges $65 to bowl on a Saturday night. That’s insane!

    I also think people are more materialistic in the big city, that we need to live up to some sort of lifestyle. Designer shoes, nice cars, monthly salon visits…I just don’t think I really resonate with that.

    • I’m not sure I totally agree that people in large towns are more materialistic. There are plenty of people in my small town of 5K people who put pressure on other to “keep up” and have the latest cars, best/biggest/prettiest houses, newest fashions, etc. I had the opposite experience in the larger town I lived in during college. I worked in a professional office there too, but the people were more down-to-earth and a lot less materialistic. But, everyone’s experiences are different. 🙂

  3. I was just thinking that I needed to write up a post similar to this, because we have experienced some changes in the cost of living by moving from a small city to a small town, but not always in the ways we expected!

    One thing I noticed when I first lived in a really tiny town in rural NY – I discovered online shopping and I used that instead of shopping in person! Not exactly reaping the benefits of not living near great places to shop….

    • I know what you mean about online shopping. When I first moved back to my small hometown after college, I went crazy with online shopping. 🙁 It was bad. I hope you still write up a post about it. There are plenty of things that change financially besides the ones I mentioned in this post. I was thinking of doing a part 2 to this post at some point…

  4. I live in a “city” with a population of 32,000. The next closest is 61,000 (about 15 miles away). The next after that is 144,000 (about 30 miles away). I can tell you for sure that I would rather live in this small city. It’s true that there isn’t as much to do here, but there’s also far less crime. The only problem is the cost of living. New York state is for the very rich (high earning professionals) or the very poor (on public assistance). Everyone in the middle feels the squeeze.

    • I can’t say that I relate because where I live is a very low cost of living area and pretty much everyone is mid-middle class or upper-middle class. It’s not diverse at all. Of course, we have a few outliers on the top side and a few on the bottom side of the economic scale here, but for the most part everyone’s at about the same level financially.

  5. I live in a city, and while there definitely are benefits to having competition, some people get a little crazy obsessed with driving all over town to get the best deal on different items at different stores, even if it’s only a few cents cheaper at another store… Meanwhile probably more than a few cents have been spent in gas getting to the place.
    I just stick to the one grocery store that is generally overall cheapest, even if some items might occasionally be cheaper elsewhere.
    The big city downside for me is not shopping, but eating out, and the abundance of wonderful theatre happening. I have to turn most of it down for the sake of my budget, but it makes me really sad.
    I guess if I lived in a small town with fewer options, I wouldn’t feel like I was missing out on so much.

    • When I lived in a larger place I too ate out way more often. I can see how you would say “I guess if I lived in a small town with fewer options, I wouldn’t feel like I was missing out on so much.” But, I’d argue that I sometimes feel more deprived or like I’m missing out since there’s literally nothing to do here and when I go to a bigger city I almost go crazy with my spending and eating out because I’m so excited to have choices again. Every size town or city is going to have financial positives and negatives though.

  6. I have a post like this in my queue! I live in a small town, and as you’ve mentioned, it is both a blessing and a curse. Some things cost more, but there are also fewer places to spend money. Our classic example is running shoes. There are a lot of trail runners and biking shoes for sale, but never running shoes/gym shoes.

  7. I used to live in a very small town and drive half an hour to get groceries because the savings was seriously like 50%. I brought a cooler and all lol. One thing that surprised me about moving to the city was that, at least in this one, things are considerably more expensive than in the suburbs. Not 50%, but definitely enough to notice. I don’t know why that is… maybe more people creates a different supply and demand curve?

  8. I’m a small town girl at heart but have been living in big cities for the past 10 years. The biggest difference I notice is the cost of entertainment. When I was living in KC, a night out might mean a professional baseball or soccer game–which means paying for tickets, parking, and food/drinks–but a night out in my hometown means $2 cheeseburgers and $1 beers. I like them both but there are definitely more temptations to spend in larger quantities in the bigger cities.

    • You are so right! I spent more on entertainment when I lived in a bigger place too, simply because there were more choices of things to do.

  9. It sounds like there are some upsides to living in a smaller place.
    On the other hand, I read the latest Barbara Kingsolver book, which takes place in a rural small town. It was very eye-opening. The narrator lived on a failing farm, in a house her in-laws owned. There was no work to be had. And they couldn’t even easily save money by taking trips to thrift stores and Walmarts. Even those were one to two hours away, and she couldn’t really afford the gas.

    Obviously, not all small towns are that isolated. Most probably aren’t. But it was interesting to read about all the factors I wouldn’t normally think of.

    • Isolation is one factor to consider for sure. My town is big enough to have a Walmart and a couple thrift stores (with very limited selection), but for lots of things we do have to travel quite a distance and thus are forced to wait and get everything all at once.

  10. I grew up in an even smaller town than you that was about 3 hours away from any sort of “city”, so I can relate! We didn’t have any movie theatre or fast food, so my spending as a kid mostly went to candy and teeny bopper magazines.
    I’d also say that gas can be a lot more expensive too, depending on how “isolated” the town is. It was much higher for us, anyways.

    • Amanda – my town is about 3.5 hours from any real “city”. Only about 1.5 hours from a little bit bigger town that has a “mall” (but very small with very little selection). We have a couple fast food places – McDonalds, Subway, Arby’s – but not too much else. Here, gas is probably about $.30 higher than the larger towns and cities around us.

  11. I also feel like there is a certain feeling of requirement to support local people. Like “we need to get our groceries from so-and-so’s store because he’s so-and-so’s cousin and he has three kids at home” even though groceries are probably cheaper at a competitor.

    • There is a some pressure to support local businesses for sure. When I have a bit “extra” I don’t mind helping the little guy out, especially if I know them personally. But, you are right it can be much more expensive to shop local.

  12. What about work opportunities? Doesn’t living in a small create some limits?

    • Yes, work opportunities are somewhat limited in my town too. My place of employement is def one of the highest paying places, making it difficult to find a new job (even though I dislike my current job)… Great point! Maybe I should do a Part 2 post, lots of commenters have raised good points. 🙂 This one wasn’t meant to be all inclusive, just a few examples of how town size affects finances.


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