How To Save Money

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!

Item 2012 2013 2014 2012-2013 2013-2014
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 6,599 6,602 6,759 0 2.4
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
Housing 16,887 17,148 17,798 1.5 3.8
Shelter 9,891 10,080 10,491 1.9 4.1
Owned dwellings 6,056 6,108 6,149 0.9 0.7
Rented dwellings 3,186 3,324 3,631 4.3 9.2
Apparel and services 1,736 1,604 1,786 -7.6 11.3
Transportation 8,998 9,004 9,073 0.1 0.8
Gasoline and motor oil 2,756 2,611 2,468 -5.3 -5.5
Vehicle insurance 1,018 1,013 1,112 -0.5 9.8
Healthcare 3,556 3,631 4,290 2.1 n/a
Health insurance 2,061 2,229 2,868 8.2 n/a
Entertainment 2,605 2,482 2,728 -4.7 9.9
Cash contributions 1,913 1,834 1,788 -4.1 -2.5
Personal insurance 5,591 5,528 5,726 -1.1 3.6
and pensions
All other expenditures 3,557 3,267 3,548 -8.2 8.6

maslow_hi

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.

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