2023's Best & Worst Cities At Money Management

Good money management skills are more important now than ever during this time of high inflation

With 44% of U.S. adults grading their knowledge of personal finance a C or lower and good financial skills being essential during this time of high inflation, the free credit score website WalletHub today released its report on 2023’s Best & Worst Cities at Money Management, 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 average number of late payments to mortgage debt-to-income ratio.

Best vs. Worst

East St. Louis, Illinois, has the lowest mortgage debt-to-income ratio, 121.14 percent, which is 8.9 times lower than in Ewa Beach, Hawaii, the city with the highest at 1,083.35 percent.

Deer Park, New York, has the lowest student-loan debt-to-income ratio, 6.95 percent, which is 14.2 times lower than in Carbondale, Illinois, the city with the highest at 98.37 percent.

Mercer Island, Washington, has the lowest share of people delinquent on their debt, 0.16 percent, which is 81.1 times lower than in Jackson, Mississippi, the city with the highest at 12.98 percent.

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.

Expert Commentary

Should financial skills be taught as a mandatory part of the high school curriculum?

“In my opinion, yes. I think that high school students should be required to learn about topics that are part of a subject that we call ‘personal financial literacy.’ Things like establishing and maintaining a personal budget, viewing and monitoring a personal credit score, responsibly building and managing credit through the acquisition of loans and credit cards, and understanding how to create and achieve long-term wealth-building goals.”
Scott Collins, Ph.D. – Associate Clinical Professor; Director of One-Year Master of Accounting (MAcc) Program, Pennsylvania State University

“Yes, I believe financial skills should be taught in all high schools. I think financial concepts could be covered and reinforced in a variety of classes, such as math, that makes it applicable to students. I once gave a presentation to a group of state advocates and educators advancing financial literacy in schools and during the question-and-answer session someone stated they were a superintendent and that she agreed we need more financial literacy in schools; however, she said it is very difficult finding qualified people to teach those concepts. She is right that it is not enough to put the material in the curriculum, you need qualified people who really understand personal finance to teach it. Those people do not necessarily need to be finance professionals. Many regular people have excellent money management skills. But students need access to these people.”
Robert Haywood Scott III, Ph.D. – Professor; Greenbaum/Ferguson/NJAR Endowed Chair in Real Estate Policy, Monmouth University

What is the most common mistake people make when it comes to managing their money?

“First, people do not save enough, they do not start saving early enough, and as a result, quickly become behind since they are missing out on compounding. Saving for retirement should start with one’s first job, with an IRA account. When an employer offers a retirement program with matching, one should always take it and max it out every year. And the second related mistake, when people look at their investments in the stock market, is that they sell after the market falls and start buying after the market has risen. That is called trying to time the market and academic research has shown that even professional money managers cannot do it, so why do retail investors think they can? Most of us invest for the long run, so as the markets go up and down, the best advice is to not touch anything and keep saving, keep investing. Third, the average household has far too much faith in real estate as an investment: buying one’s home is not a sure bet, and net of all costs and interest and taxes, the annual rate of return on home purchases is much lower than people think. As the saying goes, do not put all your eggs in one basket.”
Thomas Gilbert – Associate Professor, University of Washington

“The biggest mistake I see when people manage their money is that they overlook their opportunity costs. Sometimes trained financial professionals pitch to existing and prospective investors using select performance metrics in absence of any benchmarks. We see people make occasional splurges, like on technology upgrades, or daily splurges, like on coffee habits, without serious consideration of how else they could spend their money to extract more benefit from it. People frequently ignore the foregone benefit of extra compounding periods gained by starting to save earlier in their adulthood rather than later. People also commonly overlook the true cost of early-adulthood indebtedness, which can have detrimental lifestyle effects for at least a decade and then erode the possibility of capitalizing on compounded savings that could have otherwise taken place.”
Claire Rosenfeld, Ph.D. – Assistant Teaching Professor; Assistant Area Director, Finance, University of Kansas

What are some tips for people looking to protect their money despite inflation?

“If people have extra money, then the best thing to do is find high-interest savings accounts for an emergency fund. With emergency funds, I am less concerned with interest earned than accessibility; however, if someone has some flexibility there are excellent rates on a variety of certificates of deposits (CDs). If there is a small possibility you might need the money earlier than the CD’s maturity date, then look for shorter-term CDs and/or ones that will not penalize you for early withdrawal. If you absolutely do not need the money, then Roth IRAs are a great investment option for many people. And for those with children, 529 savings plans can make sense. Everyone’s financial situation is different, which is why educating yourself is so valuable. Finding legitimate sources of information, knowing your financial reality, and seeking advice from many sources are how all of us can make better financial decisions.”
Robert Haywood Scott III, Ph.D. – Professor; Greenbaum/Ferguson/NJAR Endowed Chair in Real Estate Policy, Monmouth University

“Generally, it is difficult for people to find a safe haven to protect the purchasing power of their money during an inflationary period because inflation is a systemic risk that affects everyone in the economy. However, if they have invested in assets that could be repriced higher to catch up with inflation (e.g., raising the rent on investment property; stocks of companies that can raise prices without hurting demand for their goods or services) or can demand much higher wages because of their skills/expertise, then they could better insulate themselves from the ill effects of inflation.”
Alice Tsang, CFA – Professor of Finance, Taylor University