Posted by: Adam McCann

Financial literacy is key to sound financial health. But financial savvy is what differentiates the comfortable from the truly stable. Unfortunately, a staggering lack of money smarts plagues Americans, according to a study on financial literacy conducted by the National Foundation for Credit Counseling. About 42 percent of U.S. adults, for instance, grade their knowledge of personal finance a “C” or worse. Meanwhile, three out of five admit to not keeping a budget, one of the most basic life skills that every adult should master even as early as high school.

As this report reflects, however, residents of certain states are sharper than their peers when it comes to maintaining their household balance sheets. To determine where American consumers set the best example, WalletHub’s analysts compared the 50 states and the District of Columbia across 23 key metrics that represent financial savvy — or lack thereof. Our data set ranges from median credit score to annual savings-account average to credit-card debt as a share of income. Read on for our findings, expert insight from a panel of researchers and a full description of our methodology.

1. Main Findings
2. Ask the Experts
3. Methodology

Main Findings

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/20496/geochart-financial-savvy-states.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2Ok8kvX>  

Overall Rank*	State	Total Score	‘Debt & Spending’ Rank	‘Financial Literacy’ Rank	‘Credit’ Rank	‘Saving’ Rank
1	Massachusetts	70.56	1	14	8	17
2	New Hampshire	69.67	8	4	7	1
3	Connecticut	67.12	4	6	18	10
4	Minnesota	66.58	10	8	4	12
5	New Jersey	66.30	3	16	27	5
6	North Dakota	65.59	16	29	1	6
7	Wisconsin	64.61	6	1	17	20
8	California	64.20	2	15	47	2
9	Rhode Island	62.78	9	49	24	7
10	New York	62.60	7	12	48	3
11	Iowa	62.58	18	24	6	21
12	Nebraska	62.23	15	27	2	34
13	Washington	62.13	19	36	9	14
14	Wyoming	61.81	12	28	12	24
15	Maryland	61.49	13	22	20	15
16	Utah	61.17	14	45	19	9
17	Hawaii	60.52	25	42	5	11
18	Pennsylvania	60.47	17	9	30	18
19	Michigan	60.45	11	25	25	27
20	Maine	59.85	23	5	13	22
21	District of Columbia	59.65	5	40	34	35
22	Vermont	59.04	22	31	11	29
23	Colorado	58.87	28	18	31	4
24	Virginia	58.17	24	32	35	8
25	South Dakota	58.15	26	30	15	19
26	Idaho	57.99	40	26	3	16
27	Illinois	57.95	20	11	33	28
28	Kansas	57.46	29	2	16	31
29	Ohio	57.33	21	20	23	32
30	Montana	56.40	27	3	14	40
31	Alaska	55.83	43	38	10	23
32	Oregon	54.80	32	35	26	25
33	Texas	53.32	30	41	37	33
34	North Carolina	52.77	34	39	22	39
35	Nevada	52.27	31	43	43	26
36	Indiana	51.91	41	21	39	30
37	Delaware	51.32	39	19	40	38
38	Kentucky	51.16	33	48	21	44
39	Arizona	50.89	36	13	42	41
40	Florida	50.34	42	7	50	13
41	Alabama	50.33	35	44	32	43
42	Tennessee	48.76	38	51	28	45
43	South Carolina	47.70	44	34	44	42
44	Georgia	47.21	48	33	46	36
45	Louisiana	46.86	37	47	36	50
46	Missouri	46.79	47	50	29	46
47	West Virginia	46.72	45	10	38	49
48	Oklahoma	45.62	46	37	41	47
49	New Mexico	43.27	49	23	45	48
50	Arkansas	42.27	50	46	51	37
51	Mississippi	37.72	51	17	49	51

*No. 1 = Most Financially Savvy

 

Ask the Experts

Juggling finances is no easy task, and teaching such a skill to our offspring can be just as challenging. For guidance, we asked a panel of experts to weigh in with their insight and advice on certain financial matters. Click on the experts’ profiles to read their bios and thoughts on the following key questions:

1. What tips do you have for consumers looking to make a budget and stick to it?
2. What is the biggest obstacle for consumers trying to stay on budget?
3. What tips do you have for consumers to get out of debt and stay debt-free?
4. How should parents teach children about the importance of financial responsibility?

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• Kyle J. Putnam Assistant Professor of Finance, Linfield College
• Benjamin F. Cummings CFP®, Associate Professor of Behavioral Finance at The American College of Financial Services

Methodology

In order to determine where the financially savviest consumers live, WalletHub’s analysts compared the 50 states and District of Columbia across four key dimensions: 1) Debt & Spending, 2) Financial Literacy, 3) Credit and 4) Saving.

We evaluated those dimensions using 23 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the financially savviest consumers.

Finally, we determined each state and the District’s weighted average across all metrics to calculate its total score and used the resulting scores to rank-order our sample.

Debt & Spending – Total Points: 40

• Total Debt as Share of Median Income: Full Weight (~2.86 Points)
• Mortgage Debt as Share of Median Income: Full Weight (~2.86 Points)
• Credit-Card Debt as Share of Median Income: Full Weight (~2.86 Points)
• Student-Loan Debt as Share of Median Income: Full Weight (~2.86 Points)
• Car-Loan Debt as Share of Median Income: Full Weight (~2.86 Points)
• Personal-Bankruptcy Rate: Full Weight (~2.86 Points)
• Foreclosure Rate: Full Weight (~2.86 Points)
• Housing Expenses as Share of Median Home Price: Full Weight (~2.86 Points)
• Ratio of Total Nonhousing Expenses to Personal Income: Full Weight (~2.86 Points)
• Share of Credit Usage: Full Weight (~2.86 Points)
• Share of Adults Spending More than They Earn: Full Weight (~2.86 Points)
• Share of Adults Making Only Minimum Payments on Their Credit Cards: Full Weight (~2.86 Points)
• Share of Adults Borrowing from Nonbank Lenders: Full Weight (~2.86 Points)
• Share of Adults Striving to Achieve Long-Term Financial Goals: Full Weight (~2.86 Points)

Financial Literacy – Total Points: 20

• WalletHub Financial Literacy Score: Full Weight (~20.00 Points)

Credit – Total Points: 20

• Median Credit Score: Full Weight (~6.67 Points)
• Delinquency Rate: Full Weight (~6.67 Points)Note: This metric measures delinquency rates across mortgages, auto loans, student loans and credit cards.
• Share of Adults Borrowing Against Their Retirement Income: Full Weight (~6.67 Points)

Saving – Total Points: 20

• Annual Consumer Savings-Account Average: Full Weight (~4.00 Points)
• Share of Adults with Rainy-Day Funds: Full Weight (~4.00 Points)
• Share of Adults with College Savings for Their Children: Full Weight (~4.00 Points)
• Share of Adults with Budgets: Full Weight (~4.00 Points)
• Share of Unbanked Households: Full Weight (~4.00 Points)

 

Videos for News Use:

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Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Administrative Office of the U.S. Courts, CoreLogic, Department of Commerce - Bureau of Economic Analysis, TransUnion, FINRA Investor Education Foundation, Federal Reserve Bank of New York, Federal Deposit Insurance Corporation, Pitney Bowes and WalletHub research.

Image: Africa Studio / Shutterstock.com

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