Study: Cities with Best & Worst Budgeters

Best & Worst BudgetersThe 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.  More than half of all consumers do not maintain a budget, according to the National Foundation for Credit Counseling, and roughly 22% say they don’t even have a good idea of what they spend on things like housing, food, and entertainment.

In the interest of giving the most responsible consumers their just due while putting everyone else on notice, we at Card Hub went looking for the Best & Worst Budgeters in the U.S.  Check out our findings in the tables below.

Rank City Credit Score Total Debt/Income Banruptcy & Foreclosure Rate Revolving Debt/Cost of Living Total Debt/Median Home Price
1 Boston, MA 758 43% 3.7% 46.27 71.98
2 New York, NY 774 44% 7.8% 32.26 65.94
3 San Diego, CA 755 52% 4.7% 45.71 65.86
4 San Francisco, CA 679 39% 4.4% 33.62 45.81
5 Minneapolis, MN 783 51% 3.5% 58.12 148.79
6 Washington, DC 718 45% 3.4% 44.88 78.53
7 Los Angeles, CA 741 52% 5.0% 41.91 72.60
8 Baltimore, MD 738 52% 4.7% 58.39 134.65
9 Philadelphia, PA 754 53% 5.8% 53.31 121.14
10 Seattle, WA 714 53% 3.9% 58.08 90.85
11 Portland, OR 739 60% 5.0% 51.66 107.79
12 Houston, TX 726 55% 3.4% 60.76 163.87
13 Sacramento, CA 748 60% 6.0% 48.47 139.80
14 Denver, CO 724 55% 4.5% 63.60 110.85
15 Riverside, CA 766 80% 7.2% 50.38 138.07
16 Miami, FL 736 55% 19.4% 50.09 121.01
17 Phoenix, AZ 784 68% 6.6% 61.89
18 Dallas, TX 726 61% 3.6% 62.31 171.39
19 St. Louis, MO 765 58% 5.3% 67.16 208.17
20 San Antonio, TX 755 72% 3.2% 66.81 170.70
21 Chicago, IL 718 55% 8.8% 53.53 145.89
22 Kansas City,MO 756 61% 4.9% 64.18 190.79
23 Pittsburgh, PA 767 59% 5.0% 68.46 277.95
24 Las Vegas, NV 777 69% 13.1% 57.89 194.25
25 Detroit, MI 765 63% 6.0% 64.10 391.41
26 Cleveland, OH 757 60% 8.6% 64.94 232.26
27 Atlanta, GA 759 64% 6.1% 67.37 260.26
28 Cincinnati, OH 761 63% 6.8% 71.65 212.05
29 Tampa, FL 757 65% 16.1% 66.69 187.26
30 Orlando, FL 735 70% 16.1% 60.73 187.28

Regardless of where your city falls on the above lists, we could all be better budgeters.  So, here are a few 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.
  • Rank Expenses in Order of Importance – Budgeting doesn’t mean you have to give up all hobbies or creature comforts.  Rather, it simply necessitates cutting expenses that you’ve grown to view as necessities even though they’re truly luxuries that are dragging you down into debt. By ranking your expenses in order of importance, you’ll be able to keep the things you value most and avoid all the headaches that come with unnecessary debt.
  • Use the Island Approach – This entails separating your debt from your everyday expenses.  That will enable you to amass the best combination of low rates and lucrative rewards possible, pay off what you owe faster, and realize immediately if you’re overspending (you should never get charged interest on your everyday account).
  • Treat Debt Payments Like a Snowball – In constructing your budget, make sure to account for monthly debt payments.  When it comes to distributing those payments, you should pay the minimum on all 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 some 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.


Before we get into the particulars of our analysis, it’s first important to note that being a good budgeter isn’t just about staying out of debt.  Rather, 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.  The best budgeters know the difference between luxury and necessity and are able to steer clear of debilitating debt due to diligence and discipline, not pure earning power.  Their realistic planning skills also enabled them to weather the storm during the Great Recession, and they are deserving of recognition for their unheralded, yet noteworthy achievements.

It was with that in mind that we chose the following metrics to gauge one’s overall budgeting capability:

  • Debt-to-Income Ratio:  This indicates the percentage of one’s annual income that goes toward paying off amounts owed to lenders and creditors.  Having debt doesn’t necessarily make you a poor budgeter, as it can be the ticket to things like home ownership, but too much speaks to chronic overspending and a potentially unsustainable lifestyle.
  • Credit Score:  One’s credit score is essentially a numerical manifestation of their responsibility as a borrower.  It takes into account income, credit utilization, payment history, and myriad other factors that collectively indicate one’s potential for serious financial difficulties.  Credit scores are particularly revealing at this point in time, as many of those who’ve incurred significant damage in recent years are people who did not incorporate a robust emergency fund into their overall budget.
  • Combined Bankruptcy & Foreclosure Rate:  In recent years, countless borrowers have infamously failed to both properly assess the mortgage burden they could comfortably support as well as prepare the financial reserves necessary to continue meeting monthly financial obligations during extended periods of unemployment.  Having a viable contingency plan that prevents a bump in the road from causing catastrophe is the mark of a good budgeter.
  • Revolving Debt Adjusted for Cost of Living:  Where a person lives alters the narrative of their debt significantly.  For example, it’s far easier to incur $10k in debt in New York City, where prices for everything from groceries to real estate are notoriously high, than it is to rack up the same amount in St. Louis.  That amount of debt would be problematic in any city, but it’s somewhat less significant in a high-cost area, where incomes are usually higher as well.
  • Total Debt-to-Median Home Price Ratio:  The most significant type of debt that most people have is their mortgage.  Relative differences in home prices across the country could therefore influence our perception of debt borne from other expense categories.  That makes it important to adjust for the housing market in order to accurately compare consumer performance in different major metropolitan areas.
  • Non-Housing Expenses Adjusted for Cost of Living, Relative to Average Income: You can’t really fault people who live in the most expensive cities for spending more than their counterparts in cheaper areas. Likewise, a millionaire who spends $20k is far more responsible than someone who makes $15k and spends the same amount. It is therefore necessary to adjust for these factors in order to compare spending habits on equal terms.

Using the most recent data available (see below for sources), we rank-ordered the 30 largest Metropolitan Statistical Areas (MSAs) in the United States, as determined by Census Bureau data, for each of the above metrics. Each of the first five metrics mentioned above were then weighted equally in order to determine the overall rankings, with “Non-Housing Expenses Adjusted for Cost of Living, Relative to Average Income” used as a tie-breaker given that the requisite data was not available for every MSA in this category.

Sources: Data used create these rankings is courtesy of the U.S. Census Bureau, Experian, the U.S. Department of Commerce Bureau of Economic Analysis, the National Association of Realtors, The Council for Community & Economic Research, RealtyTrac, and the American Bankruptcy Institute.

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