2014′s Metro Areas with the Best and Worst Budgeters

by Richie Bernardo

WH Best Budgeters BadgeThe economic struggles we’ve endured in recent years have placed considerable emphasis on both the importance of budgeting and our overall inability (or unwillingness) to do so. Roughly three in five adult Americans do not maintain a budget, and 13 percent say they don’t even have a good idea of what they spend on expenses such as housing, food and entertainment, according to the National Foundation for Credit Counseling.

In the interest of giving the most responsible consumers their just due while putting everyone else on notice, WalletHub searched for the best and worst budgeters in the United States. We did so by examining 16 key metrics, ranging from the average credit score to the percentage of unbanked households. The results of our study, as well as useful budgeting tips, additional insight from experts and a detailed methodology, can be found below.

Main Findings

 

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Overall Rank

Metro Area (Common Name)

Overall Rank

Metro Area (Common Name)

1 Sioux Empire 76 Springfield (MO)
2 Fargo–Moorhead 77 Greater Cincinnati (OH)
3 Rochester (MN) 78 Kentuckiana
4 Greater Twin Cities 79 Fresno
5 Boston 80 Joplin
6 Cedar Rapids 81 Bakersfield
7 Des Moines (IA) 82 Greater Dayton (OH)
8 San Francisco 83 Lexington (KY)
9 Lincoln (NE) 84 Knoxville (TN)
10 Siouxland 85 Charleston (WV)
11 Charlottesville 86 Greater Indianapolis
12 Greater Green Bay 87 Inland Empire
13 Madison (WI) 88 Tyler (TX)
14 Twin Ports 89 Terre Haute
15 Santa Barbara 90 Valley of the Sun
16 Omaha (NE) 91 Medford (OR)
17 Harrisburg (PA) 92 El Centro
18 Billings (MT) 93 Columbus (OH)
19 Greater Pittsburgh (PA) 94 South Bend-Mishawaka
20 New York 95 Toledo (OH)
21 Springfield (MA) 96 Nashville (TN)
22 Delaware Valley 97 Amarillo
23 Washington (DC) 98 Metrolina
24 Greater Hartford (CT) 99 Abilene (TX)
25 Roanoke Valley 100 Odessa (TX)
26 Greater Milwaukee 101 Greater Oklahoma City
27 Southland 102 Greensboro (NC)
28 San Diego (CA) 103 Mahoning Valley
29 Honolulu 104 Lubbock
30 Albany (NY) 105 Tampa Bay
31 Buffalo (NY) 106 Miami (FL)
32 Greater Seattle 107 Lafayette (LA)
33 Greater Portland (ME) 108 Greater San Antonio (TX)
34 Salt Lake City 109 Greater Orlando (FL)
35 Rochester (NY) 110 Tulsa (OK)
36 Tri-Cities 111 Kingsport-Bristol
37 Peoria (IL) 112 Flint
38 Erie (PA) 113 Chattanooga (TN)
39 Chicagoland 114 Atlanta (GA)
40 Syracuse (NY) 115 Charleston (SC)
41 Central Maryland 116 Tucson
42 Denver (CO) 117 Greater Baton Rouge
43 Sacramento (CA) 118 Waco (TX)
44 Greater Binghamton 119 Panama City
45 Greater Richmond (VA) 120 Birmingham (AL)
46 Greater Austin (TX) 121 Corpus Christi
47 Chico (CA) 122 Greater Jacksonville (FL)
48 Grand Rapids (MI) 123 Columbia (SC)
49 Greater Columbia (MO) 124 Wichita Falls
50 Utica-Rome 125 Lake Charles
51 Rockford (IL) 126 Greenville (NC)
52 Greater Portland (OR) 127 Florence (SC)
53 Spokane 128 Tallahassee
54 Colorado Springs 129 Albuquerque
55 Fort Wayne 130 New Orleans
56 Hampton Roads 131 Laredo (TX)
57 Kansas City 132 Fort Smith
58 Evansville (IN) 133 El Paso (TX)
59 Providence (RI) 134 Brownsville (TX)
60 Wichita 135 Little Rock (AR)
61 Lafayette (IN) 136 Mobile
62 Detroit (MI) 137 Truckee Meadows
63 Greater St. Louis (MO) 138 Montgomery (AL)
64 Greater Cleveland (OH) 139 Memphis (TN)
65 Boise Valley 140 Monroe (LA)
66 Raleigh 141 Savannah (GA)
67 Greater Houston (TX) 142 Shreveport
68 Salisbury (MD) 143 Alexandria (LA)
69 Topeka 144 Augusta (GA)
70 Dallas-Fort Worth Metroplex 145 Macon (GA)
71 Lane County 146 Columbus (GA)
72 Greenville (SC) 147 Gulfport-Biloxi
73 Bend 148 Las Vegas Valley
74 Lansing (MI) 149 Albany (GA)
75 Bangor 150 Greater Jackson (MS)

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Regardless of where your metro area falls on the above list, we could all be better budgeters. Here are some tips for how to go about doing that:

