How Does Your Spending Compare to The Average American?
Below you’ll find an intriguing infographic, provided by the Bureau of Labor Statistics, showing us how the average American household spends their hard earned money.
We could spend endless hours discussing this great visual, but instead, let’s look at the following three categories: mortgage/rent plus utilities, restaurant spending, and savings. These three numbers reveal a very troubling trend: we buy more home than we can afford, we eat our earnings away, and we completely ignore savings.
According to the Bureau of Labor Statistics, on average American household spends 36.9% of their gross annual income on rent/mortgage and utilities!
So let’s do the math…
If your annual household income is $50,000, you’ll spend $18,450 on rent and utilities and will have $31,550 to cover all of your other remaining expenses.
How about this one: average American household spends 5.7% of their annual income on restaurants – not counting regular grocery items. That’s $2850 a year, or $237.50 per month, based on the $50,000 annual income.
Now, let’s compare this to a whopping 2.6% savings rate (for the first quarter of 2013) among average American households – that’s $1300 annually or $108 per month!
Bottom line, we prefer to invest more of our resources in restaurant food alone (not counting money spent on pets and other entertainment items like concert tickets, etc.) than in our personal financial well-being.
So what if we simply reversed those two categories and decided to save what we consume at our local restaurants and consume what we currently save? Can you imagine how this one small change could help our families eliminate debt and build the financial foundation needed to weather life’s unexpected turns?
Planning your budget out before you spend your money each month with budgeting software or budgeting tools can help as you try to change your spending habits.
Overspending and saving too little has become the norm. We look for instant gratification today, while ignoring the fact that tomorrow will be here before we know it. Our families are unprepared to face even small financial emergencies, hence plunging deeper into debt every time the car breaks or the roof leaks.
So here is a great personal challenge to all of us…After all, each of us can do something to start changing our current direction.
“I am only one, but still I am one. I cannot do everything, but still I can do something; and because I cannot do everything, I will not refuse to do something that I can do.” – Helen Keller