With good money management skills being crucial for financial success and a good credit score, a new report on the Cities Where People Have the Best Money Management Skills in 2024 offers insight.

Alongside this report, the Emergency Savings Survey was also released and found that 35% of Americans say inflation makes it harder to save for emergencies.

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 2538. Greenwood, MS
2. Los Altos, CA 2539. Hampton, GA
3. Lexington, MA 2540. Davenport, FL
4. Palo Alto, CA 2541. Covington, GA
5. Chevy Chase, MD 2542. Maple Heights, OH
6. Sunnyvale, CA 2543. Locust Grove, GA
7. Saratoga, CA 2544. Ruston, LA
8. Scarsdale, NY 2545. Jonesboro, GA
9. McLean, VA 2546. Leesville, LA
10. Mountain View, CA 2547. Canton, MS

Emergency Savings Survey

  • Hidden danger of inflation: 35% of Americans say inflation makes it harder to save for emergencies.
  • Unprepared for emergencies: 44% of people are not confident they can cover an unexpected expense.
  • Dipping into the cookie jar: 3 in 5 Americans say inflation has caused them to dip into their emergency savings to cover day-to-day expenses.
  • Financial priorities: 2 in 5 Americans say paying off debt is their top financial goal, prioritizing it over things like building an emergency fund and contributing to their retirement savings.
  • Broke & bailed out: Nearly 1 in 3 people expect someone else to bail them out if they run out of money.
  • No savings to save the day: More than 2 in 5 Americans don’t have the financial means to come up with $5,000 in a day to save a loved one’s life.

Tips and Tricks

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

“Yes. High school students are interested and remarkably mature when given a chance. There is also the opportunity to teach this as part of broader issues, such as the wealth gap in society and how it arises and is perpetuated. Young people often have a feeling for justice; they can see that people must have money in the first place to manage it. Financial literacy can help young people understand the economic landscape and assist those at all income levels in gaining the skills that can benefit them throughout their lives,” said Rosabeth M. Kanter, professor, at Harvard Business School.

“While I believe schools should be able to design their curriculum to meet the needs of their communities, I would like to see schools offer the opportunity for students to learn financial literacy skills in school. An organization called Next Gen Personal Finance provides lesson plans that teachers can use, and certified public accountants (CPAs), financial planning professionals, and stockbrokers are willing to assist teachers in preparing lessons. Lessons could be offered through student clubs, after-school programs, or at community centers on weekends. Many adults would find the lessons informative, and providing them in a manner that allows the whole family to participate would be beneficial,” said Sharon S. Lassar, Ph.D., CPA (Florida), professor; director, School of Accountancy, University of Denver.

What is the best way for parents to teach their children how to manage money?

“One effective strategy is to start with practical exercises, such as creating personal financial statements, which include all expenses related to survival, even those covered by parents. This exercise often reveals to students the extent of their financial dependence and the expenses their parents are covering, such as car insurance or mobile phones. Parents should lead by example. Children often graduate from high school during a phase of financial stability for their parents, unaware of earlier financial struggles. Consequently, they may have unrealistic expectations about their financial situation, assuming they should have the same luxuries as their parents. Parents can counteract this by being transparent about their financial journey, including any past challenges and sacrifices made to achieve stability. It is important to instill in children the value of effort and accountability rather than simply providing them with everything they desire without understanding the effort required to attain it,” said Kari Phillips Lamoreaux, Ph.D., lecturer, at Utah State University.

“Money management is a good place for experiential learning – learning by doing. Parents can let their children handle their own money, with discussion and guidance. Set up an account that they can use for their allowance or earnings for chores. Help children see how their accounts build up and the value of saving for a big expenditure. And along the way, include charitable donations. Children like to make their own choices, and choosing among charities (and some due diligence on how their money is used) is a good way to stress values along with economics,” Kanter said.

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

“The most common mistake is making a budget and then not following through with it. People get a good feeling that they are in control when they create a budget, as though its mere existence guarantees they will have done everything right. Then temptations to splurge beyond the budget come along – a ‘one-time’ sale, a Taylor Swift concert, a ‘can’t miss’ investment– and they forget the budget, figuring they will make up the extra expenditure later. Rather than exercise discipline, they indulge themselves,” Kanter said.

“There are numerous mistakes people make when managing their money. One of the most significant mistakes is failing to take advantage of employer matches to retirement savings plans like 401(k)s. Many employers will match anywhere between 50 cents and $2 for every dollar that an employee directs to their retirement savings plan. A one-for-one match represents an immediate 100% return on investment! Other common mistakes stem from our busy lives. We become preoccupied and forget to opt out of automatic charges such as overdraft protection, gym memberships for gyms we do not attend, and streaming services that we do not need. We take advantage of conveniences like auto-renewal of insurance and electronic billing, which allow us to overlook comparing prices when policies come up for renewal. Additionally, we sometimes opt for delivery or pick-up takeout when we could prepare healthier meals for less cost. Managing expenses requires time and attention, both of which are often in short supply in our lives,” Lassar said.

Source: WalletHub