Over the past year, one of the most popular features here at Get Rich Slowly has been the monthly “how much do you spend on X?” question. I started these informal and unscientific surveys on a whim. I wanted too see what sort of spending ranges we held as a population of relatively money-savvy citizens.
In the past year, we’ve looked at the following spending categories:
- How much do you spend on food?
- How much do you spend on clothes?
- How much do you spend on gifts?
- How much do you spend on health insurance?
- How much do you spend on housing?
- How much do you spend on kids?
I’m not sure why this series of questions has been so popular. I guess there’s something deep in each of us that wants to compare our spending with others, to see if the amounts and the ways we spend are normal.
One way to answer questions like this, of course, is to compare your spending to a broader average. I do that by looking at government data. My favorite benchmark is the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey, which offers a ton of info about how Americans actually spend their dollars. Another source of info is the U.S. Bureau of Labor Statistics’ Consumer Price Index (which is generally used for tracking inflation).
Earlier this month, the Planet Money blog from National Public Radio used the Consumer Price Index to put together a couple of graphics representing what America buys. The results are interesting for a money geek like me.
For instance, did you know that Americans spend about one percent of their income on pets? And they spend another one percent on alcohol? (I’m not sure what that says about us, that our spending on pets and alcohol is roughly the same.) We spend 8.6% of our income on groceries, and we spend another 5.7% of our income on dining out.
For me, the funnest part of the Planet Money visualizations was the comparison between current spending and past spending. NPR’s Lam Thuy Vo whipped up this visual comparison of how our spending habits have changed over the past 62 years:
Data from BLS, chart from NPR.
Last month, The Atlantic also took a look at how Americans earn and spend money. Like NPR, and like me, The Atlantic couldn’t help but note that food costs have plummeted over the past sixty years — despite the fact that Americans spend nearly half their food budgets on dining out! And look how much cheaper clothing has become too!
Unfortunately (or perhaps fortunately, depending on your point of view), we don’t seem to have banked the savings we’ve gained on food and apparel. Instead, we’re plowing more money than ever into housing. According to the U.S. Census Bureau, the average new home was 2349 square feet in 2004, up from 1695 square feet in 1974 — and just under 1000 square feet in 1950.
Anyhow, I don’t have any real takeaways for you this morning. I just find it fascinating to see how the average person spends. To that end, you can be sure that there are more “how much do you spend on X?” questions coming in the future!
Do you like to compare your spending to a broader average? What are your favorite sources for comparing numbers? Do you worry when your spending on, say, housing is far greater than the norm? Or do you just figure different people have different priorities? (For myself, as long as I’m falling within the Balanced Money Formula, I’m happy.)
[NPR: What Americans Buy]
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The statistic on the size of homes is most shocking to me. I can’t help but wonder how much of the increase in housing costs are increased property taxes and utility costs directly related to the increase in size. Also, housing costs have gone up, but most people are getting ‘more’ house. I bet the decrease in food costs isn’t down to everyone eating less!
Really interesting article, thanks for sharing.
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I don’t think that the entirity of the increase in housing cost is due to Americans buying/renting bigger homes. Some of it is probably due to an increase in population- especially in cities. You look at New York, for example, which has become massively gentrified since the 70s, with large areas now very desireable to young people. Brooklyn, the meatpacking district, Hells Kitchen, they all used to be horrible areas and now people pay a premium to live in tenaments there that would have been decried as slums just 30 years ago. The population of the country has grown massively as the baby boomers had children of their own, and that has put pressure on housing stock in desirable areas and forced up the price of housing.
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But the size has still changed a lot – we live in a house built in 1902. It was big then – almost as big as most of the duplexes in the neighborhood, 1600 sf, 4 bedrooms. It housed a family that had several children and probably one or two extra adults (servants or more distant family) living here all the time. During WWII it was a boarding house, housing at least 4 women workers in addition to the family that owned it.
We bought it from a 2-person family, and now the three of us live in it and complain about the lack of closets.
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Great observation Honest. I also believe that the increase in housing has to do with the abuse from mortgage providers. Yes, people buy bigger homes, but people also make more money. If you are basing it off of one’s salary, I don’t see a huge change.
The food comment is “dead on.” Cheaper, chemical composed food has caused the food to decrease. And, the chemical products have caused medical to increase by more than double.
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I find this very interesting on a personal level. I own a food based business and am really tired of having to educate people on the costs of REAL food…not the manufactured stuff…seems like everyone is willing to shove the cheapest stuff in thier mouths no matter what’s in it. I have also marveled at the fact that the bigger the kitchens got in new homes over the years, the less the inhabitants cooked at home. You have to wonder what the says about society as a whole. Hmmmm…
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I have to agree that fresh food costs more. We currently spend about 25% of our take home pay on food and 35% on housing (including utilities).
We’re always looking for ways to cut our grocery bill but we’re not willing to go to boxed food to do it. And unfortunately coupons are almost always for boxed foods or cleaning supplies. In a family with a history of cancer I’m trying put as few chemicals into my family’s bodies as possible.
We have drastically cut our eating out budget and coffee shop purchases this month and so far it’s decreased our food costs to 20% of take home pay.
