Happy Monday everyone! As today is my birthday I really did not want to bore everyone with verbose prose on some sort of personal finance topic. So, what better way to communicate than through an infographic? A lot has been said about the middle class and where they stand (how they spend money), especially in light of the economic headwinds we’ve faced over the last five years. I like this infographic because it shows how the “average” middle class American family spends its money. Although I was not surprised by the following statistics, they did grab my attention:
- Only 3.2% of income is saved for retirement
- The middle class has shrunk by 11% since 1970
- The savings rate is abysmally low at 3.5%
- Student loan debt continues to increase
What are your thoughts? Did anything stick out to you, or was it of no surprise? How does your family spend money?
HAPPY BIRTHDAY!!! Interesting infographic. I guess the thing that stands out for me the most is that a) middle class people spend 0.7% of their income on shoes b) that the my income and house size fit right in line with “middle class” and c) the average savings is only $4,000 a year. I think that savings rate says a lot about our priorities in this country.
Greg@ClubThrifty recently posted..6 Tips for Making Home Ownership Attainable
That and we spend more on health care than we save…
Greg@ClubThrifty recently posted..6 Tips for Making Home Ownership Attainable
Great point Greg! As a good friend of ours says, our checkbook reveals our priorities in life. That savings rate is way too low and just shows once again that we as Americans are not looking at the future, but now.
Happy Birthday, John! I have to agree with Greg, the healthcare numbers were what struck me the most too. As a family of six, we work hard to keep healthcare costs low by using preventative measures and naturopathic medicines. It would really put a crunch in our budget to spend over 6% of our income on healthcare costs.
Also, I’m assuming that most of the 11% that left middle class went down instead of up, given the increase in public assistance recipients? Any idea on that?
Thanks for the informative post, and have a great day!
Laurie recently posted..Motivation: Learning From Others
Thanks Laurie! That number stuck out to me as well. We do as much preventative measures that we can and we’re relatively healthy, so thankfully we’re nowhere near that number.
I think your assumption is probably pretty accurate. I think we’ve seen a growing divide between the have’s and have not’s, so it would not surprise.
That’s a lot to be spending on food away from home. I’d love to compare these figures with those of 25 years ago to see how lifestyles have changed! Have a great day John.
Money Bulldog recently posted..Spread Betting on Cotton
You bring up a great point! My Dad is always saying how people ate out much less when he was growing up. It does seem to be a high number to me and one that I am certain we’re nowhere near.
So very true. When I was growing up in the 60′s & 70′s I can probably count on one hand the times I ate at a restaurant with my parents. I never had takeaway chinese food or a pizza until I was a teenager. Now it seems to be a part of everyday life.
What is kind of sad is that not many are seeing the correlation to restaurant spending and the state of our health. We are literally eating ourselves sick! Time to refocus and bring some of that food money back into our wallets and focus on our health.
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You should have told the truth: as today is my birthday, I’m spending a day away from the blog and let someone else carry most of the work! That’s what I’d do! Hope you’re somewhere with your feet up, man. Happy flippin’ birthday.
AverageJoe recently posted..How Successful People Accomplish More – Two Guys and Your Money 025
Lol! I know Joe, but what can I say I am a workaholic.
Responding to comments is all I am planning on doing today. Well that and pretty much nothing else.
Wow, very interesting. We don’t smoke, and live in Canada so that reduces the tabacco health care side of it substantially . We also save a lot more than 3.5%; I’d say somewhere between 13-15% of our combined income. Otherwise, this looks fairly accurate for us.
Daisy @ Money Smart Guides recently posted..3 Tips to Finding a Reputable Bankruptcy Attorney
That’s awesome you save that much Daisy! The recommended (by many) amount to start with is 10%.
Happy Birthday John. I hope you enjoy the day, even though it is a Monday. Great infographic. It is a sad one, much like mine is that I posted today. Enjoy your birthday and I hope you get a few moments away from the computer.
Grayson @ Debt RoundUp recently posted..Overspending in America – The Sad Truth
Thanks Grayson. I am planning on just responding to comments, writing a post and getting away from the computer. While not really surprising, it was an eye opening infographic.
Happy Birthday!! If I were closer, I’d take you out for the early bird senior special at Denny’s. What sticks out to me in this infographic is how the savings rate when up during the financial meltdown, but now that the economy is somewhat better, it is back down again. Nobody learned their lessons, apparently. The amount spend on vacations and pets compared to saving is also a bit surprising. We are certainly an instant gratification society.
Kim@Eyesonthedollar recently posted..How to Retire in Ten Years, Regardless of Your Age
Thanks Kim! I mentioned your gesture to Mrs. Frugal Rules and it gave her a good laugh.
Of course, she has a few more years than I do to hit the big 4-0.
