Is
Your Cash Flow Normal?
Have you ever sat at your desk, paying bills,
and wondered if everyone else spends as much as you do? The government
might have the answer.
Every year, the Department
of Labor issues a report on consumer expenditures. It's an interesting
glimpse into the bank account of the average American. The most
recent report (based on 2001 data) contains the following nuggets:
·The typical "consumer
unit" -- essentially a household, whether it's a four-person
family or an independent bachelor -- spent a total of $39,518, up
3.9% from 2000.
·Housing was the
biggest expense, costing $13,011. That included spending on utilities,
fuel, and public services (up 11.2%) and outlays for home furnishings
(down 5.9%).
·The average consumer
unit spent $5,321 on food -- $3,086 at home and $2,235 eating out.
However, that gap is closing: Spending at restaurants increased
4.6% while the grocery bill rose just 2.2%.
·Transportation cost $7,633, almost half of which went to
vehicle purchases.
·Annual spending on tobacco products and supplies ($308)
was more than twice as much as expenditures on reading materials
($141). We'd like to think that this was because so many people
used the library, but we doubt it.
How does all this outflow
compare to inflow? According to the report, the before-tax income
of the average consumer unit was $47,507. However, the Internal
Revenue Service says that the average tax bill in 2001 was $9,401.
So that leaves $38,106 to spend -- which is a bit of a problem when
you recall that your friendly neighborhood consumer unit spent $1,412
more than that.
Furthermore, if the consumer
units are segmented according to income into five groups of equal
size, the expenditures of the bottom two quintiles exceeded before-tax
income by $10,937 and $6,173, respectively. The inflow and outflow
of those in the middle quintile were approximately equal -- but
that's before taxes. In other words, only 40% of Americans live
below their before-tax means.
You might ask how the Department
of Labor got all this information. No, Big Brother didn't implant
a computer chip in your buttocks to monitor when your wallet is
removed. The data was gathered by two methods: interviews and a
spending diary.
Article continued at http://www.fool.com/News/mft/2003/mft03091510.htm?source=mppromo
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