We hear a lot these days about struggling Americans, households living from paycheck to paycheck, no money to save, etc. I don’t make light of those truly living in poverty, but our perception of struggling American families does not seem to reflect how Americans both high and low-income spend what money they do have. In other word,s a great deal of money is spent routinely on things my parents would never have spent money on … because they didn’t have it to spend. Granted, many things we spend on today didn’t even exist in the 1940s and 1950s, but everything is relative. Our perspective of a “necessity” has warped.
24/7 Wall St. reviewed how Americans spend money. One of the conclusions of this analysis is that consumer spending is relatively alive and well, despite the recession. This may mean that Americans continue to be over-leveraged. US citizens have, in general, brought down their indebtedness. However, holiday spending rose substantially from last year, and the extent to which Americans feel poor has declined now that the recession has ended. Americans spend about 15% of their household incomes on things that they do not need to satisfy their vices or to keep themselves amused.
We examined the changes in spending patterns over the course of one generation–20 years. Americans have certainly not cut back on vices because of the recent difficult economy, with the exception of casinos which were hurt badly by the slowdown. Money spent on alcohol and tobacco is about the same as it was two decades ago. Sin apparently is not beaten down by hard times.
Data from the Bureau of Labor Statistics was one of the core sources of information for the 24/7 analysis. We looked spending habits in 1989 and then again in 2009. The average household expenditure two years ago was $49,000. That is measured against household income before taxes of about $63,000. Real incomes have not risen over the course of the last ten years, something that has not happened in any decade since the Depression. Over the course of the last two decades the increase in real income was only 10%.
The patterns of how people spend money on things has changed. People spend much more on television, radio, and sound systems than they did in 1989. They also spend more on pets and toys.
via Ten Things Americans Waste the Most Money On – 24/7 Wall St..
If you are living pay check to pay check, how is there money to spend on what most people would call luxuries? The following is rated the number one spending that wastes money. Interestingly, the percentage of income spent on food away from home does not vary greatly by income level.
1. Food Away From Home
> Amount Spent Per Household: $2,619
> % of Total Annual Expenses: 5.3%Food away from home includes all meals at fast food, take-out, delivery, full-service restaurants, and at vending machines and food carts. In 2009, the average household spent $2,619 on food away from home, compared to an average $1,762 in 1989. The group which spent the most in this category, relative to household income, are those which make less than $5,000 a year. This group spent an average 6.2% of their total budget on food away from home. Those making between $5,000 and $9,999 spent 4.7%.
Read more: Ten Things Americans Waste the Most Money On – 24/7 Wall St.
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Note in the chart below the similarity in spending between high and low income Americans for many things we might consider luxuries or at least unnecessary.
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