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My thoughts exactly. It’s not so much that food costs have dropped, it’s that people used to buy real food and now they buy cheap processed junk. You can get 10 microwave dinners for $10 on sale, but REAL food (fresh fruits, veggies, meats) is still expensive. Side note: this is why everybody is fat today.
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Well, it’s not the sole and only reason!
People walk FAR less.
People do FAR fewer daily and weekly chores that are physically demanding — hanging out wash to dry, bringing it back in, and ironing it is far more labor intensive than using your installed next to a bedroom laundry, for instance.
Eating out requires fewer calories than cooking a meal, especially when you drive there and park in the adjacent lot.
50 years ago people didn’t eat all the day long, either. People didn’t snack like now — if they had a “snack” it was a couple of crackers or the like. They didn’t carry food with them all day, eating in the car, on the street, etc.
In a lot of cases, their diets weren’t all that much “healthier” with liberal use of butter, white flour and sugar. BUT, when you are only eating as many calories as you need…you don’t gain weight!
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It’s very frustrating in large cities like New York City. My wife and I want a decent-sized kitchen so that we can actually cook. Yet everyone wants a large kitchen, but mostly as a status symbol, so prices for these apts are through the roof.
I heard from a housekeeper in NYC that most of her clients use their ovens for additional storage.
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My husband is a chef.
He says that the grandeur of a kitchen is inversely proportionate to the amount of cooking that takes place there
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I can attest to the size-of-kitchen to amount-of-cooking ratio. My husband and I live in a studio apt. and have only about 5 sq. ft of counter space and a small kitchen table and we prepare greater than 95% of our meals from scratch. We limit dining out to once a month. Our food budget isn’t very high though, despite the fact that we don’t buy anything processed and try to eat a lot of fruits & veg. It’s possibly because I bake all the bread and desserts myself and we stock up on staples (spices, etc) at Costco.
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I agree that the big, fancy kitchen doesn’t equate to the occupant actually cooking meals. My parents replaced their kitchen a couple of years ago with my mom’s “dream kitchen.” Since there are no kids in the house anymore, my mom seldom cooks. They usually eat out or heat up prepared food from Wegman’s.
Their old kitchen was a lot nicer than my present kitchen. I love to cook, and would love to renovate my kitchen, but will need to wait until our house is paid off in a couple of years.
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I am not certain about the NPR chart. it seems to me that households must be spending, on average, far more for health care than 7%. I think there must have been something left out.
Also, if you are asking people what they spend and where they spend it, you will often have different numbers than when you have direct access to observe what they ‘really’ are spending money as opposed to what they ‘think’ they are spending it on.
Just some thoughts. It is interesting to note what others spend for what, but we are all so different that it is hard for those comparisons to be realistically meaningful.
Great post though JD. I enjoyed it.
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Yes, healthcare spending seems low (it was more than 16% of GDP a few years back and is higher now), but maybe it is median spending (most spending is spent on the last year or last 6 months of life) or it is out-of-pocket (so not counting what the employer pays or definitely not counting implicit wage cuts).
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I also thought it would have been higher given how many people are turning to complementary and alternative medicine therapies these days. I don’t know about the U.S., but employer benefits plans don’t cover much when it comes to CAM (if they cover anything).
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With regard to the household spending on healthcare, I would bet that the numbers don’t account for what employers spend on their employees’ healthcare. When those figures are factored in, I would think that the figure would be much much higher.
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mrslalyb is correct. The spending on healthcare is ONLY the out of pocket spending. It does NOT count the amount spent by the employers and the government. Most of the cost of medical care is not paid by the consumers.
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Interestingly, the mortgage deduction doesn’t encourage homeownership but it is at least partly responsible for increases in home size. (Empirically.)
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Are you sure Nicole? House size increases in Canada are on par with the US but there’s no mortgage deduction here.
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If you’re talking about the rate of change, it isn’t like the mortgage deduction has changed in the US, so if there’s an underlying trend affecting both that wouldn’t be caused by the mortgage deduction. However, there is a “large body of evidence” according to the textbooks on the fact that the mortgage interest deduction causes people to buy bigger houses but does not encourage homeownership. Canonical paper is Rosen (1985) but there have been many papers since then confirming.
From an economist standpoint there is broad-based support to get rid of the mortgage deduction from both sides of the aisle (liberals calling it “horrific,” conservatives actually including it in their tax plan under George W. Bush). However, it is a very popular deduction so there’s broad-based political support to keep it, even though it doesn’t do what it claims to.
According to the internet, the average size of a house in the US is larger than the average size of a house in Canada.
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Hmm. I was looking at these Euromonitor stats that said Canada had the #1 biggest average house size in the world but the US wasn’t far behind. My gut was telling me they were similar but there’s just more disparity in the US.
http://www.nationmaster.com/graph/peo_siz_of_hou-people-size-of-houses
You probably have access to better economics info than the layperson although I still think they’re close enough to be equivalent. It could be due to different causes though. I’ll stick to my budgets and forecasting and leave the broader view economics to you professionals.
