Having money beats being broke. So building wealth over time can make your life better. And building wealth is the culmination of a lot of choices. Things like saving. Investing, and acquiring assets that will appreciate in value.
But there's another surprising factor in building wealth: Where you live.
Some cities are better for your long-term financial growth than others. Bankrate.com released a list of the best – and worst – locations... and the results might surprise you.
Bankrate.com Analyst Claes Bell led the study: “A mistake a lot of people make when they’re thinking about wealth is that they only think about the revenue side of things – they only think about how much money they’re making. But you also have to think about how much you’re spending.”
So post-industrial manufacturing hubs like Cleveland and Detroit are not at the bottom – they’re in the top four! Right after Houston and Washington D.C. at numbers one and two.
At the other end of BankRate's rankings, Philadelphia, Los Angeles, Phoenix and San Diego are the bottom four.
Says Claes, “A place like San Diego, it's a really good place to go if you’ve already made money, because then you can afford a house there, you can enjoy all the benefits that San Diego has to offer. But if you’re just starting out, it may not be as good.”
So what makes a city better for building wealth? Here are three of the top reasons.
HOUSING COSTS
Claes explains, “A major way that Americans build wealth is through housing. So they build equity over time, then when they sell their house they get to cash it out. We wanted to make sure that the markets we were looking at had the potential for as many people as possible to own homes, but then also that those homes would go up” in value over time.
ACCESS TO BANKING
Without an active and accessible financial sector, people can’t get those home mortgages or small business loans they need to get ahead, so available banking services was a factor in the BankRate survey. Says Claes, “Are people able to get loans to do all those sorts of things that they need to do?”
HUMAN CAPITAL
In plain English: How hard is it to find a paying gig? “The way that most households build wealth is earning money, going out in the workforce, but if you can't find a job, you can't really do that.”
So if you're planning a move and the world is your oyster, keep in mind the cities that can help you build your nest egg. BankRate’s full study can be found here.
The List’s Jimmy Rhoades with What’s The Deal.