5 Tips for Better Budgeting

  • Feed an Emergency Fund – Set aside a bit every month with the ultimate goal of having about a year’s after-tax income in reserve in case of an extended income disruption. Start by putting away 2 percent of your net income every pay period. From there, you can keep increasing your contribution.
  • Rank Your Expenses – Budgeting doesn’t require you to give up all of your hobbies or creature comforts. It simply means cutting back on expenses that you’ve grown to view as necessities but are luxuries that drag you into debt. By ranking your expenses in order of importance, you’ll be able to keep what you value most and avoid all the headaches that come with unnecessary debt.
  • Use the Island Approach – Separate your debt from your everyday expenses. The Island Approach is a strategy that involves isolating different types of transactions to different credit cards for the best possible combination of terms. For instance, you might consider using a rewards card for daily expenses (which you’d pay off in full every month) and a 0 percent balance transfer card to lower the cost of existing debt.
  • Treat Debt Payments Like a Snowball – In constructing your budget, make sure to account for monthly debt payments. When distributing those payments, you should pay the minimum on everything but the balance with the highest interest rate while attributing the rest of your monthly allotment to that more expensive debt. Do that until the first balance is gone, and then repeat until completely debt-free.
  • Eliminate Temptation – We all have our spending temptations, whether it’s a high credit limit that we can’t resist exhausting each month or an Xbox that’s begging for new games. Whatever the spending trigger is in your case, it’s important to eliminate it, even if that means taking drastic measures such as cutting up your credit cards in order to prevent use while continuing to benefit from monthly reporting to the major credit bureaus.

Ask The Experts

Being a good budgeter isn’t just about staying out of debt. The best budgeters make the most of what they have by adhering to a well-crafted spending plan that accounts for the unexpected while leaving little room for frivolity. To expand the discussion, we’ve asked a panel of experts to share their wisdom and insight on budgeting-related matters. Click on the experts’ profiles to read their bios and responses to the following key questions:

  1. What is the most important thing consumers should know about making a budget and sticking to it?
  2. What is the biggest obstacle for consumers trying to stay on budget?
  3. What tips would you have for a person that wants to get out of debt and stay out of debt?
  4. How should parents teach children about the importance of budgeting?
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  • Cäzilia Loibl Associate Professor of Consumer Sciences, The Ohio State University
  • Norman I. Silber Professor of Law, Maurice A. Deane School of Law at Hofstra University

Cäzilia Loibl

Associate Professor of Consumer Sciences, The Ohio State University
Cäzilia Loibl
What is the most important thing consumers should know about making a budget and sticking to it?

Most important thing: that it takes time to get used to the plan. My research on savings habits shows that participants in a savings program needed at least 6 months to start saving regularly.

What is the biggest obstacle for consumers trying to stay on budget?

Probably two items: building up the necessary willpower and being willing to review money matters regularly.

What tips would you have for a person that wants to get out of debt and stay out of debt?

Recent studies from debt management plans show that it is better to set smaller goals (like repaying the higher interest items first, one after the other) rather than targeting the total amount of debt at once.

Norman I. Silber

Professor of Law, Maurice A. Deane School of Law at Hofstra University
Norman I. Silber
What is the most important thing consumers should know about making a budget and sticking to it?

The biggest obstacle to staying on a budget, in the big picture, is the enormous cultural temptation and commercial pressure to use credit and in particular credit cards, whose terms make understanding the budgetary implications of using them so hard. As a nation we should be teaching consumer financial literacy from elementary school onward with a carefully designed curriculum that is oriented toward resisting commercial appeals to spend and borrow.

Methodology

The best budgeters know the difference between luxury and necessity. They also are able to steer clear of debilitating debt due to diligence and discipline, not pure earning power.

In order to gauge the overall budgeting capability of Americans, WalletHub ranked 150 metropolitan statistical areas (MSAs) in the United States We did so by examining 16 key metrics, which are listed below. We assigned a full weight only to the metrics that were available for all the MSAs. The rest received less weight, as the data for these were available only at the state level or for several metro areas.

Although only 13 metrics appear below, “Delinquency Rate” counts as four metrics because it is a composite metric that includes the following submetrics: mortgages, auto loans, student loans and credit cards.

  • Average Experian Vantage Credit Score: 1
  • Total Non-Mortgage Debt as a Percentage of Median Income: 1
  • Personal-Bankruptcy Rate: 0.5
  • Foreclosure Rate: 1
  • Housing Expenses as a Percentage of Median Home Price: 0.5
  • Total Non-Housing Expenses Adjusted for Cost of Living Relative to Median Income: 0.5
  • Credit Usage (%): 1
  • Percentage of the Population Spending More Than They Make: 0.5
  • Percentage of the Population Paying Only the Minimum on Their Credit Cards: 0.5
  • Rainy Day Funds: 0.5
  • Percentage of Unbanked Households: 0.5
  • Annual Consumer Savings Account Averages: 0.5
  • Delinquency Rate (Measured across Mortgages, Auto Loans, Student Loans and Credit Cards): 0.5

 

Sources: Data used to create these rankings is courtesy of the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, Experian, the Administrative Office of the U.S. Courts, the Council for Community and Economic Research, the Center for Housing Policy, the Federal Reserve Bank of New York, the FINRA Investor Education Foundation, Pitney Bowes and Zillow.

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Richie Bernardo is a financial writer at WalletHub. He graduated with a Bachelor of Journalism and a minor in business from the University of Missouri-Columbia. Previously, Richie was a journalism…
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