Like most of us reading here, I don’t really care what the “average” person is doing anyway, except to fight any inclination or pressure to make those same bad choices.
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I don’t know anything about recent Canadian home sizes, but this link indicates Canada is number one in size and US is fourth. http://www.nationmaster.com/graph/peo_siz_of_hou-people-size-of-houses
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Wait… I think you’re confusing price and physical size. In some places, a larger home is cheaper than others. Where I live, you can buy a 3-bedroom home for the price of a studio condo in Toronto. How much people spend and how much space they actually have are two different things.
Housing doesn’t necessarily mean ownership either. It’s not like rents have down in price. Rents seem to be increasing faster than salaries.
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That house size link is number of rooms, not square footage. If you look, it’s graded by percent of houses with 5 or more rooms. There’s no way the houses in the UK are larger (square footage) than American houses.
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All the internet sites I saw today said US was #1 or tied with Australia and Canada behind. http://www.househunting.ca/buying-homes/vancouversun/story.html?id=ca2fc4f8-cc89-4309-94ca-fd3be2430814&p=1 for example
http://www.demographia.com/db-hsize.pdf
http://www.internationaleat.com/news_features/which-country-has-the-biggest-homes-in-the-world
etc.
Proportion of houses with more than 5 rooms is not the same as square feet.
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Yeah you’re right KCM, afterwards I looked at US census and CAD statscan data and same increase, slightly smaller homes (s.f.) in Canada. My objectivity is clouded due to where I live – which has tons of new, big construction. Mind you, I also lived in TX for awhile – and everything’s bigger in TX.
This is a neater tool to use on a global basis anyway since you can see it in relation to income:
http://www.economist.com/blogs/freeexchange/2011/03/global_house_prices
The difference between Ireland, S. Africa & Spain vs. Switzerland & Germany is just insane.
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I just saw on TV that the average person spends 46% of their food budget eating out! We recently went out for dinner and were shocked when the bill came. We had three hamburgers, a couple of drinks and one dessert. With tip, the bill totaled $120! For hamburgers??? We won’t be doing that again anytime soon.
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It’s probably the drinks and desserts that inflated the bill, not the burgers. Restaurants make most of their money on the extras.
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I think food prices have been going up much more than drink prices. I know my chipotle burrito is much more expensive than it was 4 months ago. Everyone is increasing their prices, even the nicer restaurants.
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restaurant prices are increasing because their food costs and labor costs are increasing…just like the average consumer. The profit margin on food is small!
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I’m wondering why you were shocked. Didn’t you know the prices before you ordered? I always ask for the price of anything I order if I don’t see the price on the menu. I estimate the final bill (including tip) right up front.
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This was at the Hard Rock in Baltimore. No drink prices on the menu. The waitress added in a glass with my daughter’s smoothie and my hubby’s beer. It just all added up. The burgers were about $15, but my daughter asked for a smaller burger, but with the three cheeses. They charged extra for each cheese. It added up to more than the regular three cheese burger. It’s hard to estimate the cost of the drinks. I think they were more than the meal. The dessert that my kid ordered was the cheapest thing!
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Next time don’t eat at over priced tourist traps like the Hard Rock.
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great advice, where were you two weeks ago??
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You can always ask for prices if they’re not on the menu. You can also ask for the manager if you think you’ve been overcharged–like for the smaller burger. They should have been willing to ring it up at the cheaper price.
Sometimes people don’t ask prices because they’re afraid the server will think they’re cheap. I’m not worried about what the server thinks of me. It’s my money and I have the right to know how much something is costing me.
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My theory behind tip inflation: The generally accepted tipping percentage (currently 15% to 20%) has been slowly increasing to compensate for the fact that food prices — over the long term — have been rising slower than real wages. Back in 1949, a tip of 10% was standard because food was more expensive, relative to wages. Now, a tip of 10% is considered stingy.
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I enjoy seeing spending charts out of curiosity, but in the end they don’t really apply to my life. I think it really depends on which categories we assign certain things to.
For instance, do my fitness classes fall under health or recreation? Does eating out count as food or entertainment? Does internet go under entertainment, household or work?
All that really matters is what’s “normal” for me.
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I agree. So, come to the light side, where only 3 have categories:
-Needs (“survival” budget)
-Wants (free choices beyond survival)
-Savings (to build net worth)
That’s it! No headaches, no tears, no superfluous labor. Let the Census Bureau worry about what percentage of your income you spend on apparel.
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LOL I meant to type “where we only have 3 categories”
ha ha ha.
anyway…
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Who needs 3 categories when you can have only one? Percentage savings is all I shoot for and it’s 50% p.a. Easy peasy lemon squeezy.
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1949 most homes were one income, families with more than two kids. So Food and Apparel for such a family would likely take a bigger part of the budget in that more mouths to feed and growing bodies to clothe. Every adult did not have a car and many didn’t drive at all. Since the average home didn’t have air conditioning or other indoor attactions the home wasn’t needed to be large since you spent plenty of time outdoors rather then indoors. So it doesn’t look that out of whack to me.
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True! My mom snickers at these home improvement shows where everyone wants big houses with all the perks. She loves to remind me how in previous generations, large families survived without open concept main floors or multiple bathrooms.
