As you can see from the table the average American consumer spends a mass amount of resources on food, housing, transportation and health care and I will explain why!
|Average income before taxe||$65,596||$63,784||$66,877||-2.8||4.8|
|Average annual expenditure||$51,442||$51,100||$53,495||-0.7||4.7|
|Food at home||3,921||3,977||3,971||1.4||-0.2|
|Food away from home||2,678||2,625||2,787||-2||6.2|
|Apparel and services||1,736||1,604||1,786||-7.6||11.3|
|Gasoline and motor oil||2,756||2,611||2,468||-5.3||-5.5|
|All other expenditures||3,557||3,267||3,548||-8.2||8.6|
People viewing this at first glance may be confused but fear not! It’s easy to understand Maslow Hierarchy of needs. It’s a pyramid that just states once a person accomplishes the first need or step they keep moving up until they reach self actualization. For example once you accomplish the psychological (getting feed, bathing and having clothes) you may focus your resources on safety (health care) next.
As you can see, this may be different for many people. For example you may find Esteem being after safety because it’s the next need that you would focus on.
|Maslow Hierarchy||Explanation||% of spending|
|Self Actualization||When you’re comfortable with who you become||6.6%|
|Esteem||Self-Esteem and Confidence||3.3%|
|Belonging||Socialization with friends and family||8.4%|
|Safety||Health insurance, Job Security, Car Insurance||18.7%|
|Psychological||Food, Water, Shelter, housing cost||63%|
This shows why American spending is the way it is. So enough! How do you save money?
Know that you know why you spend the way you do and how much you’re spending, it’s time for you to develop a strategy, implement a strategy and spend money like you don’t have money! And that’s all to it. Before you develop an overall systematic way that works for you, here some things you need to do to help implement that strategy.