The spending habits of the average American
Last week, Diane dropped a line asking for information about American consumer spending. She wrote:
I am trying to find sites that will provide average spending habits — such as how much an average person spends on food per week or how much a family spends on entertainment, that sort of thing. I am hoping to see where my habits line up with someone of similar means in the same part of the country.
I'm not sure of how to obtain regional information, but I know where to find national figures for comparison. Last week, a site called Visual Economics posted a chart showing where the average U.S. consumer spends her money. Here's the chart in question, which has been making the rounds of the internet:
Because I'm a skeptic by nature, I tracked down the source material used to create this chart. The data is drawn from the U.S. Department of Labor Statistics Consumer Expenditure Survey for 2007. Most writers seem to be missing this point (probably because the chart itself has a date of April 2009), but it's an important one. This chart represents consumer behavior before the market meltdown — not after. (Here's the source data [297k PDF].)
Some of the interesting bits from this survey:
- The average “consumer unit” surveyed had 2.5 people, of which 1.3 were wage-earners. This consumer unit earned $63,091 and had 1.9 vehicles. Exactly two-thirds owned their homes.
- This average consumer unit spent $49,648 in 2007.
- Average food spending was $6133, of which $3465 was spent on meals at home. Based on this data, one can conclude that the average consumer unit spends roughly $300 per month on meals prepared at home and roughly $225 per month on meals away from home.
- Average spending for housing was $16,920 for the year, which was way up from the $15,167 average for 2005. That's an 11.6% increase in housing costs over just two years! Can you say “housing bubble”?
I was surprised by the transportation costs. The average consumer unit spent $8758 on transportation, or about $725 per month. Holy cats! That's insane. The average household could save big bucks quickly by optimizing their transportation costs.
Several readers asked for my opinion about this chart, including Sarah M., who wrote via Twitter: “I'd love to see your thoughts comparing the average annual consumer's spending breakdown to what it should be!”
I don't think it's possible to say what the average consumer's spending should be. There are too many variables. What works for me may not work for you. Each year, the average American spends $1881 on “apparel and services”, for example, but only $118 on books. My spending for these categories is nearly the opposite. In 2007, I spent $702.73 on books and $425.94 on clothing.
I actually think the source data [297k PDF] could be a great basis for a budget. I always have trouble deciding which categories to track in Quicken. If I opted to use the same category structure that the government uses when tracking consumer spending, I could easily compare my habits with the “average” American. (Too bad the government doesn't track spending on comic books!)
Also, I'm puzzled as to why taxes aren't included in this information at all. The chart doesn't include taxes because the government survey doesn't include taxes. If the average consumer unit earns $63,091 but spends $49,648, there are $13,443 unaccounted for. The personal saving rate in 2007 was less than 1%, so I'm guessing that most of the unspecified money goes to taxes.
Finally, I should note that last year we took a glimpse at the spending of the average American as revealed by The New York Times and the Consumer Price Index.
In my recent reader survey, there were many requests for more content aimed at non-U.S. readers. It's unlikely I'll devote entire articles to foreign issues, but when possible — such as today — I'll try to find resources to help you do your own research. Here are similar surveys in other countries:
- Statistics Canada: Spending Patterns in Canada
- Australian Bureau of Statistics: Household Expenditure Survey, Australia
- U.K. National Statistics: Family Spending, Expenditure and Food Survey
How do your spending habits compare to those of the “average” American? I'm especially curious to hear how much GRS readers spend on books. The average of $118 per year doesn't buy a lot of reading material. On the other hand, maybe people are using their public libraries! (One can dream, right?)
Lastly be aware of your spending habits that will help you be on your toe before taking any financial decision just by checking your credit report.