I’ve read that before WWII, homes where more than one generation lived together were far more common than they are now (though we’re starting to return to that trend thanks to care giving and boomerangs). It was after the war that single family home ownership because the dream.
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I grew up in a home with nine people and one bathroom and you know what? It stinks. Every kid knows how to pick the bathroom lock by the time they’re about five. Fights, fights, and fights some more.
No thanks, I’ll take lots of bathrooms. On those rare occasions when I need privacy to escape the togetherness of our open floor plan, I can just lock myself in the master bathroom – and my kids have no idea how to pick the lock.
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I agree. Just because everyone used to pack a dozen people into a 800 sq. ft. house with one bathroom, doesn’t mean it was a great thing.
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Much of the time when I was growing up we had 7 people and 1 bathroom. I hated not having any privacy. When my husband and I married, I made him promise that we’d always have at least as many bathrooms as we had people living in the house (not counting visitors). Our first apartment had 2 bathrooms, and when our second child was born we bought a house with 4 bathrooms. Four bathrooms, no waiting, no banging on the door yelling “hurry up!”
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But how many people are having families with nine kids these days? If, on the whole, families are getting smaller so why do we “need” bigger and bigger homes? (They’re a “want”.)
Incidentally, my family of five had two bathrooms — and that was a step up from my parents’ families. Now, I know families of four who need four bathrooms — an ensuite, a bathroom for the kids, a main floor bathroom for guests and a bathroom in the basement.
I’m not judging here — I’m just saying our expectations are different than they used to be. It’s wants that are driving the market, not needs.
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Mom of Five, you made me LOL!
But yeah, when we bought our house in 2009, I begged for at least 2 bathrooms (3 people in our family). No such luck; ours has only 1. At least there’s a Burger King across the street; sometimes I’ve gone over there just for the bathroom.
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Yes, true, but most of our “needs” spending is really wants anyway. We could all get by on a food budget of beans, rice, and water, but few of us do. For me, personally, if I only had two kids, I’d really like an absolute minimum of 2.5 baths. And if it came down to it, I’d cut in other areas before I cut out my many bathroomed open floor plan.
Maybe you didn’t mean to judge, but when somebody’s snickering about my (and many people’s) lifestyle choice, it sure feels that way.
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Exactly, Mom of five! We all make our own lifestyle choices. Four bathrooms for four people may seem extravagant to some, but we don’t have granite and stainless in our kitchen, we drive our cars till they won’t go any more, most of our clothes come from thrift stores, etc. We make the tradeoffs that matter to us. As a woman with a husband and two teenage sons, it’s important for me to have my own bathroom. It’s a lot cheaper than psychiatrist bills.
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@Elizabeth
The idea of a central power deciding what everyone else “needs” is incompatible with free markets. Markets are driven by what individuals want– we always want more than we “need”. Plants and animals in nature also strive for excess–the balance of ecosystems is not achieved by self-restraint, but by competition.
During my wandering years I spent some time in an Israeli kibbutz and experienced collectivism first-hand. Yes, your “needs” are met, you get your 3 meals, and a roof over your head, but you can’t decide to build an extra room in your house or to change jobs, or maybe you want your own washing machine? No, you can’t have it.
Collectivism might appeal to some people but it’s not for everyone. Certainly it’s not for me! I don’t want to live in a place or situation where other people are telling me what I can or can’t have. Most people in the world don’t want that either, that’s just a fact of life.
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Whoa… El Nerdo, I didn’t say anything about a central power making housing decisions for us. I’m not questioning free markets or anything like that. I’m really curious how you read that in my comments
(Sometimes I’m not the only Elizabeth commenting on a post, so maybe I missed something!)
My point was that single family dwellings weren’t always as common as they are now. In the cities where I’ve lived, for example, houses built before and during the war are often much smaller than what’s being built today. That doesn’t make them superior — it just reflects a change in expectations and a change in the market.
Is that a bad thing or a good thing? I don’t think it’s either. The market is going to keep changing and they’ll be new trends. What it really boils down to is balancing one’s budget with needs and wants.
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What I mean is that this is your evaluation of what’s a “need” but doesn’t apply to all. Where do you draw the line?
Someone might say “you don’t need a house, you can live in a large apartment block” or “who needs a bathroom when an outhouse will do” or “live in yurts and save the planet” or “let’s eliminate private bathrooms and build collective ones at the end of the corridor”– what’s needs and what’s wants? clearly a hole in the ground is sufficient, everything else is a want.
I’m assuming of course you’re the same Elizabeth who said these are wants not needs.
Me I live in a 1br apt with 1 bathroom and I hate that– I don’t mind the small apartment, I just could use 1.5 bathrooms, but they don’t build those kinds of dwellings in these here parts.
Supposedly a 1br place doesn’t need a second toilet– BUT I DO! I find it very socially primitive to let visitors into your inner chambers so they can relieve themselves. It’s disgusting. Dear visitors: kindly empty yourselves before coming to see me, and stick to the social areas of the floorplan.
The last time I had 2 bathrooms it was in a 3 bedroom house (& the “outer’ bathroom had a stupid shower). Too much house for my bathroom needs!
