February 19 2009|07.33 PM UTC

Jonathan Rivers

How the Average U.S. Consumers Spend their Income

Category: UncategorizedTags: , , ,

That hard earned money of yours; one minute it is in your pocket, the next minute it is gone. It can be difficult to track the various expenses in your life to figure out exactly what is draining your cash. Taking a look at average consumer spending in the United States gives us an interesting insight into this matter. The comparison of different age groups shows us areas toward which people are more likely to allocate their income at various ages. The analysis of these trends can help us to determine whether each of these expenditures are necessity or frivolity.

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Update 2/21/09: Interested in more numbers on average U.S. consumer expenditures across various demographics, including age, education, and racial ethnicity? Check out our spreadsheet on U.S. Consumer Expenditures (accessible on Google Doc).

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{ 36 comments… read them below or add one }

Partici-pantelones February 20, 2009 at 2:54 pm

I’m not sure where you live, but personally I end up paying about %30 federal income tax every year rather than 1.

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Chad February 20, 2009 at 2:32 pm

You have to call BS. How many people earn $63091 and only pay around $2200 in Federal income tax. That’s a 3.5% tax rate. Pretty sure you’d have to be a married couple with kids earning $63091 to see that.

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Anonymous October 14, 2010 at 7:17 pm

Bottom 50% of americans only pay 2.59% rate as of 2008

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David T. February 20, 2009 at 2:35 pm

Dang! The avg American makes 60K/yr? Sign me up!
You got housing, food, and transportation right as the big three. It is obscene how much it costs to have a place to live… whether you are renting OR buying.

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Brandon February 20, 2009 at 2:35 pm

Unless you’re running for the cabinet, you’re paying more than $3k in income tax on a $60k/year salary…

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Jenny Santi February 20, 2009 at 2:38 pm

This doesn’t include state and local taxes.

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Chris February 20, 2009 at 2:40 pm

This is the most retarded graphical format I have ever seen.

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Tim February 20, 2009 at 2:42 pm

I believe you need to truth test your numbers better.

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Nate February 20, 2009 at 2:43 pm

those percentages don’t add up to the same number…..

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Doogie February 20, 2009 at 2:44 pm

You suburbanites are idiots. 15% on transportation!!!????

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Anon February 20, 2009 at 2:50 pm

Um…what world do you live in where a 63k salary on pays 3k in taxes?

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Big Dog Pots February 20, 2009 at 2:52 pm

Interesting that the news media is finally coming around to commenting on the Feds bailing out citizens who unfortunately, made poor choices. Now we are all paying the price. Hopefully, things will turn around again soon.

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Sharkey February 20, 2009 at 3:12 pm

http://scienceblogs.com/goodmath/2009/02/metric_abuse_-_aka_lying_with.php

Try using a more accurate depiction of stats next time.

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Sharkey February 20, 2009 at 3:14 pm
Mike February 20, 2009 at 3:16 pm

The housing representation is backwards.. The orb for 26% is much larger that that with 31%. I think the values need to be switched

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Anonymous February 20, 2009 at 3:34 pm

The representation of this information is poorly visualized. I can’t even understand why some circles with smaller percentages are bigger in size than other circles with bigger percentages. Honestly, these graphs need help.

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Thanh February 20, 2009 at 3:37 pm

The representation of data in this page is poorly visualized. Why are some circles with smaller percentages BIGGER than other circles with bigger percentages. If we are trying to show comparisons, there needs to be a constant control icon. Currently, that control icon changes from one data dimension to the next with no rhyme or reason. These graphs need a lot of explaining to fully understand what the author is trying to communicate.

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CB February 20, 2009 at 4:17 pm

Since the purpose of the lower half of the graphic is to show differences in spending between age groups, and considering that the age groups have varying average incomes, don’t you think the circles should be sized according to percentage of income spent rather than dollars spent? Except in a few cases, the circle sizes only reflect the trend in average income–rising until middle age with a slight drop toward retirement. Sizing the circles by percentage would be, IMHO, a much more meaningful visual dimension.

Interesting info, in any case.

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BillShrink Guy February 20, 2009 at 5:57 pm

Do’h! A few mistakes were made and unfortunately it became a glaringly big one when the graphic was put together.

First, as nice as it would have been, we’re well aware that not too many individuals in the United States are paying a measly 3.5% rate in taxes with an annual income of ~$60,000. Even when you’re at the lowest tax bracket, a 10-12% range is of the norm, never mind the 25-30% that should have been the case.

The data were mostly derived from the Consumer Expenditure Survey by the Bureau of Labor Statistics from the U.S. Department of Labor. This consumer survey is mostly focused on expenditures data, and because of this, data on income and income after taxes are not as reliable as other sources such as the U.S. Census Bureau. A commenter mentioned that the average income seems a bit high, and this can be seen apparently so, as the survey targets a “consumer unit” instead of a household. You should note that this is also the average income number, not the median income number. So it can be widely skewed when you compare it to the more commonly referred annual household median income of about $44,000.

We shouldn’t have included the numbers above without a big fat disclaimer and explanation on how the Consumer Expenditure Survey goes about acquiring their data.

I’m sorry about the mistake and any confusion this may have caused. We’re aware that this makes the rest of the info graphics on expenditure percentages less than reliable in some eyes, but you should note that the expense numbers are fairly spot on.

Couple interesting notes you can tell right away are the alcoholic beverage spending percentages (in terms of income) for the age 25 and younger demographics, they are almost twice that of other age demographics.

The same applies for education expenses. Consumers under the age of 25 generally spends about 5.8% of their annual income on educational related expenses. This number decreases through the year but increases dramatically again in the 45-54 age group (info graphics combined the 35-44 age group to this group) — as the children of those within this demographic are beginning their college years.

