Carmel, Ind., took the top spot on the list, which is featured in the September issue of the magazine. In 2011, Louisville, Colo., was number one.

The magazine cites Carmel's excellent schools, wide bike lanes, variety of housing and roundabouts to keep traffic flowing as reasons it's the best place to live in the country. "Money" also says its economy played a big factor in making the top spot.

"Carmel's business district has the second-largest concentration of office workers in Indiana and an unemployment rate that's a little more than half the national average," editors of "Money" said.

The 2012 list highlights small cities across the country with populations between 50,000 and 300,000. "Money" says it looks for places with "the optimal combination of economic strength, quality health care, low crime, great schools and lots to do."

Here's the rest of "Money's" 2012 top 10 list:

  1. Carmel, IN
  2. McKinney, TX
  3. Eden Prairie, MN
  4. Newton, MA
  5. Redmond, WA
  6. Irvine, CA
  7. Reston, VA
  8. Columbia/Ellicott City, MD
  9. Overland Park, KS
  10. Chapel Hill, NC

The September issue goes on sale Friday, Aug. 24.