What Do People Spend Their Money On?

There are a lot of different ways that people spend their money. Some of these spending habits can have a big impact on one’s overall financial health. People who are good with their money know how to balance spending for the present and saving for the future. They avoid high-interest debt, make smart decisions about investing, and set both short-term and long-term savings goals that they revisit regularly. These people can be found doing everything from positioning themselves for a promotion to tracking their expenses on a daily basis.

Most of the things that people spend their money on fall into two categories: non-discretionary and discretionary spending. The latter includes items like entertainment, recreation and travel. The former includes necessities such as housing, food and clothing. Some of the most interesting spending trends come from how people allocate their budgets among these categories. The higher income groups tend to spend what do people spend their money on less on food and clothing, but more on housing and utilities. The middle-income groups seem to split the difference between these two extremes.

The average American household spends a little over 30 percent of their annual income on non-discretionary goods and services. The biggest expenditures include housing, healthcare and transportation. The next largest expense is food. The last large category is utilities. The middle-income groups seem to spend the most on all three of these categories, while the lower-income groups spend less.

Discretionary spending, on the other hand, is a bit more variable. While some of these expenses, such as home decor and entertainment, may be considered necessities by some, others, such as dining out and groceries, can be seen as optional or luxury. It’s worth noting that there are a number of Americans who have a negative net worth, meaning they spend more than they earn on a regular basis.

These spending trends are a result of a number of factors , including the cost of living in each city and state and the types of jobs that people have. Another factor is the amount of disposable income, which is the amount left over after paying all of your monthly bills. The more disposable income you have, the more you can spend on leisure activities and vacations.

This article is based on data from the Consumer Expenditure Survey, which tracks the spending of over 1 million American households. The data was compiled from surveys taken in 2020 and categorized into various categories based on age, gender, income and region.

The data also shows that some spending trends are consistent across generations. For example, housing is the most expensive category for every generation, accounting for over 30 percent of annual spending for each group. Entertainment is the second-highest spending category for all groups except Gen Z, who focuses on education expenses. Other major spending categories are healthcare and personal insurance.