US Household Spending Breakdown by Income Group
From Money magazine via Engaging Data
One of the key factors in the financial health of an individual or household is making sure that household spending is equal to or below household income. If your spending is higher than income, you will be drawing down your savings (if you have any) or borrowing money. If your spending is lower than your income, you will presumably be saving money which can provide flexibility in the future, fund your retirement (maybe even early) and generally give you peace of mind.
We can see that on average, those in the lowest quintiles may be borrowing or drawing down on savings to live, while those in the highest quintiles are saving money. This fairly high level of borrowing/drawing on savings from the lowest quintile households may be deceptive because it includes seniors who are drawing down savings that were built up specifically for this purpose, and college students who are borrowing to go to school. These groups generally don’t have significant incomes.
The main thing is to understand where your money is going. Once you’ve done this you can be more conscious of what you are spending your money on, and then decide if you are spending too much (or too little) in certain categories. Having context of what other people spend money on is helpful as well, and why it is useful to compare to these averages, even though the income level, regional cost of living, and household composition won’t look exactly the same as your household.
One of the key factors in the financial health of an individual or household is making sure that household spending is equal to or below household income. If your spending is higher than income, you will be drawing down your savings (if you have any) or borrowing money. If your spending is lower than your income, you will presumably be saving money which can provide flexibility in the future, fund your retirement (maybe even early) and generally give you peace of mind.
We can see that on average, those in the lowest quintiles may be borrowing or drawing down on savings to live, while those in the highest quintiles are saving money. This fairly high level of borrowing/drawing on savings from the lowest quintile households may be deceptive because it includes seniors who are drawing down savings that were built up specifically for this purpose, and college students who are borrowing to go to school. These groups generally don’t have significant incomes.
The main thing is to understand where your money is going. Once you’ve done this you can be more conscious of what you are spending your money on, and then decide if you are spending too much (or too little) in certain categories. Having context of what other people spend money on is helpful as well, and why it is useful to compare to these averages, even though the income level, regional cost of living, and household composition won’t look exactly the same as your household.
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