You bring up a great point Kim…no one learned their lesson, sadly. Yes, we do like our instant gratification.
Happy Birthday!
Definitely enjoyed the infographic. Looks like i have a below average size home : ( Haha just kidding it really doesn’t matter, but it’s interesting to see how the data adds up. There’s a wealth of data in that infographic.
Anyway, hope you have a great bday and I hope you took the day off from commenting and tweeting!
DC @ Young Adult Money recently posted..5 Ways to Invest in Yourself
Thanks DC! Yes, I am taking (sort of) the day off. I am just responding to my comments and writing a post then I plan on unplugging for the rest of the day.
Our house is below “average” as well, but we like it and it comes down to being content I think.
Great infographic! The savings rate is quite scary… And that’s quite a bit of money on cars and gas!
Brian recently posted..Why not to have children…ever
Yes it is Brian. It was not really surprising to me though. Great point on cars & guess…11% is spent on that. Thankfully, we’re well below that.
Happy birthday (again)!!!
The big part that stuck out to me was the amount we spend on housing and vehicles. Between the mortgage, utilities, TV/cable, furniture, car payments, gas, and car repairs, the middle class family spends nearly 55% of their income on that. That’s way too much. Imagine if people lived in smaller homes, didn’t commute 30/miles each way to work, and didn’t carry debt on their cars.
I think things would look a little different….
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Thanks Jason!
Great point! I could not agree more, way too much is being spent by most on those areas and it is scary to see those numbers all summed up. I think it is a point to how we really have become in society as that we generally want more and bigger things…i.e. lack of contentment. I agree, things would look a little different.
Happy Birthday John,
I always like the infographics. It’s no surprise though that housing is tops in % and that % percentage saved has been on the decline since 2009. I agree with Jason, when you add it all up it’s a staggering percentage of money that we spend for the roof on our heads, transportation and utilities. Have a great day!
Canadianbudgetbinder recently posted..The Pros and Cons of Homeschooling In Canada Part 2 of 2
Thanks Mr. CBB! That is a great point. Way too much is being spent on these things, especially when you see that saving is so low.
Happy Birthday!
Those numbers are about what I would expect. Median income has little changed over the years, so savings will likely go down as inflation goes up. 31% seems very high to me for mortgage! Mine is more like 20-25%.
My Money Design recently posted..Rethinking My Strategy for What Stocks to Buy This Year
Thanks MMD!
I would agree on the mortgage as well. We are somewhere in the low 20′s ourselves and am thankful we kept it to that. Sure, we’d like a bigger home, but we have other priorities than a bigger house.
With all the health issues plaguing society I’m sort of surprised more isn’t spent on medication.
Have a great birthday!!
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Thanks Catherine!
You bring up a great point, one that I was wondering myself. I wonder if it’s skewed at all by government programs at all. Regardless, I think it’ll be a number that will be going up in the future if nothing substantive is done.
Looks accurate, but for us, we’re weird. I’m at like 50% + on my PITI, and WAY less on groceries. Mostly, my money goes toward the house
Jacob @ iheartbudgets recently posted..Weekly Wrap-Up, Mentions and Good Reads #27
I think it’s pretty accurate as well Jacob. I think we’re fairly under he grocery spending ourselves, but lower on housing.
Cool infographic!
Happy Birthday!!!!!! Hope it’s totally awesome
Mackenzie recently posted..Would You Spend Money On It?
Thanks Mackenzie!
Happy Birthday! Seems to be the day for infographics. They have become a great way to share information.
Tackling Our Debt recently posted..How Do You Define Success?
Thanks Sicorra! Yes, they can be a great way to communicate…especially when you’re dealing with a lot of numbers.
This was fun. Some of the percentages are pretty close to our spending, others aren’t. Some of the percentages are close but in our case represents a lot of spending! (ie, Alcohol or mortgage).
Anne @ Unique Gifter recently posted..Honeymoon Gift Basket Ideas
It was interesting to see how our own spending lines up in comparison to the “average”. Thankfully we come in under in many of them.
Happy birthday (again) John! Wow 3.2% savings rate, and that’s the average… Around me I have a lot of people who seem to be expecting their parents to cover for them. A friend got about 50% deposit on a house by her parents. Another one is basically counting how much he will get when his parents die. And they don’t consider how they would do the same for their kids…
Pauline recently posted..What You Need to Know When Buying a Car
Thanks Pauline! I agree, that number is way too low for my liking. It’s not very surprising though.
These numbers sound about right, although seeing such a low savings rate really is scary. That’s so little!
Jordann @ My Alternate Life recently posted..Why I Care About What I Eat
I agree Jordann. While not surprising, it’s a bit scary.
I liked the piggy bank pie chart.
