New Data Analysis Reveals 50-Point Financial Security Gap Between US States as Living Costs Soar

New Data Analysis Reveals 50-Point Financial Security Gap Between US States as Living Costs Soar

Research identifies key factors driving financial resilience across America, with debt-to-income ratios proving crucial

Key Findings:

• • Study ranks U.S. states by financial security score, with New Hampshire scoring triple Louisiana’s score, highlighting regional economic divides 

• States with better average credit scores consistently rank higher, regardless of cost of living challenges

• Data reveals median income alone doesn’t guarantee financial security – states with moderate incomes but better debt management often outperform higher-income regions

Financial security is a top priority for many Americans, but factors like income, employment opportunities, and cost of living vary widely from state to state. As inflation continues to impact household budgets and economic uncertainty persists, understanding these state-by-state differences has become increasingly important for policymakers and residents alike.

A comprehensive new study by ConvertBankStatement has quantified these disparities, revealing a stark 50-point gap in financial security between the most and least stable states. The study shines a light on how debt management and credit scores often matter more than raw income figures.

Study: The Most and Least Financially Secure States

ConvertBankStatement’s analysis calculated a Financial Security Index Score by examining six key factors affecting financial wellbeing: median household income (25% weighting), average credit score (20%), unemployment rate (15%), poverty rate (15%), debt-to-income ratio (15%), and cost of living index (10%).

The resulting Financial Security Index provides a score from 0-100, with higher scores indicating greater overall financial stability. Their innovative approach goes beyond simple income comparisons to paint a more complete picture of financial health across America, factoring in both economic indicators and residents’ financial behaviors.

These were the 10 states with the highest financial security scores:

Table 1. Top 10 Most Financially Secure States

Rank	State	Financial Security Index
1	New Hampshire	80.09
2	Minnesota	78.30
3	Virginia	74.93
4	Massachusetts	73.85
5	New Jersey	73.07
6	South Dakota	72.21
7	Utah	71.41
8	Connecticut	71.33
9	Vermont	69.82
10	Maryland	69.25

• New Hampshire

New Hampshire leads the nation with an impressive 80.09 financial security score. The Granite State boasts a median household income of $88,465, complemented by the nation’s lowest poverty rate at 7.1%. 

With an unemployment rate of just 2.6%, a solid average credit score of 720, and a manageable debt-to-income ratio of 1.672, New Hampshire’s success is only slightly tempered by its above-average cost of living index of 115.

• Minnesota

Minnesota secures second place with a 78.30 score, driven by the highest average credit score nationwide at 730. The state’s median household income of $77,720, combined with a low poverty rate of 7.7% and moderate cost of living index of 94.1, creates a strong foundation for financial security. A reasonable debt-to-income ratio of 1.383 and 3.3% unemployment rate further solidify its position.

• Virginia

Virginia ranks third with 74.93, featuring a robust median household income of $80,963 and an impressive average credit score of 726. The state maintains a low unemployment rate of 2.8% and poverty rate of 8.6%. Despite a slightly higher debt-to-income ratio of 1.82, Virginia’s moderate cost of living index of 103.1 helps maintain overall financial stability.

• Massachusetts

Massachusetts achieves fourth place with 73.85, powered by a high median household income of $89,645 and strong average credit score of 720. While its cost of living index of 148.4 is among the highest, the state’s low poverty rate of 8.5% and moderate unemployment rate of 3.7% help offset this. A favorable debt-to-income ratio of 1.324 further supports its ranking.

• New Jersey

New Jersey rounds out the top five with 73.07, featuring a strong median household income of $89,296 and impressive average credit score of 727. The state’s 8.2% poverty rate is notably low, though its 4.8% unemployment rate and 114.1 cost of living index present some challenges. A debt-to-income ratio of 1.644 sits at the national midpoint.

• South Dakota

South Dakota claims sixth place with 72.21, demonstrating strong financial health with a 722 average credit score and low 2% unemployment rate. The state’s median household income of $66,143, combined with a favorable 93.8 cost of living index and low debt-to-income ratio of 1.242, creates a stable financial environment despite a slightly higher 9.7% poverty rate.

• Utah

Utah achieves seventh place with 71.41, showing strong performance with a $79,449 median household income and 719 average credit score. The state’s poverty rate matches New Hampshire at 7.1%, though its debt-to-income ratio of 1.895 and cost of living index of 101.5 are slightly elevated. A low 3.2% unemployment rate helps maintain its high ranking.

• Connecticut

Connecticut secures eighth place with 71.33, bolstered by a high median household income of $83,771 and solid 717 average credit score. Despite a higher cost of living index of 113.1, the state maintains a relatively low poverty rate of 9.8% and moderate unemployment rate of 3.4%. Its debt-to-income ratio of 1.455 sits comfortably below the national average.

