The 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 14 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.
Spending & Debt Rank
|2||Sioux Falls, SD||3||7||6|
|4||Minneapolis-St. Paul-Bloomington, MN-WI||4||3||29|
|6||Cedar Rapids, IA||8||8||14|
|7||Des Moines-West Des Moines, IA||9||12||14|
|8||Sioux City, IA-NE-SD||12||10||14|
|9||San Francisco-Oakland-Hayward, CA||1||18||38|
|11||Green Bay, WI||16||5||33|
|16||Omaha-Council Bluffs, NE-IA||21||13||36|
|17||Santa Maria-Santa Barbara, CA||6||42||38|
|21||New York-Newark-Jersey City, NY-NJ-PA||25||37||17|
|22||Hartford-West Hartford-East Hartford, CT||51||20||5|
|23||Milwaukee-Waukesha-West Allis, WI||46||15||33|
|25||Portland-South Portland, ME||37||28||27|
|27||San Diego-Carlsbad, CA||14||69||38|
|30||Salt Lake City, UT||62||25||7|
|32||Buffalo-Cheektowaga-Niagara Falls, NY||41||33||17|
|33||Los Angeles-Long Beach-Anaheim, CA||11||79||38|
|45||Spokane-Spokane Valley, WA||69||23||58|
|51||Grand Rapids-Wyoming, MI||30||46||86|
|52||Colorado Springs, CO||41||52||70|
|55||Virginia Beach-Norfolk-Newport News, VA-NC||73||76||48|
|56||Fort Wayne, IN||38||54||91|
|64||Austin-Round Rock, TX||19||81||114|
|66||Kansas City, MO-KS||54||63||97|
|67||St. Louis, MO-IL||68||53||97|
|68||Lansing-East Lansing, MI||72||56||86|
|69||Boise City, ID||49||65||111|
|72||Lafayette-West Lafayette, IN||50||72||91|
|79||Houston-The Woodlands-Sugar Land, TX||32||96||114|
|81||Dallas-Fort Worth-Arlington, TX||33||104||114|
|82||South Bend-Mishawaka, IN-MI||81||74||91|
|83||Riverside-San Bernardino-Ontario, CA||66||134||38|
|85||Terre Haute, IN||84||74||91|
|87||El Centro, CA||103||106||38|
|91||Tampa-St. Petersburg-Clearwater, FL||116||102||52|
|93||Miami-Fort Lauderdale-West Palm Beach, FL||100||127||52|
|95||Louisville/Jefferson County, KY-IN||77||80||137|
|101||Greensboro-High Point, NC||104||86||102|
|105||San Antonio-New Braunfels, TX||83||104||114|
|111||Panama City, FL||128||132||52|
|113||Oklahoma City, OK||91||101||135|
|117||Wichita Falls, TX||114||96||114|
|120||Atlanta-Sandy Springs-Roswell, GA||96||114||141|
|121||Charleston-North Charleston, SC||94||122||129|
|122||Lake Charles, LA||131||108||79|
|124||Baton Rouge, LA||120||125||79|
|126||Corpus Christi, TX||102||130||114|
|127||Fort Smith, AR-OK||133||89||133|
|128||New Orleans-Metairie, LA||138||111||79|
|129||El Paso, TX||125||123||114|
|133||Little Rock-North Little Rock-Conway, AR||135||94||133|
|139||Shreveport-Bossier City, LA||145||140||79|
|144||Augusta-Richmond County, GA-SC||137||133||141|
|148||Las Vegas-Henderson-Paradise, NV||142||150||139|
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:
- 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 an Avalanche – 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, to which you should allocate the rest of your monthly allotment until that balance is gone. Repeat that process with the balance that has the second highest interest rate until you’re 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 the subject. Click on the experts’ profiles to read their bios and responses to the following key questions:
- What tips do you have for consumers looking to make a budget and stick to it?
- What is the biggest obstacle for consumers trying to stay on budget?
- What tips do you have for consumers to get out of debt and stay debt free?
- How should parents teach children about the importance of budgeting?
Ask the Experts
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 were assigned to three main categories: 1) Spending & Debt, 2) Credit and 3) Saving. We assigned a full weight only to the metrics that were available for all of the MSAs included in this report. The others received less weight, as the data were available only at the state level or for select metro areas.
Although only 13 metrics appear below, “Delinquency Rate” counts as four metrics because it is a composite that includes the following delinquency submetrics: mortgages, auto loans, student loans and credit cards.
Spending & Debt – Total Weight: 10
- Total Non-Mortgage Debt as a Percentage of Median Income: Full Weight
- Personal-Bankruptcy Rate: Half Weight
- Foreclosure Rate: Full Weight
- Housing Expenses as a Percentage of Median Home Price: Half Weight
- Percentage of Total Non-Housing Expenses to Median Income: Half Weight
- Credit Usage (%): Full Weight
- Percentage of the Population Spending More Than They Make: Half Weight
- Percentage of the Population Paying Only the Minimum on Their Credit Cards: Half Weight
Credit – Total Weight: 5
- Average Experian Vantage Credit Score: Full Weight
- Delinquency Rate (Measured across Mortgages, Auto Loans, Student Loans and Credit Cards): Half Weight
Saving – Total Weight: 5
- Rainy Day Funds: Half Weight
- Percentage of Unbanked Households: Half Weight
- Annual Consumer Savings Account Averages: Half Weight
Sources: Data used to create these rankings were obtained from the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, 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, the Federal Deposit Insurance Corporation, Experian, Pitney Bowes and Zillow.