As noted by another commenter, food, housing, and transportation are the big three expenses, no matter your age group. Health care cost also increases dramatically through the year in terms of total spending amount AND percentage of income. So there are a lot of interesting observation you can make when you consider our spending habits as we advance in our years, and our life priority changes.

Lastly, I’d like to apologize again on the after taxes income numbers. I’ll be uploading the Excel spreadsheet soon with the rest of the numbers if anyone is interested in checking out more spending numbers — especially across educational background and ethnic background. Interestingly, there’s a wide gap in the clothing and apparel spending category between the opposing genders, regardless of the age, education, and ethnic background of the consumer surveyed. ;)

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Anonymous June 10, 2011 at 12:38 pm

How is your information supposed to be accurate? You didn’t even include insurance!!!!!!!! Next time triple check everything before you start giving people wrong information!!!!!!! But you had an outstanding graph.

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Anonymous February 20, 2009 at 6:50 pm

I’m envious of the small spending on healthcare. Since my employer doesn’t cover me, my expenses (even for just catastropic) make healthcare rival some of the other major categories. Would love to see different income brackets combined. The “average” here is solidly middle class (or higher?). Let’s compare some of those costs to people living in the same cities and earning half the salary…

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Cheap February 20, 2009 at 6:54 pm

I would like to see this chart for other countries too

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nagy andras February 21, 2009 at 2:10 am

whats more interesting is the way teens spend their money, the difference between guys and girls, percentage wise. http://www.opentopix.com/topic/off-beat/how-teens-spend-their-money-very-funny-but-true

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Wobble February 21, 2009 at 1:48 am

Wow, no wonder Americans are the richest country. In my country, I make 1/10 of that amount. Americans are very lucky peoples.

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subcorpus February 21, 2009 at 4:13 pm

i would like the chart to be presented in an easier format … the circles and dots are confusing as hell …

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Iowa lad February 21, 2009 at 6:29 pm

Tax rate is about right from what I can tell. Two years ago I made a little over $60,000 and paid 1% in federal taxes (H&R Block calculates it). My wife does not work outside the home and we have two children.

We nearly fully funded our IRAs which helped a lot on the tax side.

I realize it is in the best interest of Republicans to make us think all our money goes to the government, but if you save your earnings instead of buying flat screen TVs you can’t afford or a giant SUV, then the tax rate isn’t so bad.

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Gustavo February 23, 2009 at 7:50 am

Pie chart, please, this is idiocy. Why even bother with the circles if they’re not going to be held relative to one another? Pointless waste of graphics, you may as well just write the numbers down.

Cost of living somewhere is atrocious. We pay so much just to have a place to sleep and walls to keep out wind, and a roof to keep out rain. (Storage for our junk.. et cetera)

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Diane February 25, 2009 at 11:52 am

I found your blog today; it’s outstanding! I knew the graphs were NOT prepared by YOU – probably it would have been better to have put clarification on those particular elements that were truly ‘distorted’ or certainly not commonplace.

Maybe a follow-on would be for you to give ideas on how to reduce those costs; show income levels – then discuss what most people at those income levels are spending as basic expenses.

Illustrate that the MORE MONEY A PERSON EARNS, the MORE LIKELY they are to SPEND IT ON THINGS MOST OF US CAN’T AFFORD TO EVEN THINK ABOUT, LET ALONE BUY.

Investments in the stock market – Savings in CD’s/savings accounts might also be something to detail further.

I’ll continue to visit; have you on my rss feed – indeed, you provide an EXCELLENT SERVICE TO ALL YOUR READERS. Diane

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Diane February 25, 2009 at 12:45 pm

I’ve tried 3 times to comment, but it doesn’t post.

Anyway, thank you for a great blog – all the information; certainly you can’t be held accountable for a ‘graph’ that you didn’t create.

Maybe next time, a preface about your thoughts regarding information you see is somewhat helpful, but you notice the errors in it; correct it in the post/preface, and avoid all the comments that seem to be complaining about the information. Diane

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JIMBO February 25, 2009 at 3:36 pm

What’s funny is everyone here that is scrutinizing the tax point of this infographic presume to be knowledgeable on such things. My point to them, is be smart about your taxes, figure out loopholes and write-offs, and you won’t screw yourself. Only idiots pay the prescribed tax rate. A rate of 3% is completely attainable, spend $200 on having your taxes done by a professional and see how.

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Quinnovator February 26, 2009 at 10:25 am

Agree with another’s comment; your healthcare cost listing is about 2 months of what an independent with a family pays. Our three biggest expenses are mortgage, healthcare, and food.

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Big Al March 29, 2009 at 7:13 am

Don’t beat on the BillShrink Guy! Maybe his peeps can easily convert the data to barcharts that could be more relatable to some of you. Statistix can be used to present anything you want, just remember – we are all in control of making our own stats (to a large degree) and knowing where you may be missing some areas to take better control (or already have) helps you to think about what you might want to do. Thanx for making us think about it. Afterall, that’s the point.

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tonga May 23, 2009 at 8:25 am

WHY does anyone come to this site? The numbers are always suspect and in contradiction to real life, the graphic formats confusing and juvenile. The Summer of 69 page first tries to convince me that my buying power has hardly changed since ’69 (dead wrong), THEN shows me the CPI that clearly indicates how much my buying power has eroded.

Where do you get your numbers, and what is your agenda? Or do you even have a point to make?

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Roman June 29, 2009 at 8:40 am

These expenditures are fine. However you failed to mention that the avg American spends 34.5% on interest of their net income.

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Andrew November 1, 2010 at 10:42 am

This is a sweet infographic. Crazy how much the average person spends on housing. I guess when you factor in people living in new york though and other just crazy extravagant places to live that makes sense.

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Accountancy March 2, 2011 at 4:59 am

This is good article.

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