• Vermont

Vermont ranks ninth with 69.82, featuring a strong median household income of $72,431 and low poverty rate of 8.4%. The state’s 2.2% unemployment rate is among the nation’s lowest, though its cost of living index of 114.9 presents some challenges. A 712 average credit score and 1.388 debt-to-income ratio demonstrate solid financial management.

• Maryland

Maryland completes the top ten with 69.25, showcasing the highest median household income in the top ten at $90,203. While its average credit score of 706 is lower than its peers, a low poverty rate of 8.6% and unemployment rate of 2.9% support its position. The state’s main challenges include a high debt-to-income ratio of 2.034 and elevated cost of living index of 119.5.

States Facing Challenges

These were the 10 states with the lowest financial security scores:

Table 2. Least Financially Secure States

Rank	State	Financial Security Index
41	Texas	45.01
42	Arkansas	42.71
43	North Carolina	42.61
44	Missouri	42.07
45	New Mexico	40.24
46	Mississippi	39.93
47	Oklahoma	39.49
48	South Carolina	36.80
49	Kentucky	36.46
50	Louisiana	29.40

• Louisiana

Louisiana ranks last with a 29.40 score, struggling with the lowest median household income among bottom states at $52,087. A high poverty rate of 16.9%, low average credit score of 680, and challenging debt-to-income ratio of 1.457 contribute to its position, though its cost of living index of 92 provides some relief.

• Kentucky

Kentucky places 49th with 36.46, facing challenges with a low median household income of $55,573 and high poverty rate of 15.8%. Despite a moderate cost of living index of 93.8, the state’s 4.8% unemployment rate and 695 average credit score indicate significant financial stability challenges.

• South Carolina

South Carolina ranks 48th with 36.80, showing similar struggles with a $59,318 median household income and 13.3% poverty rate. A high debt-to-income ratio of 1.937 and modest average credit score of 692 contribute to its ranking, though its 96.5 cost of living index remains manageable.

• Oklahoma

Oklahoma sits at 47th with 39.49, challenged by a low median household income of $55,826 and high poverty rate of 15.8%. While benefiting from the nation’s fourth-lowest cost of living index at 86, a low average credit score of 687 and moderate debt-to-income ratio of 1.323 impact its overall financial security.

• Mississippi

Mississippi ranks 46th with 39.93, showing the lowest median household income nationwide at $48,716 and highest poverty rate at 17.8%. Despite the lowest cost of living index at 85.3, a combination of a 705 average credit score and 1.562 debt-to-income ratio contribute to its challenging financial security position.

Experts at ConvertBankStatement commented on the findings:

“While the rankings might seem predictable at first glance, our analysis reveals something more nuanced – it’s not just about how much people earn, but how they manage what they have. Take South Dakota, for example. Despite a median income $23,000 lower than Maryland, it ranks higher in overall financial security thanks to superior debt management and credit scores.

“This data challenges the common assumption that high salaries automatically translate to financial security. We’re seeing states with moderate income levels but better financial management consistently outperform those with higher wages but poorer debt ratios. It should be a wake-up call for policy makers. We need to make sure that every state has equal access to financial education.”

Story credit (https://www.convertbankstatement.io/)

About ConvertBankStatement

ConvertBankStatement is an online platform that provides users with a simple and efficient solution for converting bank statements into various formats, such as PDF, Excel, and CSV. Catering to individuals and businesses, the service helps streamline financial data management, saving time and reducing manual data entry. With a user-friendly interface and secure processing, ConvertBankStatement ensures that sensitive financial information is handled safely while delivering quick and accurate results.

Methodology

The study analyzed financial security across all 50 US states using six key indicators: median household income (25% weighting), average credit score (20%), unemployment rate (15%), poverty rate (15%), debt-to-income ratio (15%), and cost of living index (10%). Each indicator was normalized on a 0-100 scale to ensure comparability.

Sources:

• US Census Bureau (Median Household Income and Poverty Rate data)

https://worldpopulationreview.com/state-rankings/cost-of-living-index-by-state 

• Statista (Unemployment Rate data)

https://www.statista.com/statistics/200017/state-unemployment-rate-in-the-us/ 

• World Population Review (Cost of Living Index)

https://www.statista.com/statistics/200017/state-unemployment-rate-in-the-us/ 

• Equifax (Average Credit Score data

https://www.equifax.com/personal/education/credit/score/articles/-/learn/average-credit-score-state/ 

• Federal Reserve (Debt to Income Ratio data)

https://www.federalreserve.gov/releases/z1/dataviz/household_debt/state/map/#year:2024 

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