Household Spending Habits: How do you Compare?

Posted 22 Jun 2018 by Natalie LeBlanc


Do you think you spend too much money going to the movies every week? What about your grocery bill? While some of our expense categories (like healthcare) may not be comparable to our American counterparts, the U.S. Bureau of Labor Statistics prepared a report of household spending through the 2016 calendar year that highlights some interesting facts.

On average, Americans spend about a quarter of their income on housing alone. When you add in transportation (12%), food (10%) and clothing (2%), that’s about half of your income going towards daily necessities. Other expenditures like healthcare, insurance and retirement savings, while not “necessities,” make up an additional 15% of expenditures. This leaves 35% of your income for spending on leisure (9%), saving (9%) and taxes (14%). There really isn’t much left over for the average household.

Three expense categories showed an interesting increase over 2015: charitable contributions, healthcare expenses and pension contributions.

Rage-Giving: Keeping threatened causes alive

The report’s findings unearthed a trend of “rage-giving” in 2016, which may be tied to that year’s presidential election. This phenomenon is the act or intention of giving more funds to a charity that is under threat to be defunded or underfunded. With some American-based charities (largely environmental groups and women’s advocacy) coming under fire by politicians, citizens took the onus upon themselves to keep these causes funded, apparently by giving 14.4% more of their income than in 2015.

Health Insurance: Now or never

The broad category of healthcare was up 6.2% in 2016, but health insurance made up the bulk of this increase at 6.1%. While this statistic may not be as comparable to Canadians’ budgets, it does highlight the increased need for health insurance, which is potentially driven by an aging population.

Pension Contributions: Retirement is nigh

Retirement is not far off for the largest age demographic in North America. As the baby boomer generation gets closer to hanging up their ties and coveralls, many are realizing they might not have enough saved to live comfortably in retirement. Naturally, this sparks a flurry of savings; pension and social security contributions were up 8.2% over 2015. In Canada, we are seeing the same phenomenon, though at a slower rate. RRSP contributions were up 3.1% from 2015 to 2016.

How does your spending compare? Take a look at the chart below and see for yourself:

 

 

Sources:

Westmaas, Reuben. "Here's How the Average American Household spends its Money." Curiosity.com https://curiosity.com/topics/heres-how-the-average-american-household-spends-its-money-curiosity?utm_source=androidapp

Consumer Expenditures. Bureau of Labour Statistics. www.bls.gov/news.release/pdf/cesan.pdf

McCambridge, Ruth & Larry Kaplan. "What Was Rage Philanthropy After All?—And Has It Run Its Course?" Non-Profit Quarterly. https://nonprofitquarterly.org/2018/03/13/rage-philanthropy-run-course/

"Total RRSP contributions rise as number of contributors declines slightly." Benefits Canada. www.benefitscanada.com/news/total-rrsp-contributions-rise-as-number-of-contributors-declines-slightly-110950