How Do The Rich Spend Their Money – Depends on how much there is. For those earning $16,000 a year, more than half of that goes to housing and utilities. But those earning $160,000 a year still have nearly two-thirds of their disposable income left over after the monthly bills.
Planet Money shows one of our favorite topics: How families spend money. Here are their numbers rendered slightly differently:
How Do The Rich Spend Their Money
The results aren’t that surprising: Poor people spend more of their money on essentials than richer people (and these numbers don’t account for dramatic geographic differences). But how much is left?
How Philanthropy Benefits The Super Rich
After necessities — housing, transportation (including gas), food, utilities and clothing — the poor have 15% of their disposable income left over, and the over-$150,000 crowd has about 40%. This next graph uses these numbers to tell you how much disposable income a typical person making $17,500, $60,000, or $150,000 has left after the essentials are taken care of:
This chart doesn’t include any categories you might argue are essential: restaurant food (which is somewhere between optional and essential), health care (which is essential, but spiky), and education (which is practically essential, but specific to certain years ). By these categories, the poorest group spent 98% of their income, which gives them $367 for the year – or a dollar a day. Welfare benefits are a contentious issue for both legislators and consumers. Some states have considered changing their welfare policies, most of which aim to control what the poor spend their food stamps and welfare checks on. Some politicians worry about the poor taking government money and spending it on non-essentials (concerns include welfare checks being spent at strip clubs and food stamps being used for filet mignon – I kid you not).
To help calm these fears, the Bureau of Labor Statistics recently updated its Consumer Expenditure Survey. The Consumer Expenditure Survey shows how much individuals from different income brackets spend on goods and services. The tables are simplified in this Washington Post article , where income brackets are divided into low, middle, and high, and expenses are broken down into food, housing, retirement/life insurance, and transportation.
As expected, the high earners spend more than the other two income classes. I think we can chalk it up to said individuals having more money to spend. Even individuals with higher incomes spend less of their total income, but mostly because the higher incomes are higher. But when it comes to groceries, consumers spend roughly the same amount on different types of food. While the rich spend more on food and the poor spend less, both high- and low-income consumers spend about 19% of their budget on produce, 22% on meat, and between 3 and 4% on seafood and fish. Unless there’s some secret discount on lobster and filet mignon for those on lower incomes (if there is, join me), it’s unlikely that most of those on government subsidies are blowing it all on fancy steak and seafood. When it comes to leisure expenses. The rich spend much more on alcohol and eating out, while the poor still spend money on cigarettes.
Spend Money Like The Rich: How To Change Your Spending Mindset
Another big difference in savings. The rich tend to have more disposable income and often end up with more money at the end of the day. High income earners invest a significantly larger part of their budget on insurance. It is difficult to bridge the income gap when the poor have no money left to save at the end of the month while the rich get richer by investing their extra money. And because the rich keep saving their money, those lower on the income scale (ie those who provide goods/services to the rich) don’t get paid. The most important takeaway from the BLS survey is that the poor (on average) do not take advantage of government assistance. To combat inequality, we should not focus on making government support for low-income people even harder to get – instead, we should encourage the poor to save and the rich to spend. How do you go about it? That is a completely different problem. Two crossed lines forming an “X”. It indicates a way to close an interaction or dismiss a notification.
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NPR’s Planet Money recently published this cool infographic that shows the differences between how the poor, the middle class, and the rich spend their money. It can also reveal how they budget.
Visualizing The Investments Of The Ultra Wealthy
It turns out that everyone’s rent is way too high, as every demographic puts more than 25 percent of their monthly income toward housing. Each group also spends a lot on transportation and gas—the poor spend 20.4 percent, while the middle class drops 21.3 percent—not to mention a lot on food and healthcare. The poor spend the most on the latter category, with 8.2 percent on healthcare and health insurance costs.
Interestingly, the rich do a much better job of saving for retirement, beating both the middle class and the poor by siphoning off 15.9 percent of their income each year. The poor fare worse on this front, taking only 2.6 percent away. They also fall short when it comes to education, saving slightly more than the middle class (1.5 percent vs. 1.3 percent), but significantly less than the wealthy (4.4 percent).
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