I just want what I want, and I can’t accept other people’s evaluation of my needs– that’s totalitarianism. Let each person decide what they want and let them get it or go broke trying
(and some day i’ll get that extra 1/2 bathroom again! ha ha ha)
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Ahhh… I see where you’re going with this
I agree there’s no universal standard for what is a need versus a want – nor should there be! It really depends on the person or family, lifestyle, etc.
The wants versus needs distinction is fuzzy even at the best of times, but I think the ultimate test is the budget. Marketing houses is the same as any other form of marketing — we’re constantly invited to overspend on things we’re told we need.
And yes, a lot of the time we do need those things
I just think we have to be careful to balance what we need/want with our financial goals. If certain features — like plenty of bathrooms — brings value, then it’s worth spending on (if one isn’t taking a big financial risk, that is).
We get a lot of messages in the media and from our peers about what we “need” — it’s up to us to figure out if that’s really the case or not.
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Ha ha, oh yeah— when I say I don’t like people telling me what I need, I most definitely mean to include professional marketers in that bunch. They can’t make me.
Anyway, nice chatting– it’s 530 on a Friday and I’m out of here. Wheeeeeeeeeeeeee!!!!!!!!
Have a good weekend!
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@Mom of Five — I’m sorry that it came across that way. It’s reality TV — you know they ham up the whiny homeowners throwing temper tantrums because they want something that doesn’t fit in their budget. When you grew up as part of a different generation and had a lot less, it’s easy to roll your eyes at the sense of entitlement you see on TV. (It’s certainly not a reflection on anyone here!)
I do think our expectations have changed over the years and I don’t think that’s good or bad thing. It means we have more options — if we can afford them, great! If we can’t, we take huge financial risks trying to keep up with the Joneses.
I tend to side with the GRS mantra: do what works for you.
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Nice post.Quite helpful
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I often like looking at these types of numbers, but inevitably, I know that the situations don’t apply to me. A lot of it very tied to not only where you live but also when, or more specifically what period of your life you are in. When the data comes out, I know it doesn’t neccessarily apply to a young single twenty something living the in the Boston metro area.
Housing costs are very different, as is health care costs, than in many other parts of the country. Also…I don’t have kids which is different than many families.
And finally, I know my costs are always going to be significantly skewed since I spend a large portion of my income paying back student loans. If debt repayment falls into the ‘other’ category on this chart, mine would look very different.
It’s still interesting to look at though.
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About spending money on alcohol and pets: if someone is serious about wine, they could easily spend 1% of their income on alcohol. I don’t think it “says” anything if people spend as much on alcohol as they do on their pets.
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I find the figure for alcohol surprisingly low! But maybe it’s a cultural thing. I easily spend WAY more than 1% of my income on alcohol. Maybe like 4-5% and I don’t consider my drinking any above average (to the contrary in fact!). But I live in Scotland, where there is a very heavy drinking culture so maybe, while I think I don’t drink a lot in comparison, the average American drinks much less?
Or maybe alcohol is cheaper in the US? To clarify, 1% of my income would JUST buy me a bottle of cheap vodka or two mid-range bottles of wine or maybe 3-4 drinks in a bar a month and I drink way more than that, often that much or more in ONE weekend. To be fair, my income is quite low; even if I earned more, I don’t think I would drink more, so my alcohol expenditure would then be a smaller percent of my income.
Sorry for rambling… I just find that figure interesting and now want to waste some time googling average spending in the UK to see if there are cultural differences in spending in some of the areas.
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Having lived for a little while in the UK and a long time in the US, I would definitely say the drinking culture is muuuch stronger in Scotland/England.
When my friends and I first moved back to the US, we really had to change our habits to stop from being perceived as borderline alcoholics. And we were considered wussy lightweight Americans when we were in London!
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Jess,
I think this figure for alcohol is low too. I wonder if some of the drinking outside the home spending got lumped in the dining out category. Many people drink when dining out here.
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I think alcohol is one of those things where the actual fixed amount spent probably doesn’t depend upon income, with the obvious exception of wine afficionados who probably spend more if they can afford it. In our house we go through about 2 cases of beer per month and a few bottles of white zinfandel (drunk only with ice) per year. I’m thinking that wouldn’t change whether our income were 50k or 500k.
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Wikipedia has a list of alcohol consumption per capita by nation. Alcohol consumption in UK is about 13.4 liters per capita and in the USA it is about 9.4 liters.
I found an article in the Daily Mail online that said an average pint in UK is 3 pounds. Thats probably around twice what we’d pay here in the US.
So on average UK drinks 50% more and booze costs you 2 times as much. Roughly speaking our average spending would likely be about 1/3 of UK.
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I come from a part of the US where a town is any crossroads with a bar and a church, and I went to a university renowned for alcohol and weed consumption, but I had never in my life seen as much alcohol consumption as when I went to Glasgow. And then you pay a lot more (including that VAT, holy moly) for booze, too.
Plus it seems like there is alcohol in more venues in the UK – fancy theaters serving beer, stuff like that. And I have to think the availability of public transit helps – having to drive to the bar limits most Americans drinking quite a bit.
