How to divide my expenses between different categories?
Regardless of your personal income one of the biggest challenges is to figure out how much to spend on leisure or transportation or housing or utilities. Most of us end up overspending or underspending or just being unhappy because we are spending too much on things that may not make us happy and lot less on things that do make us happy. Since the situation of each individual and household is unique, there are no perfect answers, but this chart summarizes how Americans at different levels spend their money. Now, considering how poorly Americans run their finances, I would not recommend that this is what you do, but it sure is a good way to compare where you stand and make some changes.
A few things stand out:
- On so many categories, the expenses are very comparable regardless of income level.
- The richest Americans spend the least on healthcare. This is a complex and controversial topic but the healthcare premiums are independent of your income and that makes it so unfair for the poor and middle class.
- The rich also spend a lot less on transport and fuel; again, like healthcare, the gasoline prices are the same for everyone, and the rich are more likely to drive less.
- Also notice, how much more the rich spend on education. I am really hoping that low and middle income Americans will start appreciating the value of education.