Where does county rank for ‘Places to save?’
By NEAL WAGNER / Managing Editor
Shelby County residents enjoy the widest margin between average household income and cost of living in the state, giving them the ability to save more than any other county in Alabama, according to a study recently compiled by a national website.
The Smartasset.com website recently released its list of the “Best places to save” in Alabama, and Shelby County topped the rankings by a significant margin.
“Where you live can have a big impact on how easy it is to save money based on several regional factors,” read the website. “Our study aims to find the most suitable places for people to save based on median household income, average living expenses and income tax burden.”
While compiling the list, the website calculated the average cost of living for a household with two adults in each county, and created a purchasing power index for each county reflecting “the counties with the highest ratio of household income to cost of living,” according to the website.
“To better compare income tax burdens across counties, we applied relevant deductions and exemptions before calculating federal, state and local income taxes for a family making $50,000 annual income in each location,” read the site’s methodology. “Next, we created an effective tax rate index for each county, which reflects the counties with the lowest ratio of income taxes to the assumed $50,000 annual income.
“Finally, we calculated the weighted average of the indices to yield an overall best places to save score,” read the site. “We used a three-fourths weighting for purchasing power and a one-fourth weighting for tax rates. We indexed the final number so higher values reflect places that are better to save.”
Shelby County had a median household income of $70,187, an average cost of living of $30,727, a purchasing power of 2.30 and an estimated tax rate of 16.40 percent, giving it a 63 “best places to save index.”
Madison County came in at No. 2 with a median household income of $57,993, an average cost of living of $29,191, a purchasing power of 2 and an estimated tax rate of 16.40 percent, giving it a “best places to save index” of 52.
To view the entire list, visit Smartasset.com/checking-account/best-savings-accounts#alabama/best-places-to-save.