A new study by InCharge(R)Institute of America , a nonprofit organization specializing in personal finance education, research and credit counseling, ranks 314 U.S. metropolitan areas to determine which are leading the nation in personal "financial fitness." The study looks at how different population centers measure up in offering the economic climate and conditions that promote financial fitness for its citizens.
The study was conducted in late 2004 and examined 314 metropolitan areas across the three population categories. The analysis utilized five factors to define and measure "financial fitness:"
- Real personal disposable income -- Total personal income minus personal current taxes. This is the amount ultimately available to families for personal expenditures and savings.
- Employment opportunities -- Since wages and salaries produce most of personal income, employment is an important indicator of financial success -- not only at the family level, but also on a local and national level. It can be expected that greater financial fitness will be associated with areas with higher employment opportunities.
- Credit worthiness -- How well is consumer income covering consumer expenditures and debts? What is the debt to income ratio? Excessive consumer debt is the largest threat to economic well-being. For this study, 2003 Equifax average Beacon credit scores were used to determine the credit worthiness of a metropolitan area.
- Levels of savings -- Savings is one of the most important indicators of financial wellness. Savings buys financial security. Domestic deposits held or accepted in FDIC insured commercial banks in 2003 by metropolitan area were used to measure this factor.
- Refinancing activity -- Refinancing is connected to financial worth, and reflects the ability to convert non-financial assets -- like one's home -- into money that can be used to decrease debt or to spend or invest in things that will deliver higher returns.
Trends and Notable Facts from Consumer Financial Fitness of Metropolitan Areas Study
- Three states -- Wisconsin (6), California (4), and Minnesota (3) -- account for almost half the total of 30. Wisconsin and California alone account for one third of the total.
- Fifteen states are represented in the three Top 10 lists. Of those, eight have multiple metropolitan areas represented.
- Cities with major state university communities are well represented: Madison (University of Wisconsin), Minneapolis-St. Paul (University of Minnesota), Boulder (University of Colorado), Burlington (University of Vermont), Bloomington-Normal (Illinois State University), Iowa City (University of Iowa), Fargo (North Dakota State University), Columbia, Missouri (University of Missouri) and Salt Lake City (University of Utah). Many of the other communities (particularly the metropolitan areas of New York City, San Francisco and Chicago) have multiple major institutions of higher learning.
- In some cases, more than one of the individual "primary" metro areas used for the study are within larger "combined" metro areas, meaning there is a high level of financial fitness across that broader urban community. Examples -- San Francisco Bay Area and adjoining portions of Northern California (all four California communities), the Delaware Valley area around Philadelphia (Trenton and Wilmington) and metropolitan New York City (NYC, plus Nassau-Suffolk, Long Island, and Middlesex Somerset-Hunterdon in New Jersey).
- Interestingly, a group of contiguous states in the upper Midwest has half the communities -- Wisconsin (6), Minnesota (3), Illinois (2), Iowa (2), North Dakota (1) and South Dakota (1)
Top 10 Metropolitan Areas with Populations Over 500,000
- Wilmington-Newark DE-MD
- San Francisco CA
- Boston MA
- New York NY
- Salt Lake City-Ogden UT
- Middlesex-Somerset-Hunterdon NJ
- San Jose CA
- Minneapolis-St. Paul MN
- Chicago IL
- Nassau-Suffolk NY
Top 10 Metropolitan Areas with Populations Between 200,000 to 500,000
- Trenton NJ
- Madison WI
- Boulder-Longmont CO
- Green Bay WI
- Appleton-Oshkosh-Neenah WI
- Burlington VT
- Barnstable-Yarmouth MA
- Santa Rosa CA
- Des Moines IA
- Santa Cruz-Watsonville CA
Top 10 Metropolitan Areas with Populations Under 200,000
- Bloomington- Normal IL
- Sioux Falls SD
- Rochester MN
- Wausau WI
- Iowa City IA
- St. Cloud MN
- Sheboygan WI
- Fargo-Moorhead ND- MN
- Columbia MO
- La Crosse WI