Tuesday, December 5, 2017

American Spending By Income Level

This study shows how American households spend their incomes as a function of income level.  There is a huge difference in spending between the top 20% of households with income above $177,851 and the bottom 20% of households with incomes below $10,916.  Most of the spending in each income category is on Housing, Transportation and Food.  However, low income households spend a much higher percent of their income on housing (40%) and most of it is on rent payments.  High income households spend a lower percent of their income on housing (29.9%) but a much higher percent own their homes. They also spend a significant share of their income on insurance and retirement savings.  Low income households spend almost nothing on these categories which makes them much more economically vulnerable.

Not surprisingly, since high income households have more money to spend,  they spend much more money on every category.   The ratio of high income household spending to low income spending  in each category is amazing.  They spend 30 times what low income households spend on insurance and retirement, but they also spend 6 times more than low income households on alcoholic beverages.  They even spend more on tobacco products which is the category with the lowest spending ratio.  They live in completely different worlds.

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