Did you know that some states are financially savvier than others?  And that’s not just in terms of state budgeting practices. Some have residents who score much higher than their neighbors in terms of financial literacy and stability, according to a recent survey conducted by WalletHub.  WalletHub used 15 different metrics to measure the financial skills of residents of all 50 states, plus Washington, D.C. Metrics included the percentage of adults with emergency savings, the number of households without bank accounts, and the share of adults borrowing from lenders other than banks.

The most financial savvy states

According to WalletHub, the 10 states with residents in the best financial shape overall, starting with the savviest state are:

  • New Hampshire
  • Virginia
  • Minnesota
  • Maryland
  • Utah
  • New Jersey
  • Maine
  • Colorado
  • North Dakota
  • Illinois

Different states at the top of the list excelled for different reasons.

New Hampshire scored very high in all categories. Its residents were No. 3 when it came to good financial planning habits and ranked No. 1 in performance on WalletHub’s WalletLiteracy test, which is a 30-question online test compiled with help from professors in the field of finance. The test — which includes questions ranging from how to tell which laundry detergent is cheapest to what factors matter when deciding to buy a home  — was completed by more than 8,000 people from across the country.

Virginians, on the other hand, were better at putting financial ideas into practice, as the state scored No. 2 in terms of residents exhibiting good financial habits such as having a rainy day fund. While Virginia residents may be doing the right things, their WalletLiteracy Ranking was ninth and they ranked only 29th in financial knowledge.

By contrast, Maine residents were No. 1 in financial knowledge, but 17th in financial planning and habits, so while those residents know their stuff, they aren’t always doing what they should.

The least financially savvy places

Now for the bottom of the list: the 10 least financially savvy places to live. Starting with the lowest score and working up, these are:

  • Louisiana
  • Alaska
  • Mississippi
  • Oklahoma
  • District of Columbia
  • New Mexico
  • South Dakota
  • Kentucky
  • Delaware
  • Rhode Island

The worst-performing state, Louisiana, received an overall score of 52.72, compared with New Hampshire’s total score of 70.28. Louisiana scored the worst of all 50 states plus the District of Columbia in financial habits, and came in 49th out of 51 for financial education.

Louisiana residents also struggled on the WalletLiteracy test, finishing 47th. Mississippians, however, performed the worst on the test, although their financial knowledge and education score was actually not too bad, ranking 26th.

How can you improve your financial literacy?

While it might be nice to live in a state that ranks well, it’s more important that you have your own financial life in order, regardless of what your neighbors are doing. To get your finances under control, make sure you have both the financial knowledge to make good decisions and the willpower to follow through with responsible practices.

Some of the ways you can improve your situation include:

  • Having an emergency fund: North Dakota scored highest in residents with rainy day funds. Not having an emergency fund means you could end up in debt or facing financial disasters such as foreclosure if your income falls or you face unexpected expenses. You should have three to six months of living expenses in a savings account you don’t touch unless you have an emergency. If you don’t have this much saved, make a budget, determine how much to contribute to reach your savings goal, and set up automated contributions. This guide to emergency funds will help you get started.
  • Opening the right financial accounts: First and foremost, you need a checking account. Getting paychecks and paying bills are very expensive if you don’t have one. Oklahoma has the highest share of unbanked households, and one big reason is concern over fees and overdraft costs. The good news is, new apps are developing to serve the unbanked, such as Capway. A bank account is just the beginning, though. You should also open a high-yield savings account for an emergency fund and to save for other goals, and a retirement account such as a 401(k) or IRA to invest for retirement and get tax breaks. Do research on discount brokers and check out this advice on opening your first brokerage account.
  • Develop sustainable spending habits: Residents of Washington, D.C., had the least sustainable spending habits — habits including living on a budget and spending less than you earn —  according to WalletHub’s rankings, while Massachusetts residents did best at spending below their means. The best way to develop sustainable spending habits is to track your spending, create a budget limiting how much you spend on needs and wants, and allocate a sufficient amount to savings. You can check out this comprehensive guide to making a budget to learn about budgeting to spend within your means.

Increasing your financial knowledge also helps you make better choices on how to allocate your cash, where to put your savings, and what to invest in.

Improving your own financial literacy

Improving financial practices doesn’t have to be difficult. The key is to get the basics right, such as having the right accounts, saving for emergencies, and living within your means. If you start with these best practices, you’ll be well on your way to financial success. And you’ll do your state proud if you’re ever part of a financial literacy survey.

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