BY LEXINGTON LAW | JANUARY 6, 2020*
It’s no surprise that Americans spend a lot of money. To understand how to market to different groups, there are a few keynotes to take into consideration. It’s essential to know where all of our money goes, why we tend to spend more money on certain products and services, and how the economy functions. Below, we give an overview of America’s spending habits and break them down by different demographics.
Overview of American Spending Habits
Americans made $78,635 before taxes and spent $61,224 in 2018. This means that American spending habits lead us to spend 78 percent of our incomes every year. Americans spend on things from essentials, like housing and transportation, to non-essentials, like entertainment.
The Bureau of Labor Statistics saw a 1.5 percent decrease in income and a 4.8
percent increase in expenditures in their annual consumer report. Among the different categories, entertainment spending increased the most by 10 percent. Cash contributions saw the largest decrease and dropped 10 percent. These numbers fluctuate depending on the type of household. To illustrate, we can compare expe
nditure differences between married couples without children and married couples with children. Married couples with children reportedly spend the most on personal insurance and pensions while
married couples without children tend to spend the most on healthcare. To get a better understanding of American spending habits, we took a look at different groups and identified their spending habits. Check out our guide below to dive into the different spending habits in America.
Teen Spending Habits
Food is the top priority for teenage boys and the second priority for teenage girls. (Piper Jaffray)
Teens reportedly spend an average of $2,600 every year. (Piper Jaffray)
More teens earned money in 2019 by working independently than in 2018. (Junior Achievement)
There are 42 million teenagers in America today. Although they spend most of their days in school, teenagers are an important demographic for the economy since 22 percent reportedly earn money by working. In addition to jobs, many teenagers also earn allowance from their parents that allow them to shop. Most teens have a positive outlook on their financial futures with six in 10 teens believing they’ll own a home by the time they turn 30.
College Student Spending Habits
34% college students rated work and paying expenses as their top challenges. (Source: RISC)
Health majors spend the most on course materials. (Source: NACS)
31% of minority students take fewer classes to save on textbooks. (Source: Cengage)
College students today come from all different walks of life. Four years in college is no longer the norm — many students take anywhere between an extra semester to a few extra years to graduate. This extra time incurs additional costs (like tuition and rent)
that impact spending habits. In addition to money spent paying tuition, college students are purchasing new tech, tickets to festivals and events, and lots of food. Older students with more life experience also have to balance school expenses with other mandatory purchases like groceries for the household
Gen Z Spending Habits
54% of Gen Zers prefer to shop using a web browser. (Source: IBM)
77% believe they influence how their parents spend on food. (Source: IBM)
66% of Gen Zers want brands to sell high-quality products. (Source: IBM)
The elusive Generation Z includes anyone born between 1997 and 2012. Their spending habits reportedly differ even more than their older millennial counterparts. This generation grew up completely immersed in the digital era and is very likely to shop online. These digital natives are also used to having everything fast, so they'll likely click out if an app or website loads too slowly. Quality and value are of the utmost importance to this generation. They’re quick to switch brands if they believe they’re getting better overall value from a different company. Learn more about Gen Z spending habits
Millennial Spending Habits
Millennials spend about $600 billion each year. (Source: Accenture)
54% of millennial purchases are made online. (Source: UPS)Millennials make close to $56,099 annually before taxes. (Source: BLS)
Millennials are generally defined as the generation born between 1981 and 1996. This group is known for making financial decisions that are strikingly different from those that came before them. Millennial spending habits include an increase in online shopping, a preference for experiences over material things, and an openness to generic brands if the choice saves money.
Baby Boomer Spending Habits
Baby Boomers account for more than half of U.S. spending. (Source: Visa)
Boomers expect to take 4 to 5 leisure trips in 2019. (Source: AARP)
Baby Boomers put between 9% to 10% of their pay towards their retirement. (Source: Stanford)
Baby boomers are those born between 1946 and 1964. This group is filled with people who are close to or already in their retirement years. In contrast to their parents who were born in the Great Depression, boomers expect to have a fun retirement. They're looking forward to experiencing new places and trying new things. However, many baby boomers are facing retirement issues due to a lack of savings and mounting debt.
Source:www.elxingtonlaw.com/blog/credit-cards/american-spending-habits.html For further information on each spending group visit their site.