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What about taxes? My single largest expense.
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I know! Right? I was thinking the same thing. I’d find it fascinating to compare what an average person pays in total– just in tax– on everything (whether it be on a need or want). Sales tax, property tax, income tax, vehicle tax, interest/dividend tax…tax on tax, etc. I budget for my taxes under “Charity”-Ha! I do. I’ve always wanted to add up all the different kinds of tax I pay for the entire year and see what it comes out to be. But, I haven’t that kind of time and I’m certainly not that anal and I would be boggled and confused by all the “fees” that I’d be tempted to call a tax–because they are, just the corporate kind — and it would go on and on and on until I’d forgot what I actually even purchased and for what.
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sounds like an idea fir a future getrich slowly article – what percent do we really pay in taxes?
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I would love to see an article like that too — especially since I’m not in the U.S. I’d love to know how much we pay up here versus the U.S. I know we pay more (partly due to universal health care) but I’d be curious to see the breakdown in terms of percent of people’s income. The tax rates are easy to find (http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html) but I’ve never worked through the math with personal deductions and tiers.
I’m almost afraid to think about how much I pay in tax. Income tax is easy to spot because it comes off the pay check, but there’s also property taxes, HST (which in Ontario is 13%), the taxes we pay at the gas pump, hotel tax, etc.
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I agree that I always like the comparative/benchmark results, even though they’re not actually useful or even necessarily meaningful. We have different situations, different value, different locations, etc.
But there’s still just something voyeuristically fun about it! (And perhaps some day it may spark a rethink of my own spending. Who knows.)
I’d love to see some summary results/graphics etc out of the GRS posts we’ve done.
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I have to say that these processed foods are the reasons why America is so obese. The fact that 15% of our pay is spent on food compared to 40% 60 years ago is ridiculous! Hit up the Fresh Market and get some quality food and learn to cook. I think this is a sad reality.
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You’d have to ask the generation before you and the one before them what the food situation looked like while they were growing up. Have them describe a market that they purchased their items from. Far, far different than what we have come to know as normal. Your parents and grandparents didn’t get things flash frozen or flown in from Brazil. Cheap food is due to the new world market, supply and demand, and ease. TV dinners were the introduction to processed food and were the 50s housewives dream. But, so was the refrigerator itself.
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But Drew…if we don’t buy processed crap food and wear $5 shirts made overseas we can’t afford our huge house, smartphones for all and new cars for everyone old enough to drive. Where are your priorities? hehehe
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Remember that although the percentage of income spent on food has dropped, total income has risen more than enough to compensate for that even in real terms. So we spend more in total on food than we did.
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What gets left out of this though is the fact that most homes had one full time homemaker who was responsible for cooking for the entire family. Fresh food requires time spent shopping, cooking and cleaning … a cost that was seldom counted or even quantified because wives are never paid for domestic labor.
Add the cost of the free labor and the high cost of fresh food is even higher.
The reason people eat out more and eat more convenience foods is that most households don’t have one adult at home full time anymore.
Two parents working full time CAN, with diligence and discipline, MAKE time to cook three square meals a day but they rarely CHOOSE to.
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What several comments have said about food is also true for clothing: we buy more than we used to but it’s cheaper because it’s mostly low-quality junk. 60 years ago people had 2 or 3 outfits, but they were durable, well-made pieces that cost more because they were made by unionized American workers. Today everyone has a million crappy t-shirts that come straight from the lowest-wage countries in the world.
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Hey JD, can we get a button added with a thumbs-down for “Don’t Like”? (Even if my posts earn the most thumbs-downs?
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Andrew, I think your statement about high durability and quality being due to American union workers to be romanticized claptrap. Workers don’t determine durability or quality – then, in America, nor now, overseas. It seems to me that the business owner determines it, based on their business model and profitability. This determines the quality of the materials and tools the labor force has at their disposal. Yes, a less-educated and inexperienced workforce can decrease the durability and quality due to defects, but the workforce cannot make a silk purse out of a sow’s ear – even if they are unionized.
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If you read my comment carefully–which you obviously didn’t–you will note that I didn’t say that clothing was more durable because it was made by unionized workers. I said that was the reason it cost more.
However, you do get what you pay for, and today’s prevailing business model, with some exceptions, is to provide cheap, badly made clothing at a very low price. Of course, this goes along with the fact that most American adults prefer to dress like overgrown 8-year-olds. The 1940s were a much more formal time.
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I don’t know that the charts indicate that food is cheaper today necessarily…There are a few other variables that aren’t included in the charts. For one thing, inflation-adjusted incomes may have risen (I strongly suspect they have, though I don’t know any of the data). Secondly, the charts don’t appear to have a bar for “Savings” so it appears that the figures are the percent of spending, ignoring the percent of total income. Basically, if Americans have higher incomes and lower savings rates than in 1950 they are spending more – it seems likely that a large percentage of the additional spending has gone toward bigger, nicer houses (and the new “luxuries” one gets with them these days such as A/C, cable and internet) and toward bigger, nicer cars. I’m sure food and clothing prices have fallen as agriculture and manufacturing processes have improved, but not as drastically as just looking at the percentages on the two charts.
