Are Residents in the Republican States Better with Money than Those in the Democratic States?

It’s easy to understand why a lot of people would assume that the people with the highest annual incomes would also be the people with the best credit scores. Based on a recent study, that assumption has been debunked.

The study went to great lengths to analyze the financial behaviors of people at different income levels as well as in different states. To say the results are a bit surprising would be an understatement.

At the Individual Level

It turns out that high-income earners tend to have greater difficulties managing their money than low-income earners. This is likely due in part to them leading financially complex lives where they take on more debt, which later results in more debt issues. There’s also a likelihood that the lifestyles of the wealthier individuals cause them to overextend themselves in an effort to maintain said lifestyles.

At the State Level

For the most, the study focused on credit and debt issues for residents by state. Some of the findings were actually quite interesting.

For instance, it turns out that South Dakota residents have the highest FICO scores on average at 727. That’s based on an average annual income of $56,274, which ranked 33 out of 51 for the 50 states and the District of Columbia. It’s worth noting that Montana had the highest average FICO scores in 2016, the last time such a study was done.

At the bottom end of the FICO score spectrum were the larger populated states with the larger urban areas. The list at the bottom included states such as Washington, D.C., Maryland, Texas, and California.

In an attempt to explain the data, Ted Rossman, an industry analyst representing the company that ran the study, ““It shows that it’s not just about how much you have, but also how you manage it. In some of these high-cost states, even though they make more, it goes right out the window. In D.C., they have the highest income in the country but they also have more debt than anyone else.”

He later added, “It is better to live in a low-cost place even if you don’t make as much. It seems to stretch further,”

Other Interesting Data

Some other interesting data came to light from the study. It turns out that the people in Republican-leaning states do a much better job of managing their finances than people living in Democrat-leaning states. As a point of reference, Republican-leaning states held 7 of the top 10 FICO scores on average while the Democrat-leaning states scored 8 of the 10 bottom spots.

One explanation offered for this disparity is the Republican-leaning states tend to be populated with more mature and established residents while the Democrat-leaning states have younger populations.

Another interesting result came back that the average debt burden in D.C, is $86,730, which actually exceeds the area’s average income of $85,203. Clearly, the cost of living in some states is outpacing the rise in income.

According to Rossman, the bottom line is this: “If you can pay your bills on time, and keep your debts low, that’s most of the battle right there.”

Leave a Reply

Your email address will not be published.