What I don’t get is how can the bottom of the range for middle class income be the median household income? Shouldn’t it be in the middle of the range instead?
Edward Antrobus recently posted..Do’s and Don’ts of Free Wifi
Happy birthday John. I’m really shocked at some of these numbers. Although I suppose I should be. 10% of your income on smokes. Imagine adding 4 years to your career to cover an addiction. That’s just nuts.
Justin@TheFrugalPath recently posted..Improve Your Financial Situation One Step at a Time
Thanks Justin! Great point, that’s A LOT of money to spend on smokes.
If my girlfriend got out of college w/ $32k of student loans it would have been a miracle… but instead it was over $80k! I’m so hoping we get them paid off this year like we are planning to! 2 to 2.5 years after she graduated
Lance @ Money Life and More recently posted..Four Ways to Split Expenses at Home
Oh and I forgot the whole reason I was going to comment before reading the infographic… HAPPY BIRTHDAY!
Lance @ Money Life and More recently posted..Four Ways to Split Expenses at Home
Thanks Lance! I think it’s pretty darn good to get 80k paid off in under three years. Great for you guys!
Happy birthday John.
Roger @ The Chicago Financial Planner recently posted..Life Insurance as a Retirement Savings Vehicle – A Good Idea?
Thanks Roger!
Happy Birthday!! This is a great infographic thank you for sharing. Enjoy your birthday make it a good one.
Brick By Brick Investing | Marvin recently posted..People Are Funny About Money
Thanks much Marvin!
Great infographic! I have to agree with the comments above about savings rates. It is interesting that you see the savings rates through the recession of 2008/2009 spike up to 8%. How soon do we forget the past. Only two years later and the rate is back down to 3.5%. Certainly shows where the priorities are. Almost $1,000 spent annually on TV’s while only $4,000 is saved. It would be interesting to see this contrasted against Canadian and European savings/spending rates. Not sure what the results would be but I am sure it would be a good read.
Jeremy @ CreditSpark recently posted..Good Credit Is Sexy
Thanks Jeremy! I think it goes to show how easily we forget the past and how uninformed we are in general. While the numbers are not surprising, they do show how little we emphasize being prepared for the future.
I’m proud to say that I don’t owe any money on college loans which I think is why I’ve been able to get ahead so much financially. However I have to disagree on spending $3000 for an average vacation. I don’t think I’ve even come close to spending that much on a vacation ever.
Chis @ Stumble Forward recently posted..How to Control Your Debt to Income Ratio – A Guide For Beginners
That really can be helpful to not have loans to pay off. I would tend to agree on the vacation as well. We take a family of five on one for a fraction of that cost. Other than our honeymoon the only other time we spent more than $3000 was on a cruise we went on last year.
The fact that people are saving more money than it spends on vacation makes me think that there is still some hope. Despite this I think people are too optimistic about their future.
GoodTrader recently posted..3 Ways to Improve a Terrible Stock Portfolio
I wish I were as hopeful as you.
I think the saving rate, while not surprising, is still way too low for the “average” family. I think it goes to show how quick many of us forget.
Hi John,
These are very good statistics and nice presentation of charts.
This is very interesting for middle income families.
With your statistics, people will know where they stand.
Just a thought, it really pays to be spending a lot.
Lakita recently posted..Eating Well but Saving More
Happy Birthday! The most depressing part of that infograph is that I don’t even “qualify” to be in the middle class. I made less than 50k last year. OMG! Sigh….
Budget & the Beach recently posted..Food Wastin’ Hair Dilemma
Thanks Tonya! I would not be so quick to think you don’t “qualify”. I am not certain what they’re considering in this. If it’s a family of four, then it’s comparing apples to oranges. That said you can use numbers to say almost anything you want.
The saving rates scare me. I’m all for living today, but risking your future is something that no one should do.
Marissa @ Thirtysixmonths recently posted..How to Ask for a Discount
Great point Marissa! There’s a balance to be had, but still that saving rate is too low.
That retirement fund savings rate is awful but I was once there — for far too long! It’s hell playing catch-up and I never really will “catch up”.
Kay Lynn recently posted..31 Days to Better Health: Change Your Order
I know the feeling Kay Lynn. We were not able to save last year with us starting our business, but plan to be back in the game this year.
Happy Belated Birthday John! Very interesting infographs and the cost that stood out to me is the rising cost of college education. Too many grads exit school and suffer from lack of employment/under employment and have to shoulder such large loans. I’m so glad I’m past done with my student loans which were nowhere near the amounts shown.
K.K. @ Living Debt Free Rocks! recently posted..All Yuh Mad! Trinidad Moments
Thanks K.K.! That’s a great point about student loans. It is rising and many are graduating with tens of thousands in student loan debt. I am so thankful to be past that myself.
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