When trying to save money, the city you live in can play a big role in whether or not you succeed.
House Method, an online housing resource for homeowners, narrowed down the best and worst cities for saving money using data from the U.S. Census Bureau, fuel price comparison website GasBuddy, consumer prices database Numbeo and the U.S. Bureau of Labor Statistics.
To determine which cities helped or hurt a person's ability to save, House Method ranked 100 of the largest U.S. cities based on their daily and yearly costs of living. To do so, House Method compared the five following factors for each location:
- Percent of median income to median home mortgage, which is how much of a household's income goes toward mortgage payments
- Percent of median income to median rent, which is how much of a household's income goes toward rent payments
- Percent of median income to cost of groceries, which is how much of a household's income goes toward buying groceries
- State income tax burden
- Average cost of gasoline
House Method graded each city on a 50-point scale, meaning cities that scored close to 50 are considered optimal locations for saving money and vice versa. Here's a closer look at the 10 cities ranked highest.
10. Anchorage, Alaska
Overall score: 41.21
Yearly cost of living rank: 4
Daily cost of living rank: 100
9. Arlington, Texas
Overall score: 41.27
Yearly cost of living rank: 9
Daily cost of living rank: 95
8. Wichita, Kansas
Overall score: 41.31
Yearly cost of living rank: 8
Daily cost of living rank: 7
7. Henderson, Nevada
Overall score: 42
Yearly cost of living rank: 7
Daily cost of living rank: 45
6. Scottsdale, Arizona
Overall score: 42.33
Yearly cost of living rank: 10
Daily cost of living rank: 72
5. Irving, Texas
Overall score: 42.48
Yearly cost of living rank: 14
Daily cost of living rank: 30
4. Chesapeake, Virginia
Overall score: 43.13
Yearly cost of living rank: 13
Daily cost of living rank: 64
3. Chandler, Arizona
Overall score: 44.61
Yearly cost of living rank: 2
Daily cost of living rank: 73
2. Gilbert, Arizona
Overall score: 45.32
Yearly cost of living rank: 1
Daily cost of living rank: 66
1. Plano, Texas
Overall score: 46.5
Yearly cost of living rank: 3
Daily cost of living rank: 14
Plano, Texas, took the top spot, thanks in part to the fact that those who live in this southern locale pay low gas prices and no income tax.
The worst cities for saving money
The ranking also named Newark, New Jersey, the hardest place to save. The city scored poorly in several categories, including the percent of median income that goes toward rent and the percent of median income that's spent on groceries.
Other cities where it's difficult to save include Los Angeles; New Orleans; Hialeah, Florida; and Miami. Los Angeles has extremely expensive housing and gas prices, while New Orleans residents spend a larger portion of their income on groceries compared to those in other major cities. Hialeah, Florida, and Miami each scored low for the ratio of median income to median rent and the cost of groceries.
Why it's smart to consider where you live when trying to save
Many people consider the location when buying a home or looking for a good school district, but where you live can also drastically impact your ability to save.
If your rent is too high, you could end up spending far more on housing than the standard 30% of your monthly gross income that the government recommends. Or if you're spending a lot on groceries, mortgage payments or gas to commute, these expenses could eat into money that you could be putting toward your retirement.
Of course, there are other ways to save besides moving. You could get a side job, set a tighter budget or opt for more affordable living accommodations. But it's not a bad idea to consider where you live, how much it's costing you and whether you feel the associated costs are worth it.
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