The Big Apple is home to the dreams of many Americans and the big money of Wall Street, but the nation’s best cities for building household wealth are less glamorous.
That’s what Bankrate.com concluded after analyzing 18 of the biggest metropolitan areas based on key financial factors that affect household wealth. Houston came out No. 1, and the Midwestern metropolises of Cleveland and Detroit ranked ahead of New York City.
The website defines household wealth as “a household’s total assets, both financial (stocks, bonds, checking and savings accounts) and nonfinancial (homes, cars, precious metals), minus its total debt.”
Ray Boshara, director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, tells Bankrate that this type of wealth is key to Americans’ ability to invest in themselves and their families, such as by buying a home, starting a business, getting an education or relocating for a new job.
“When people have wealth they have a stake in something, a sense of pride, a sense of ownership, and that sense of ownership changes their behavior. They’re more likely to be engaged in their neighborhoods, in their schools, and with their kids, and, very importantly, to engage in future planning.
Wealth allows you to imagine a different kind of future than you could if you didn’t have wealth.”
For its analysis, Bankrate culled data from about a dozen sources, including expert economists, federal government agencies, independent nonprofit organizations and trade groups. The website then ranked cities based on financial factors such as:
- Residents’ savable income (what’s left over after taxes and household expenses).
- The local labor market (whether workers can find jobs with competitive pay).
- The local housing market.
- Residents’ debt level.
- Residents’ access to financial services (that allow residents to invest, save and borrow efficiently).
Based on its analysis, Bankrate ranked the 18 cities in this order:
- Washington, D.C.
- New York
- Dallas-Fort Worth
- Minneapolis-St. Paul
- San Francisco
- Los Angeles
- San Diego
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