Ever wonder what the “rich” spend their money on? I found an answer online (see monthly summary below): The Consumer Expenditure Survey, U.S. Bureau of Labor Statistics (BLS), September 2015 (latest available), higher income before taxes table.
I focused on those making more than $150,000, but this table also has 8 other categories, starting with $70,000 (and below), $70,000 – 79,999, and so forth.
I use this information not necessarily as a guide, but rather as a useful starting point to compare your household spending to. The percentages are probably more relevant than the absolute dollars because, more than likely, these households have a higher income (average of $242,681 pre-tax) than your particular situation. Having said that, if you spend more, in real dollars, or on a percentage basis, than these benchmarks, then I would argue you have room for improvement. . .
Compare your spending in each of these categories – in absolute terms and as a percentage of your total expenses. The BLS methodology only captures consumer spending; note they exclude Federal/State income taxes from this calculation. It does appear to capture social security withholding (included in the retirement line), along with life insurance and personal pensions.
If you have never done a budget before, this is a great opportunity to get started! Today! Don’t wait! This BLS template is not perfect, but I do think it’s a good place to begin – especially since you have some references to compare to. I plan to do another post on how much you “should” spend in each category, but for today let’s just do some window shopping.
The BLS table is incredibly long and contains a ridiculous amount of data, but I think it’s a really helpful resource because it makes it easier to compare your household spending to households of similar income and resources; and how they prioritize their spending.
Again, I am not saying these reference points are the correct level of spending – in many cases I would argue their priorities are a little wonky; nonetheless, it should help you in analyzing your own finances and will show you areas that you are better than average (woo hoo!) as well as some areas that you are worse than average – that’s really an opportunity to do better and set some new goals – I know I am motivated to reduce the amount I spend on food . . .
Some notes about how the BLS summarizes things. Housing includes anything and everything associated with the house, including: mortgage payment(s), property taxes, property insurance, utilities, household items (including the kitchen sink), repairs, maintenance, furniture, appliances, etc. (you get the idea). I will provide a few sub-categories (below) to illustrate, for the whole table see the hyper-link below.
$1,264 per month for principal, interest, and property taxes (not insurance)
$267 per month for housing repairs, maintenance, and insurance
$322 for electricity, natural gas, and water bills
$129 for cell phone service
food also has many categories and sub-categories, but a couple data points:
$546 in groceries per month
$592 in restaurant spending per month
some transportation details:
$611 per month for car payments
$326 per month for gasoline
$177 per month for car insurance
Way too many details to list . . .
Look for the “higher income table” and the XLSX link at the bottom of the BLS consumer expenditure page (see link below)