With good money management skills being crucial for financial success, the personal-finance website WalletHub today released its report on the Cities Where People Have the Best Money Management Skills, as well as expert commentary.
In order to determine where Americans are best at handling their finances, WalletHub compared more than 2,500 cities based on 10 key indicators of money-management skills. The data set ranges from the median credit score to the average number of late payments to the mortgage debt-to-income ratio.
| Cities with Best Money-Management Skills | Cities with Worst Money-Management Skills |
| 1. Cupertino, CA | 2508. Locust Grove, GA |
| 2. Palo Alto, CA | 2509. Covington, GA |
| 3. Chevy Chase, MD | 2510. Hampton, GA |
| 4. Los Altos, CA | 2511. Park Forest, IL |
| 5. Scarsdale, NY | 2512. Calumet City, IL |
| 6. Sunnyvale, CA | 2513. Fairburn, GA |
| 7. Lexington, MA | 2514. Tolleson, AZ |
| 8. Redmond, WA | 2515. Canton, MS |
| 9. Mountain View, CA | 2516. Dolton, IL |
| 10. McLean, VA | 2517. Ruston, LA |
Readers who are curious to know how their money-management skills compare with those of the average person in their city can view an analysis of their free credit score through WalletHub.
“Many Americans have unfortunately never been taught good money management skills, but it’s never too late to learn. Our study found that in the cities where people are best at money management, residents have significantly higher credit scores than average, well into the excellent credit range. This is due to a combination of low debt-to-income ratios, restrained credit utilization, and low rates of late payments and delinquency.”
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“Cupertino, CA, is the city where people have the best money management skills, in part because residents’ credit card debts are extremely low compared to their incomes. In fact, the median credit card debt ($2,790) is only around 1.6% of the median income ($178,180), which is the lowest ratio in the country. This indicates that many people keep their utilization very low and pay their balance off every month. In fact, Cupertino residents only use around 26% of their available credit, the seventh-lowest percentage in the country. They have the third-fewest late payments per person in the past 12 months, and the third-lowest debt delinquency rate. The median credit score in Cupertino is 778, very firmly into the excellent credit range.”
- Chip Lupo, WalletHub Analyst
Expert Commentary
Should financial skills be taught as a mandatory part of the high school curriculum?
“Yes, financial skills should be a mandatory component of high school curricula. Various studies indicate that many adults lack essential financial knowledge, leading to poor financial decisions and long-term economic challenges. Challenges include finding qualified instructors and integrating the curriculum without diminishing focus on other subjects. To address this, schools can incorporate financial literacy into courses like math or economics and utilize digital tools to make learning engaging and relevant.”
Richard Roberts – Professor, Monmouth University
“Yes. Period. Currently about half of all US states have K-12 standards that include personal finance. This is progress, but there is still a lot of work to do. If you are in a state without K12 personal finance standards, I suggest connecting with the Jumpstart in your state and also exploring how to connect with state legislators.”
Julie Heaton – Director, Sokolov-Miller Family Financial and Life Skills Center, Pennsylvania State University
What is the most common mistake people make when it comes to managing their money?
“The most common mistake is living beyond one’s means. Related mistakes include neglecting to create a budget, relying too heavily on credit cards, and ignoring the importance of having emergency funds for unexpected setbacks.”
Richard Roberts – Professor, Monmouth University
“Accountability. A Budget is just a story you tell yourself until you return to it and see how real life spending and actions compare.”
Julie Heaton – Director, Sokolov-Miller Family Financial and Life Skills Center, Pennsylvania State University
What is the best way for parents to teach their children how to manage money?
“Help your child define and achieve a savings goal for something they want to buy… Set up a savings account to help them understand the benefits of compound interest… Give an allowance – even a small one – for chores to demonstrate the value of money and hard work… Involve your child in family shopping decisions, guiding them to choose products based on quality and price… Clarify the difference between necessary expenses and discretionary spending.”
Richard Roberts – Professor, Monmouth University
“Be open and honest about your own money experience. Do your kids know how much money you make and how you spend it? Have you communicated about purchases you do or don't make and why? Have you shared your money philosophy or history with them? These are all simple places to start. A lot of time parents forgo the personal money storytelling for more financial education vocabulary and facts. This is fine, but it misses the larger lesson which is behavior and beliefs around finances.”
Julie Heaton – Director, Sokolov-Miller Family Financial and Life Skills Center, Pennsylvania State University
6 Tips for Improving Your Money Management
- Practice making and sticking to a budget: One of the best ways to develop your money management skills is learning how to budget. Carefully creating a budget to plan out how you spend each dollar of your income will help you pay your bills on time while also meeting financial goals like paying down debt or saving for the future.
- Try WalletHub’s Island Approach: The Island Approach involves using each credit card for a dedicated purpose. For example, you should make all of your everyday purchases on a good rewards credit card and only finance big purchases on a card with a 0% introductory APR, if possible.
- Pay off all credit cards in full: A credit card has a minimum amount that you’re required to pay every month, but usually lets you carry a balance. Unless your card has a 0% APR, you should strive to pay off your entire balance in full before your monthly due date. In most cases, that will allow you to avoid interest entirely.
- Monitor your credit and spending: Make sure to check your credit score and credit report for free, both to see your progress and to catch any errors. Some sites, such as WalletHub, also may give you personalized advice on how to improve your finances. You can also sync your financial accounts to automatically track your spending and get alerts about big changes.
- Improve your financial literacy: Read articles on the topic of money management and talk with your friends and family to discuss what strategies have worked best for them. Take a quiz to find out your financial literacy level and learn some new facts along the way.
- Build an emergency fund: Sometimes, even people with the best money management skills will have a month where they can’t pay all of their expenses due to an unforeseen situation. In that case, it’s important to have an emergency fund to dip into so you don’t have to borrow money. Try putting aside money for this fund every month until you have enough stored to pay for at least six months’ worth of expenses (12 would be even better).
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