Best Money Management Skills In DC Area Found In Chevy Chase, McLean, Bethesda

MARYLAND/VIRGINIA — Three communities in the Washington, D.C., area, known for high-priced homes and high-performing schools, ranked in the top 30 of WalletHub’s 2023’s Best & Worst Cities at Money Management.

With access to homeownership limited primarily to high earners, it’s no surprise that Chevy Chase ranked fifth in WalletHub’s list of small cities with residents who have the best money-management skills. Unlike many communities across the U.S., residents who can afford to live in Chevy Chase — which routinely ranks as one of the wealthiest communities in the country — are not living paycheck to paycheck.

"Money management is a life skill that unfortunately isn’t taught as often as it should be. It’s a skill that everyone should want to learn too, as it can bring about flawless credit and freedom from debt," WalletHub said in its survey, released Wednesday.

WalletHub said its survey of consumer financial literacy reflects a growing need for financial instruction in U.S. households. Only 56 percent of adults give their knowledge of personal finance high marks, and 44 percent maintain a budget and keep an eye on their spending.

"Good money management skills are more important now than ever during this time of high inflation," WalletHub said.

McLean, a community with pockets of lower-income residents but home to mostly middle class and wealthy individuals, ranked No. 9 on the WalletHub small city list.

Bethesda, similar to McLean with small pockets of lower-income residents but mostly middle- and upper-class residents, ranked 30th on the small city list.

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WalletHub, a free credit score website, said in order to determine where Americans are best at handling their finances, it 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 average number of late payments to mortgage debt-to-income ratio.

Ahead of Chevy Chase in the small city ranking was Cupertino, California, located in the middle of the state’s Silicon Valley. Lexington, Massachusetts, ranked 2nd on the list, followed by Scarsdale, New York, Los Altos, California, and then Chevy Chase.

The cities with the worst money management skills, according to the WalletHub study, are majority African American communities, where Black residents have been prevented by discriminatory laws and lack of economic opportunities from building wealth that would give them the flexibility and time to manage their money.

Canton, Mississippi, with an 80-percent African American population, ranked last in the WalletHub study. The city had extremely high credit card debt-to-income, mortgage debt-to-income and car loan debt-to-income rations.

Bastrop, Louisiana, ranked second to last, with Maple Heights, Ohio, in third to last and Fairburn, Georgia, in fourth to last. Each of these small cities has a population that is at least 65 percent African American.

Among the large city rankings, residents of Washington, D.C., ranked 11th for money management. San Francisco, one of the most expensive cities to live in the U.S., ranked No. 1 among large cities. WalletHub ranked Arlington County 11th among midsize cities. Sunnyvale, California, ranked No. 1 among midsize cities.

For its “Ranking by City Size,” WalletHub categorized each city based on population. Large cities had more than 300,000 people; midsize cities had between 100,000 and 300,000 people; and small cities had fewer than 100,000 people.

In order to identify the cities where residents have the best money-management skills, WalletHub said each of the 10 metrics was graded on a 100-point scale, with a score of 100 representing the best money-management skills.

The 10 metrics included five debt level metrics, with a total point score of 50: credit card debt-to-income ratio; mortgage debt-to-income ratio; car loan debt-to-income ratio; student loan debt-to-income ratio; and average percentage of credit used.

The metrics also included financial behavior, with total points of 50: median credit score; average number of late payments; share of delinquent debtors; share of adults with a recent bankruptcy; and foreclosure rate.

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