What do we spend our money on now?

by The Dawn Thomas Team on November 11, 2013

HOW HAVE SPENDING HABITS CHANGED SINCE ’73? MORE HOUSING. LESS SAVING
Source: The Los Angeles Times
New research indicates American families spend less of their total income today than 40 years ago. But are they saving that extra money? Not exactly. ConvergEx Group, a New York-based brokerage, posits that spending and saving among American consumers is changing, but not necessarily for the better. The research shows Americans are not saving extra money for the future in such vehicles as retirement accounts, stocks, or bonds. Data analysis found a lack of clarity about how Americans are spending 14 percent of unaccounted for income today, but it is clear that Americans are not saving the money.
Making sense of the story

The average person spends 81.2 percent of his or her post-tax income on food, housing and other expenses.
For the sake of comparison, in 1973, Americans spent 85 percent of their income on mandatory and discretionary items.
The U.S. saving rate is far smaller than what it used to be: 4.6 percent today vs. 13 percent four decades ago.
Overall housing costs rose to 32.8 percent of income from 30.8 percent. However, the cost of so-called “shelter,” which is owned or rented dwellings, jumped to 19.2 percent from 15.9 percent.
Despite the multitude of options consumers currently have, such as smartphones and Internet access, Americans spend about the same percentage on phone service today (2.4 percent) as they did in 1973 (2.2 percent).
According to ConvergEx, in 1973, the average U.S. person had post-tax income of $9,700, annual spending was $8,270. Today average income is $63,000, but per-person expenditures average only 81.2 percent.

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This blog is courtesy of The Dawn Thomas Team who is an award-winning Real Estate Agent team at Intero Real Estate Services in Los Altos 650-701-7822. We help nice people with selling and buying homes in the greater Silicon Valley and Beyond!