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Interesting article as usual, but you have to question everything now. The Gov’t say the CPI is NOT going up… we’ll have you noticed that your paying the same amount for LESS food? Almost everything is packaged in smaller amounts, but the price is the same. The Gov’t is not claiming this as an increase in CPI. We’ll if we are spending the same and getting less, that’s inflation.
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I don’t know why you think the government is saying it isn’t going up.. They publicly report it is going up.
The government reported CPI increase of 2.7% in the past 12 months. Food at home category is up 3.6%.
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I use Mint and it has a feature that compares your spending habits in certain categories to others. I find it interesting.
My breakdown for the past two years according to Mint:
Home: 22%
Food and Dining: 18%
Travel: 17%
Shopping: 7%
Auto & Transport: 4%
Bills & Utilities: 4%
Health & Fitness: 3%
Personal Care: 1%
Donations: 4%
Savings: 20%
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Does mint give you the percentages?! That’s a cool feature I haven’t found on their website. I can do the math, but I would love it if mint would do it for me….
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It does! Go to the Trends tab in Mint. It will give you percentages and even comparisons to other cities. It is an interesting tool.
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Health care costs look a bit low. I know many people are employed and have group plans, but many are not these days, especially the self-employed and unemployed. In 2011 I spent almost 40% of my income on healthcare costs: monthly health insurance cost, deductible, out-of-pocket costs and co-payments, dental bills, CAM expenses and so on.
I think housing and food took up the other 60%
, but of course this chart is just an “average”.
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THe overwhelming majority of Americans are covered by health insurance through an employer or government (medicare/medicaid / va). Its around 80-85% of the nation that are insured.
Self employed and uninsured are really a small minority of the whole population.
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Has the PRICE of food/clothing (with inflation taken into account) gone down or has our income gone up? It looks like this information is based on percentage of income spent on certain categories, but if I went from a $30,000 job to a $100,000 job, I’m not going to be spending the same percentage of my income on food.
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The price of clothing at for sure has gone down in the last 60 years, not to mention over the centuries.
I read somewhere that people used to steal the clothes off dead people in hospitals and the like. Clothes took a lot of work to make and were expensive, made by hand from natural fibers that took a long time to harvest.
Nowadays we have a lot of things that make clothing cheaper: synthetic fibers, more efficient agriculture, advanced manufacturing processes, a 3rd world labor force that requires a fraction of what it would cost to produce domestically, and cheap transportation across the globe. When is the last time you went to a tailor, or a cobbler?
Beyond that, if you read Charlie Munger’s stock-picking pamphlet, he discusses how the textile industry is not an attractive investment for him because savings due to technological upgrades get passed to the customer and not kept for profit– it’s a race to the bottom.
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My first thought, as many other comments, is that food prices may have dropped but so has the quality of the food. People are willing to sacrifice their health, their children’s health and the health of our planet on buying cheap, processed, convenience food. And we wonder why our healthcare costs are rising!
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I spend 75% of my income these days (55 needs, 20 wants), but I’d like to go 50/30 (spend more in wants, save less, ha ha–unless I make more money).
Of course the split matters– I try to emphasize good food and reduce transportation costs, and thanks to living in New Mexico I can get away with spending a pittance in clothes (it’s not the style capital of the world).
However, the historical figures that concern me more are inflation vs. savings interest rates. Right now I’m not very happy with their ratio. Bwaaaaaahhhhh!!!
So–should I put my savings on the Dow instead? (This isn’t for retirement– it’s just for savings beyond quick cash).
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I am also interested in the “Medical Care” category. I wonder if that includes health insurance costs? I also wonder just what percentage of Americans had insurance (which is not the same as “medical care”) in 1949.
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It is interesting to compare, but I think it’s funny how when I see the averages, I think to myself how much better I have things “figured out” than anyone else. Odd.
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Americans may spend just 1% of their income on pets, but this is an average of everyone, including all those people who are petless. For those who do own a pet, or multiple pets, it’s a lot more than 1% !
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Stats on home size can be misleading. The new average home size of 2349 is new homes built, not purchased. Homes stay in use for many many years, so the average new home size is not telling of the average home size.
My home is about 1000 sqft, build in the 1990s and 38% of my spending.
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Jackie is right. Median size of all homes in the US is about 1800 sq ft. 70% of homes are smaller than 2500 sq ft.
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Looking at my excel sheet for last year, spent
18-19% on grocery, 5-6% on restaurant =24% on food (including beer : ), 19% on housing, 3% on clothing. I don’t break out pet costs, are a combination of grocery, medical, entertainment. Our housing spending includes property tax/insurance, but not repairs/maintenance. Last year did many house projects so adding those costs=36% house spending. House is smaller on average for US home, less than 1500 sq feet for 4 people. transportation (gas + car repairs)=almost 9% due to expensive repairs, 4% for medical (but have had years where much higher). Looking at our budget the obvious place to cut is food/grocery, but as we love food and like to buy non-packaged food, (as well as go out to eat for convenience/enjoyment) is it’s not working so well. So, as long as we can afford it we will buy (and prepare) food the way we prefer.
