In this challenging economy, saving money can be a daunting task due to soaring home and rent prices, as well as high interest rates. We decided to investigate how far a dollar can stretch in different cities across America to determine which ones are more conducive to saving money.
Our team at FinanceBuzz conducted an in-depth analysis of various factors that impact saving money, including median income, cost of living, taxes, and more. We aimed to understand the impact of living in a big city on residents’ ability to save for the future.
Easiest US Cities to Save Money
Now, it’s time to unveil the cities that make saving money a breeze.
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Toledo, OH
Toledo has one of the lowest costs of living among all cities in this analysis, making it an extremely affordable place to live (compared to other cities) in Ohio’s fourth-largest city. Toledo is among the top three cities with the lowest median credit card debt, rent costs relative to income, and mortgage costs relative to income.
Pittsburgh, PA
Pittsburgh’s high ranking on this list can be attributed to the availability of affordable housing, especially for homeowners with mortgages. Although Toledo has a lower cost of living compared to Pittsburgh, the average income in the Steel City surpasses that of Toledo. Both cities share an identical debt-to-income ratio.
Sioux Falls, SD
South Dakota is among the few states that have no state income tax, resulting in a relatively manageable average tax burden for its residents. Sioux Falls has made it to the top five in terms of ease of saving money, thanks to its affordable rent and below-average cost of living.
St. Louis, MO
In terms of cost of living, St. Louis surpasses even Sioux Falls, boasting the lowest average rent cost compared to income among all cities in the country. Despite some obstacles, St. Louis is held back from reaching greater heights due to higher tax rates and the burden of average credit card debt.
Madison, WI
Madison residents have the lowest credit card debt in the country, with a median of $2,181 per person. The amount is almost $800 lower than the average of $2,930 across 125 cities.
Also Read: Western Massachusetts College Has Been Named the Most Dangerous College Campus in the State
Cincinnati, OH
Cincinnati has one of the lowest median rent costs compared to income among all cities, second only to St. Louis. The Queen City’s inclusion in the top 10 was influenced by its below-average cost of living and other significant factors.
Frisco, TX
Frisco, the last city in the top 10, boasts the fifth-highest median income among all cities. Frisco, similar to nearby Irving, has a low tax burden. However, it is important to note that Frisco has a significantly higher debt-to-income ratio.
How We Chose These Cities
FinanceBuzz conducted an analysis of over 200,000 U.S. cities, totaling 125 cities, using the latest data from reputable sources including the United States Census Bureau, Transunion, and the Federal Reserve.
Here are the metrics we examined:
- Cost of living: A comprehensive measure that monitors the prices of essential items such as housing, transportation, and food in comparison to the national average. Living in cities with higher costs of living can pose challenges when it comes to saving money.
- Exploring median income: Discovering the annual earnings of the average person in different cities. Increased incomes have the potential to go a long way, especially in terms of the savings that individuals can accumulate.
- Monthly rent payments in relation to income levels: Discover the percentage of an average person’s annual income required to cover the median rent payment in each city for one year. Rising housing costs pose a challenge to saving money.
- Monthly mortgage costs as a percentage of median income: Discover the annual percentage of income that the typical homeowner must allocate to cover the median mortgage payment in various cities. High housing costs pose a challenge to saving money.
- Calculating the average effective tax burden for individuals earning the median income in different cities, taking into account both federal and state taxes under the current tax laws. Individuals who are required to contribute a higher percentage of their annual income to the government find themselves with a reduced ability to save for the future.
- Debt-to-income ratio is a statistical measure that examines the average level of debt in relation to income among individuals in different cities. Individuals burdened by significant debt in relation to their income may find themselves allocating additional funds towards reducing their existing debt rather than being able to save for the future.
- Exploring the median amount of credit card debt in different cities, we delve into the financial burden carried by individuals. High-interest credit card balances can hinder cardholders from saving money.
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