Which Metropolitan Areas Are the Most "Financially Fit?"

Study Summary Here (PDF)

(ORLANDO, Fla.) January 18, 2005 - A new study by InCharge®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 results of this study are being presented today at the U.S. Conference of Mayors annual meeting in Washington, D.C.

"Consumer Financial Fitness in Metropolitan Areas," the study performed by the research team at InCharge® Education Foundation, ranked the Wilmington/Newark Delaware metropolitan area first in the nation, both overall and among America's largest population centers (in excess of 500,000 citizens). Trenton, New Jersey topped the ranks for mid-sized metro areas (NULL,000 to 500,000 population), and Bloomington/Normal, Illinois scored the highest among smaller regions (fewer than 200,000 citizens). (See attached tables listing the top ten metro areas in each category).

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 wellbeing. 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.

"There are tangible actions that local and regional leaders can take in order to promote financial fitness - be it through economic policymaking, or through community education and outreach programs," explained Rebecca Stiehl, president of InCharge® Education Foundation. "The factors we used to measure financial fitness provide a solid roadmap for local policymakers to take steps to improve and enhance each region's economic strength. There are clearly metropolitan areas that are excelling in offering their citizens a strong economic climate and opportunities, and the rest of us can learn a lot from them."

"This is a sign of our growing economic strength in Trenton - the hub of our region," explains Trenton Mayor Douglas Palmer, upon hearing the news that his city was named the most financially fit among mid-sized regions. "The five factors InCharge used in its analysis make Trenton a dynamic area as it relates to mixed use development, market rate housing and private sector development."

Recognizing that a community's financial wellness plays a large role in the overall wellbeing of its citizens, several mayors and other local leaders are aggressively promoting education programs in their communities and schools. For example, as part of the U.S. Conference of Mayors' national DOLLAR WI$E Campaign - an initiative encouraging the development of ongoing local financial literacy strategies - InCharge piloted a financial literacy program with the office of Detroit Mayor Kwame Kilpatrick in October 2004. In connection with the Child Care Coordinating Council (4C) of Detroit/Wayne County, a "Train the Trainers" program was conducted to provide educators with a credit and money management education program. More recently, InCharge launched the same program in Miami, Florida, in conjunction with the Office of Mayor Manuel A. Diaz and Miami Dade College.

Please see the following attachments:

Trends and Notable Facts from Consumer Financial Fitness of Metropolitan Areas Study

1. 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.
   
2. Fifteen states are represented in the three Top 10 lists. Of those, eight have multiple metropolitan areas represented.
   
3. 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.
   
4. 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).
   
5. 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)

Table A: Top 10 Metropolitan Areas with Populations Over 500,000

Table B: Metropolitan Areas with Populations Between 200,000 to 500,000

Table C: Metropolitan Areas with Populations Under 200,000

Study Summary Here (PDF)