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Great post! I think these topics are so popular because we like to compare our behavior with that of others to see if we’re normal or can justify the discrepancies.
In estimating my monthly expenses I’ve noticed a few major differences:
1) I spend WAY more than 15.3% of my income on food…probably closer to 25-30%
2) I spend virtually 0% of my income on Medical Care and have gone to the doctor on average 0 times over the past ~6 years
I point this out because I think the two might be related…the shift to cheap, fast, unhealthy foods is contributing to the poor health of our country. I always hear people say “Whole Foods is a total rip off” or “I can’t afford to buy organic”. My thoughts on this are that food is the single most important expenditure you have and should thus be prioritized.
I clicked on the link to the Atlantic article and noticed that over the past 60 years health care and food expenditures are almost 1 to 1 inversely related. I hope people begin to reevaluate their spending priorities and focus on healthy living.
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I find this information really interesting, too. I wish when you ask GRS readers how much they spend on X that you would make it a poll so that it’s easy to read the aggregate responses.
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I was so distracted by the non-word “funnest” in this post– drives me as crazy as people pronouncing the word nuclear as “nu-cu-lar”!
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I’m saddened it took 88 responses for anyone to notice.
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Noticed. Didn’t care. Doesn’t matter to me if people point out grammar mistakes, but it doesn’t really add anything to the discussion.
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Thanks for writing what I was thinking, Bethr.
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I’m thinking the decrease of food expenditures is explained partially by rises in government subsidies for food and advancements in agricultural technology which has increased yields due to demand.
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I would like to see the same graphs but per income level. What percentage of income is spent on housing (etc.) for a family bringing in $25k/year vs $75k/year vs $150k/year?
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That information is compiled by quintiles right here:
http://www.bls.gov/cex/2010/Standard/quintile.pdf
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I do look at the comparative information that mint provides on their website. Overall though I really try to compare my spending to myself year over year and month to month. I try to analyze why changes occured and am always challening myself to see if I can spend less.
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There’s just hubby and I, but we’re way below average for food costs at about 9%. We do most cooking from scratch and don’t eat out much, plus we don’t eat a lot of meat. The fact that I work from home probably gives me more time for cooking than someone who commutes.
Thankfully our transportation costs are also way below average due to my telecommuting and hubby driving a company vehicle. I do not know how people can afford car payments and fuel these days, it’s astronomical!
I have no idea how a family of 4 ever managed in a 1,000 sq foot house without killing eachother, especially with just 1 bath. We downsized from a 1700 sq foot house to a 900 sq foot house that is 100 yrs old and I hate it! 1 small bathroom, no storage or closet space, and an outdated kitchen with bright orange formica and a crooked floor. Even with just 2 of us, it feels clausterphobic. I was lured by the beautiful 4 acres, the relatively low price, and hubby’s assurance that we could make cosmetic improvements. Given the costs of the improvements, I’m sure we will end up spending well over the average for housing costs. And we’re not doing anything fancy at all, and doing it all ourselves. Ugh, if I had it to do over again, I wouldn’t!
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Reader story? People have been calling for more stories about how things like this (downsizing) can actually turn out to be a worse situation.
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I work for the BLS (the CPI program actually!) and I absolutely love it when I see BLS data put to use! Thanks for sharing! I always find the Consumer Expenditure data really interesting. The CEX also publishes comparisons between US consumer spending and several foreign countries. Apparently Japan spends way more money on food than us, and not surprisingly, we spend the most on housing.
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I don’t like to compare my spending to the “average” because I feel there are often many statistics that skew these numbers. I am happy, as long as my finances are in order and I can continue to save for my goals. I think it is really tough to compare expenses with others because everyone has different priorities and lifestyles. I am all about enjoying life and living within my means.
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To quote Zippy the Pinhead: “Why be normal?”
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I wonder how much the increase in medical costs between 1949 and 2011 is due to the increase in the number of medical conditions we can do something about.
Ten years ago, my father survived and recovered completely from the same ailment that killed his mother. Two months ago he survived (and is recovering from) the ailment that killed his father and grandmother. He has now lived longer than either of his parents, and today is not really considered all that old. Neither of my grandparents survived to Social Security age.
All this is due to advances in medical care during the last 50 years. I’m sure my family could have saved a lot of money by providing my father 1950-standard medical care, rather than 2002 or 2012-standard medical care. I’m so glad we had the option of all the latest advances in medical treatment. Medical care= expensive. Having my father still here with us, and living a normal, independent life is, as they say, priceless.
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Very true! We also have a lot more equipment for diagnostics and treatment. People tend to forget that it isn’t just the baby boomers aging that’s putting pressure on health care systems. All the new treatments and diagnostics cost money too.
I’d love to know if drug company marketing is affecting this spend as well. Decades ago, men weren’t running to their GPs to get Viagra, after all. One of the birth control companies here in Canada got in trouble a while back for falsely marketing their product was better at preventing acne — but I wonder how many women unnecessarily took the medication or switched because of marketing? (In this case, it was how the drug was marketed to physicians who then recommended it to their patients. Scary.)
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